Q&A Hero

Q: A(n) ________ is a linkage that results when a director from one company sits on the board of another company. A) interlocking directorate B) strategic alliance C) network D) keiretsu

Q: What are the three principal sources of ethical values that influence organizational ethics?

Q: What are the three models of ethics?

Q: What is an agency problem?

Q: Describe the various ways in which a CEO can influence organizational effectiveness and decision-making.

Q: Differentiate between inside directors and outside directors.

Q: Explain why shareholders are considered the stakeholder group with ultimate authority over the use of a corporation's resources.

Q: Describe the various reasons due to which managers may follow goals that promote their own interests and not the interests of shareholders.

Q: Discuss the significance of suppliers as an outside stakeholder group.

Q: Who are the inside stakeholders of an organization?

Q: List the outside stakeholders of an organization.

Q: ________ occurs when an employee informs an outside person or agency, such as a government agency, a newspaper, or television reporter, about an organization's (its managers') illegal or immoral behavior. A) Boundary spanning B) Moonlighting C) Whistle-blowing D) Dumping

Q: In the long run, an organization that follows unethical practices is most likely to ________. A) be more innovative B) spend less on advertising or managerial salaries C) be bureaucratized D) spend more on research and development

Q: A son of a mobster believes that it is ethical to steal if it is in the best interest of his family. This view comes from ________. A) justice model of ethics B) professional ethics C) personal ethics D) moral rights model of ethics

Q: Which of the following organizations is most likely to commit unethical and illegal acts such as collusion, price fixing, or bribery? A) an organization that is introducing a new product in the market B) an organization that is struggling to survive C) an organization that is entering into a new market D) an organization that has a flat and decentralized organizational structure

Q: Behavior that follows accepted ethical rules confers a(n) ________ effect on an individual or an organization. A) observer-expectancy B) framing C) focusing D) reputation

Q: The reputation effect ________. A) solves the agency problem B) leads to equal distribution of resources among all the stakeholders C) increases the problems of self-dealing D) reduces transaction costs

Q: The "tragedy of the commons" illustrates that ________. A) the utilitarian model of ethics is the most effective model of ethics B) all unethical actions are always illegal C) the rational pursuit of individual self interest results in a collective disaster D) all the available resources should be equally distributed among all the stakeholders

Q: A doctor was banned from practicing medicine because he consistently prescribed unnecessary procedures. This doctor violated ________. A) professional ethics B) the justice model of ethics C) individual ethics D) the utilitarian model of ethics

Q: Which of the following is a model of ethics? A) mutual association B) utilitarian C) value integration D) incremental benefit

Q: As per the ________ model of ethics, an ethical decision is one that produces the greatest good for the greatest number of people. A) mutual association B) utilitarian C) justice D) moral rights

Q: A manager decides to distribute the pool of bonus money equally among all of the subordinates, even though some performed better than others. Which model of ethics is being used by him in making this decision? A) justice B) moral rights C) utilitarian D) mutual association

Q: A manager chooses to tell affected employees about an impending layoff, despite the damage this causes to the stock price of the organization. She did this because it was "the right thing to do." Which model of ethics is she using? A) justice B) moral rights C) utilitarian D) mutual association

Q: A manager decides to locate a manufacturing plant in a location that maximizes the overall benefits to the stakeholders. Which model of ethics is being used by the manager? A) justice B) moral rights C) utilitarian D) mutual association

Q: As per the ________ Act, CEOs, COOs, and the chief financial officer are required to sign off on their company's balance statements so they can be held personally and legally liable for accidental or deliberate mistakes found later. A) Sarbanes-Oxley B) Taft-Hartley C) Walsh-Healey D) Davis-bacon

Q: Which of the following is generally used to solve agency problems? A) self-dealing B) stock-based compensation schemes C) a highly centralized organization structure D) a matrix organization structure

Q: "Self-dealing" is defined as ________. A) a manager acting in his own best interest, as opposed to the interests of the other stakeholders B) a cash bonus distributed privately amongst the top-management team C) a manager promoting family members at the expense of others D) a form of control that aligns the interests of principal and agent so both parties have the incentive to work together to maximize organizational effectiveness

Q: Which of the following statements is true regarding a divisional manager? A) A divisional manager is a part of the top-management team. B) Divisional managers act as outside directors for the company. C) A divisional manager is not a corporate manager. D) A marketing manager is an example of a divisional manager.

Q: Which of the following is one of the two conditions that lead to a moral hazard problem? A) the principal possesses more information than the agent B) the agent has an incentive to pursue goals and objectives that are different from the principal's C) the principal acts in his own best interest, as opposed to the interests of the other stakeholders D) the agent is given the authority to allocate scarce organizational resources

Q: A(n) ________ problem is a problem in determining managerial accountability that arises when delegating authority to managers. A) self-dealing B) organizational contract C) line of command D) agency

Q: Which of the following managers has a staff role? A) R&D manager B) production manager C) divisional manager D) assembly line supervisor

Q: Vice presidents are part of ________ management. A) corporate B) divisional C) functional D) line

Q: Which of the following organizational positions is considered to be a part of corporate management? A) project manager B) chief operating officer C) divisional manager D) plant supervisor

Q: Which of the following organizational positions is a part of an organization's top management team? A) functional manager B) executive vice president C) divisional manager D) plant supervisor

Q: Managers who are in charge of a specific organizational function such as sales or R&D hold a(n) ________ role. A) distributive B) line C) staff D) integrative

Q: Managers who have direct responsibility for the production of goods and services are considered to be holding a(n) ________ role. A) staff B) integrative C) line D) distributive

Q: Which of the following is a primary responsibility of a chief operating officer? A) selecting the members of the board of directors B) managing the organization's internal functions C) selecting key executives to occupy the topmost levels of the managerial hierarchy D) determining top management's rewards and incentives

Q: Which of the following employees would be considered to have a line role? A) sales manager B) executive vice president of finance C) R&D director D) vice president of production

Q: Which of the following terms best describes the system of hierarchical reporting relationships in an organization? A) line of control B) span of authority C) matrix of hierarchy D) chain of command

Q: Which of the following would be considered to be the lowest level of management in a chain of command? A) executive vice presidents B) functional managers C) divisional managers D) vice presidents

Q: Which of the following statements is true about an outside director? A) An outside director of an organization should have worked with the organization for at least 10 years at some point during his career. B) Outside directors tend to dominate boards because as compared to inside directors, these people have better access to most of the information about the company. C) An outside director should be a current employee of the organization. D) An outside director of an organization can be an executive of some other company.

Q: Which of the following persons can be an inside director in an organization? A) a government official B) a professional director who holds positions on the board of many companies C) a full-time employee of the organization D) an executive of another company that operates in the same industry

Q: In the case of a large organization, which of the following options best represents the accurate chain of command at the corporate management stage? A) CEO, president, senior vice presidents, executive vice presidents B) board, CEO, executive vice presidents, presidents C) CEO, president, executive vice presidents, vice presidents D) president, divisional managers, executive vice presidents, vice presidents

Q: In an organization, the position of the ________ is one of trusteeship. A) managers B) members of the board of directors C) customers D) government

Q: The stakeholder group with ultimate authority over the use of a corporation's resources is ________. A) managers B) customers C) government D) shareholders

Q: According to the capitalistic view, the primary goal of an organization is to ________. A) maximize shareholder wealth B) form long-term relationships with suppliers C) satisfy employees D) satisfy customers

Q: To be effective, an organization must ________. A) satisfy interests of all the stakeholders equally B) consider employees as the most important stakeholder group and give priority to their interests over the interests of all the other stakeholders C) at least minimally satisfy the interests of all the stakeholders D) consider customers as the most important stakeholder group and give priority to their interests over the interests of all the other stakeholders

Q: ________ are usually an organization's largest outside stakeholder group. A) Suppliers B) Customers C) Shareholders D) Workforce

Q: In effect, ________ are the agents or employees of shareholders. A) suppliers B) customers C) managers D) unions

Q: Which of the following is an outside stakeholder group? A) shareholders B) suppliers C) managers D) workforce

Q: Which of the following group of outside stakeholders contributes high-quality inputs? A) unions B) government C) customers D) suppliers

Q: Which of the following groups of stakeholders receives inducements in the form of bonuses, status, and power? A) shareholders B) managers C) suppliers D) unions

Q: Which of the following is an inside stakeholder group that contributes money and capital? A) government B) suppliers C) shareholders D) managers

Q: Which of the following is an inside stakeholder group? A) government B) customers C) suppliers D) shareholders

Q: Which of the following groups of stakeholders receives inducements in the form of dividends and stock appreciation? A) trade unions B) suppliers C) shareholders D) workforce

Q: ________ are the owners of an organization, and, as such, their claim on organizational resources is often considered superior to the claims of other inside stakeholders. A) Employees B) Customers C) Shareholders D) Trade unions

Q: Stakeholders will generally participate in an organization if ________. A) the goods and services produced by the organization are of high quality B) they receive inducements that exceed the value of the contributions they are required to make C) the organization has a well-defined structure and culture D) the organization is large and takes advantage of economies of scale and economies of scope

Q: ________ are people who are closest to an organization and have the strongest or most direct claim on organizational resources. A) Early adopters B) Free riders C) Whistle-blowers D) Internal stakeholders

Q: The rewards that stakeholders receive for participating in an organization are called ________. A) inducements B) contributions C) annuity D) dividends

Q: ________ are people who have an interest or claim in an organization, in what it does, and in how well it performs. A) Stakeholders B) Early adopters C) Boundary spanners D) Late adopters

Q: In the long run, an organization that follows unethical practices tends to spend more on research and development and less on advertising and managerial salaries.

Q: Organizations that are doing badly in an economic sense and are struggling to survive are the ones most likely to commit unethical and illegal acts.

Q: Behaving ethically can reduce transaction costs through the reputation effect.

Q: As per the moral rights model of ethics, an ethical decision is a decision that distributes benefits and harms among stakeholders in a fair, equitable, or impartial way.

Q: As per the justice model of ethics, an ethical decision is a decision that best maintains and protects the fundamental rights and privileges of the people affected by it.

Q: As per the moral rights model of ethics, an ethical decision is one that produces the greatest good for the greatest number of people.

Q: Ethics and law change as time passes.

Q: An ethical dilemma is the quandary people experience when they must decide whether or not they should act in a way that benefits someone else, even if it harms others and isn't in their own interest.

Q: Stock-based compensation schemes help solve the agency problem.

Q: "Self-dealing" is the term used to describe the conduct of managers who take advantage of their position to act in their own interests rather than in the interests of other stakeholders.

Q: Divisional managers are not corporate managers.

Q: A problem in determining managerial accountability that arises when delegating authority to managers is known as an agency problem.

Q: The chief operating officer, functional managers, and divisional managers form a company's top management team.

Q: A manager who is in charge of sales holds a staff role.

Q: A manager who has direct responsibility for the production of goods and services is said to be holding a staff role.

Q: The CEO determines top management's rewards and incentives.

Q: The system of hierarchical reporting relationships in an organization is known as a chain of command.

Q: Inside directors hold offices in a company's formal hierarchy.

Q: An inside director of a company can be a professional director who holds positions on the boards of many companies.

Q: Outside directors of a corporation are full-time employees of the corporation.