Business Ethics and Social Responsibilities

Question 1

Which of the following are examples of a firm being socially responsible to the community?
(1) Bus company provides “Priority Seat” to senior citizen and the needy
(2) Convenient store offers special discount during summer vacation
(3) Restaurants launches the campaign of “Saves $1 by less rice”
A. (1) and (2) only
B. (1) and (3) only
C. (2) and (3) only
D. (1), (2) and (3)

Answer 1

Answer: B

Question 2

Which of the following is NOT a stakeholder of a fur firm?
A.	Employees of the firm
B.	Competitors of the firm
C.	Animal right association
D.	None of the above

Answer 2

Answer: D

Question 3

Which of the following shows that a firm is socially responsible to its customers?
(1)	Provides safe products and services
(2)	Offers customer the rights to choose
(3)	Sells the products at “bottom” price
A.	(1) and (2) only
B.	(1) and (3) only
C.	(2) and (3) only
D.	(1), (2) and (3)

Answer 3

Answer: A

Question 4

Which of the following are the reasons of electric company comply with more stringent standard than legal requirement in fuel supply?
(1)	Enhances the corporate image
(2)	Seeks support from the society
(3)	Prevents the government to impose more strict control
A.	(1) and (2) only
B.	(1) and (3) only
C.	(2) and (3) only
D.	(1), (2) and (3)

Answer 4

Answer: D

Question 5

Why do businesses have a stronger emphasis on social responsibility?
(1) Bearing social responsibility will result in grow in profit
(2) Raising awareness towards social responsibility for the public
(3) Growing expectation on corporate social responsibility by the pressure group
A. (1) and (2) only
B. (1) and (3) only
C. (2) and (3) only
D. (1), (2) and (3)

Answer 5

Answer: C

Question 6

How does a firm provide social responsibility to its employees?
(1)	Paying the employees on time
(2)	Offering a harmonious working environment
(3)	Issuing bonus
A.	(1) and (2) only
B.	(1) and (3) only
C.	(2) and (3) only
D.	(1), (2) and (3)

Answer 6

Answer: A

Question 7

What is corporate social responsibility?
A. A set of principles to govern business behaviour
B. An attitude for a firm to meet the expectation of different stakeholders
C. A regulation for a firm to comply with
D. A guideline for a firm’s employees to follow

Answer 7

Answer: B

Question 8

What are the benefits of a firm for timely repayment of debt to creditor?
(1) Avoiding to pay extra interest charges
(2) Getting a more advantageous terms and conditions of loan application
(3) Higher chance to get approval for loan application
A. (1) and (2) only
B. (1) and (3) only
C. (2) and (3) only
D. (1), (2) and (3)

Answer 8

Answer: D

Question 9

Which stakeholders’ expectation has been satisfied when a restaurant distribute lunchbox to the needy in society?
A.	Customer
B.	Government
C.	Society
D.	Employee

Answer 9

Answer: C

Question 10

Which of the following is NOT the reason why a firm decides to take social responsibility?
A. Consumers affect business decision through their buying behaviour
B. Shareholders only concern about company profit
C. More emphasis on the right of employees
D. Suppliers only provide goods to firms repaying the debt on time

Answer 10

Answer: B

Question 11

Which of the following behaviour is legal but unethical?
A. Textile manufacturer raises product price due to price rise of raw materials
B. Firm uses pirated software for the sake of cost cut
C. Hotel wastes a plenty of food when serving buffet
D. Supplier commits corruption when dealing with purchaser of a firm

Answer 11

Answer: C

Question 12

What are the consequences when a firm behaves unethically?
(1)	Loss of goodwill
(2)	Ruin of corporate image
(3)	Subject to legal punishment
A.	(1) and (2) only
B.	(1) and (3) only
C.	(2) and (3) only
D.	(1), (2) and (3)

Answer 12

Answer: A

Question 13

Which of the following is NOT an effective measure to ensure employees to behave ethically?
A. Appreciating those employees with high ethical standard
B. Designing code of ethics for the employees
C. Emphasising education on moral and ethics
D. Accepting those unethical behaviour that result in making profits

Answer 13

Answer: D

Question 14

Which of the following business decisions is affected by ethics?
A. Company doing clearance sale
B. Mini-bus company offers special discount to the elderly
C. Company provides minimum wage to employees
D. Company pays the tax on time

Answer 14

Answer: B

Question 15

Which of the following is a correct description about business ethics?
A. There are clearly defined consequences for the violation of business ethics.
B. There is a clear definition of business ethics.
C. Business ethics are the principles and moral standards which a business sees as acceptable.
D. Business ethics will not change over time.

Answer 15

Answer: C

Question 16

Which of the following business decisions revealed compliance of business ethics?
A. A mobile phone manufacturer launches different versions of mobile phones to boast up sales.
B. A skin beauty company exaggerates the effects of different treatments.
C. A computer company offers very limited number of special discounted items to attract customers.
D. A travel agent provides accurate information on the itinerary.

Answer 16

Answer: D

Question 17

Which of the following are appropriate actions when a firm taking business ethics and social responsibility into consideration?
(1) Using bio-degradable packaging
(2) Providing special discount to under privileged group
(3) Design products to cater the need of customers
A. (1) and (2) only
B. (1) and (3) only
C. (2) and (3) only
D. (1), (2) and (3)

Answer 17

Answer: A

Question 18

Which of the following are examples of misuse of company resources?
(1)	Use of the Internet for personal use during office hours
(2)	Absence for work deliberately
(3)	Inappropriate sick leave
A.	(1) and (2) only
B.	(1) and (3) only
C.	(2) and (3) only
D.	(1), (2) and (3)

Answer 18

Answer: B

Question 19

What is code of ethics?
A. A list of formalised rules and standards that illustrate the behaviour the business expects employees to observe and follow
B. A set of principles and moral standards which a business sees as acceptable
C. A set of rules and standards which state the standard operating procedure
D. A set of tactics and methods to improve the operating efficiency

Answer 19

Answer: A

Question 20

List three stakeholders of a real estate agency and explain their concerns respectively. (6 marks)

Answer 20

Answer:
Customer: Concerns about the agency can deliver faithful property referral service without any deception. (2)
Employees: Concerns about the agency can pay the salary and commission without any delay. (2)
Government: Concerns about the agency can fill the tax return properly and pay the tax on time without any deliberate missing or deferral. (2)

Question 21

What are the negative consequences if a toy manufacturer does not bear social responsibility? List three stakeholders and provide explanations. (6 marks)

Answer 21

Answer:
Employees: When employees have a feeling of being deprived of, they may initiate strike. (2)
Customers: Customer may boycott company’s products if they have negative impression on the company. (2)
Government: Government may impose more strict rules and regulations if it is believed that the company does not bear social responsibility. (2)

Question 22

From the perspective of supplier and society, explain how a supermarket can bear social responsibility. (4 marks)

Answer 22

Answer:
Supplier: To pay back the supplier on time (2)
Society: Setting up recycle box to collect unused items from nearby residents (2)

Question 23

Explain the conflict between employees and shareholders as well as customers and shareholders respectively.
(4 marks)

Answer 23

Answer:
Employees and shareholders: Employees concern about the rise of salary while shareholders concern about the rise of profit. (2)
Customers and shareholders: Customers demand for better product and service quality while shareholders worry about the improvement of product and service quality would result in cost boast up. (2)

Question 24

What are the benefits brought to Kowloon Motor Bus Limited (KMB) by bearing social responsibilities? List out three benefits and provide explanations. (6 marks)

Answer 24

Answer:
Betterment of goodwill: Passengers are more willing to use the bus service. (2)
Enhance confidence of investors: Investors will have more confidence to KMB and boast up the stock price. (2)
Receive support from society: Easier to seek support from society on controversial issue like restructure of bus route. (2)

Question 25

Why does a company need to comply with business ethics? (3 marks)

Answer 25

Answer:
A company can establish its goodwill, receive support from customers and enhance confidence of investors by complying with business ethics. (3)

Question 26

Provide two recommendations to beverage manufacturers to behave more ethical behaviour in business. (4 marks)

Answer 26

Answer:
Adopting more environmentally materials in packaging: Using bio-degradable materials to produce the bottle for reducing pollution (2)
Promoting the concept of “Fair Trade” during purchase of raw materials: Using suppliers that promote the concept of “Fair Trade” so as to reduce the deprivation to farmers (2)

Question 27

Shanghai Husi Food Co. Ltd. has been discovered by the press that it used expired chicken skin and breast to produce chicken nuggets to fast food chain restaurant. It also manipulated the production data and the expired chicken was planned to sell in China on prior basis. Factory in Shanghai has been concealed by the government and restaurant groups supplied from Husi has been dropped dramatically.

(a) What are the unethical behaviours performed by Shanghai Husi? (2 marks)
(b) What are the negative consequences being faced by the stakeholders of Husi? List three of them and provide justifications. (6 marks)

Answer 27

Answer:
(a) Using expired food materials to manufacture food products (1)
Changing the production data deliberately (1)
(b) Shareholders: Drop in share price of restaurant groups after the incident. (2)
Employees: Workers may be stopped from work or even fired after the closure of factories. (2)
Society: The public will lose confidence towards food products manufactured in China and lead to panic in food safety. (2)

Question 28

McDonald Hong Kong declared that it did not import any food from Shanghai Husi (a meat manufacturer which has been discovered by the press that it used expired chicken skin and breast to produce chicken nuggets to fast food chain restaurant) when being asked by the mass media. However, the Centre for Food Safety announced that McDonald Hong Kong imported food from Shanghai Husi and all of the food had been sold out. Top management expressed deep apology to the public and banned all food materials from Husi.

(c) McDonald Hong Kong was suspicious of hiding the truth in this incident. What are the adverse effects of such behaviour? (4 marks)
(d) Provide three recommendations to McDonald Hong Kong in response to this food safety incident. (6 marks)

Answer 28

Answer:
(c) Loss of customers: Customers are skeptical of the food supply of McDonald and reluctant to have meals in the restaurant. (2)
Loss of goodwill: McDonald has been suspicious of hidden the truth and the corporate image has been ruin. (2)

(d) Report the incident: Management from McDonald should explain the details of the incident and relieve the suspicion from the public. (2)
Stop the supply of food materials: Stop all the food supplies from Husi to retain confidence from the public. (2)
Investigate the incident: Carry out the investigation and make improvements for any shortcomings along the supply chain. (2)

Question 29

Which of the following are common arguments for social responsibility?

(1) Profit maximization
(2) Lower product price
(3) Meet public expectation
(4) Improve company image

A. (1) and (2) only
B. (2) and (3) only
C. (3) and (4) only
D. (1), (2), (3) and (4)

Answer 29

Answer: C

Question 30

__________ is / are a set of principles, values and beliefs, which govern business behaviour, decisions or actions that conforms to generally accepted norms.

A. Business ethics
B. Social responsibility
C. Company law
D. Accounting principles

Answer 30

Answer: A

Question 31

Which of the following are benefits of being a socially responsible business?

(1) lower production costs
(2) better business reputation
(3) attraction of customers who are also concerned about social responsibility

A. (1) and (2) only
B. (1) and (3) only
C. (2) and (3) only
D. (1), (2) and (3)

Answer 31

Answer: C

Question 32

Which of the following statements about stakeholders of a company is correct?

A. Competitors are not stakeholders of a company.
B. Stakeholders of a company would be affected by the decisions made by the company.
C. All stakeholders can share the assets of the company upon its liquidation.
D. A client becomes a company’s stakeholder only after he/she has settled his/her outstanding debts to the company.

Answer 32

Answer: B

Question 33

Which of the following companies is/are socially responsible?

(1) A power company which develops new technology to help reduce gas emissions.
(2) A printing company which accepts many orders from social welfare organisations.
(3) A trading company which encourages employees to participate in voluntary work to serve the community.

A. (1) only
B. (1) and (3) only
C. (2) and (3) only
D. (1), (2) and (3)

Answer 33

Answer: B

Question 34

Ethical behaviour in business will ____________________.

(1) enhance the public image of a business
(2) increase the operating costs of a business in the long run
(3) enable a business to be subject to a lower profits tax rate

A. (1) only
B. (2) only
C. (1) and (3) only
D. (2) and (3) only

Answer 34

Answer: A

Question 35

For a toy company, which of the following is not regarded as an example of fulfilling its social responsibility?

A. using recycled materials to produce toys
B. donating toys to orphanages
C. offering 20% discount to customers during Christmas
D. improving the working environment of its employees

Answer 35

Answer: C

Question 36

Which of the following statements about business ethics is/are correct?

(1) Business actions that are legally acceptable may be unethical.
(2) A code of ethics compiled by the government for businesses.
(3) Business ethics are a set of clearly-defined moral principles and standards that a business should follow.

A. (1) only
B. (2) only
C. (1) and (3) only
D. (2) and (3) only

Answer 36

Answer: A

Question 37

Which of the following is/are regarded as example(s) of a hotel fulfilling its social responsibilities?

(1) allowing clerical staff to work from home when there are adverse weather conditions
(2) paying the minimum wage to housekeepers
(3) serving sharks fins if requested by customers

A. (1) only
B. (1) and (2) only
C. (2) and (3) only
D. (1), (2) and (3)

Answer 37

Answer: A

Question 38

Which of the following companies does not fulfil its social responsibility towards its stakeholders?

A. A company adopts a strict credit policy for its customers.
B. A company does not distribute dividend to ordinary shareholders.
C. A company charges a higher price than its competitors selling the same type of product.
D. A company does not provide training and development opportunities for its employees.

Answer 38

Answer: D

Question 39

Which of the following firms are fulfilling their social responsibility towards stakeholders during the spread of COVID-19?

(1) An interior design company which allows its employees to work from home.
(2) A restaurant which offers discounts to dine-in customers.
(3) A publisher which allows the public to read its books online free of charge.

A. (1) and (2) only
B. (1) and (3) only
C. (2) and (3) only
D. (1), (2) and (3)

Answer 39

Answer: B

Question 40

What is the main reason for a business to compile a code of ethics?

A. This is required by law.
B. This could reduce the cost of production.
C. This could improve the firm’s image and maximise its profit.
D. This provides rules and standards for employees.

Answer 40

Answer: D

Question 41

In early 20X7, Mr Chan plans to close the factory in Hong Kong and form a new business in Shenzhen. All the workers of the Hong Kong factory will then be laid off.

Propose two measures that Mr Chan could adopt to minimize the workers’ dissatisfaction with their layoffs.
(4 marks)

Answer 41

Answer:
Measures:
- provide more generous compensation (more than statutorily required)
- communicate and explain to all workers the reasons for the layoff
- help laid off workers look for other jobs/recommend the good workers to other furniture factories
(2 marks for each relevant measure, max. 4 marks)

Question 42

A business should be responsible to various stakeholders. List three types of stakeholders in a construction company and explain how the company can fulfil its social responsibilities to each of them. (6 marks)

Answer 42

Answer:
employees: e.g. provide a safe and healthy working environment
customers: e.g. assure property quality
suppliers: e.g. make payment timely
creditors: e.g. pay interest and principal on time the
government: e.g. pay taxes on time
(2 marks for each relevant point, max. 6 marks)

Question 43

Peter was a sole proprietor running a small business without any employees. He bought a piece of equipment with a list price of $56 000 for $48 000 in February 2012. Peter then went bankrupt on 31 March 2012 and he decided to close the business. The market value of the equipment on the same date was $38 000.

Give two types of stakeholders in Peter’s business and explain the adverse effect of the closure on each of them. (4 marks)Mike learns from a research report that the materials of some of his inventory may be harmful to people’s health. He plans to give away these items as free gifts to his customers, without mentioning the potential health hazards. His wife warns him that this is an unethical practice and will adversely affect his business.

(a) If Mike decides to give away those items as planned, explain two possible adverse impacts on his business. (4 marks)
(b) Apart from customers, identify another stakeholder of Mike’s business. (1 mark)

Answer 43

Answer:
(a) - Adverse impacts: unethical practice will harm the reputation of Mike’s business
- customers lose confidence and sales and prospects will be affected affected
- customers may claim compensation from Mike
(2 marks for each relevant adverse impact, max. 4 marks)
(c) Stakeholder: employees, suppliers/creditors, distributors, government, public
(1 mark for each relevant stakeholder, max. 1 mark)

Question 44

(a) What is business ethics? (1 mark)
(b) For each of the following stakeholders, illustrate with one example how John can ensure that the operation of his firm is socially responsible:

(i) employees of the firm (2 marks)
(ii) residents living around the firm (2 marks)

Answer 44

Answer:
(a) Business ethics: the moral principles, values and beliefs which govern the behaviours of a business
(b) (i)
employees of the firm:
- providing a safe and pleasant working environment
- providing fair and reasonable remuneration
(2 marks for each explanation, max. 2 marks)
(ii)
residents living around the firm:
- disposing litter and waste appropriately
- sponsoring community activities
(2 marks for each explanation, max. 2 marks)