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Chapter 2 Being Ethical and Socially Responsible 41
41 Chapter 2 Being Ethical and Socially Responsible
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
2.1 A WORD FROM THE AUTHORS
The material on ethics and social responsibility is presented early in the text to underscore the im-
portance of business’s role in our society. In this context, we define business ethics and discuss the
major factors believed to influence the level of ethical behavior in an organization. We also examine
several types of ethical issues.
As in Chapter 1, we turn to American history to trace the evolution of socially responsible business
practices. Next, we define and contrast two contemporary views of social responsibility: the eco-
nomic model and the socioeconomic model. In the process, we present arguments both for and
against increased social responsibility in business. We consider social changes in three specific
areas: consumerism, employment practices, and the environment. We identify public and private
agencies that regulate or monitor business practices in these areas, including the Equal Employment
Opportunity Commission and the Environmental Protection Agency. Finally, we outline the steps in
the development and implementation of an effective corporate program for social responsibility.
2.2 TRANSITION GUIDE
New in Chapter 2: Being Ethical and Socially Responsible
A new Inside Business feature describes how Panera cares about its communities by “suggested
funding levels” rather than specific prices for its meals.
New URL information about the student Web site is provided in the first part of the chapter.
Information has been added about John and Timothy Rigas of Adelphia Communications Corp.
and how Adelphia’s investors lost more than $60 billion.
A new Personal Apps describes how business ethics apply to customers, managers, and employ-
ees.
In the “Fairness and Honesty” section, information about how more than 1,500 clients of Ander-
son’s Ark and Associates lost about $31 million has been added.
The Ethical Challenges and Successful Solutions feature has been deleted.
The whistle-blowing section has been updated, and the Whistleblower Protection Act of 1989 is
now included in the discussion.
In the “Social Responsibility” section, the General Mills Foundation’s philanthropic activities are
revised and updated.
A discussion of IBM’s Corporate Service Corps., a “corporate version” of the Peace Corps, is
now included.
A new example of GE’s $20 million grant to Milwaukee Public Schools to improve academic
achievement is now included.
Charles Schwab Foundation’s philanthropic efforts are updated.
A new example of how ExxonMobil celebrated 2011 International Women’s Day by granting $6
million to support economic opportunities for women around the world has been added.

A new example of how AT&T responded to the high school drop-out crisis with a $100 million
philanthropic program is given.
The Sustaining the Planet feature about major companies and nonprofit groups has been deleted.
A new Personal Apps explains that we should keep consumer rights in mind when we shop
around for goods and services or have a problem with a purchase.
A new Ethical Success or Failure? feature reveals how everything we do online is being tracked
by business.
Figure 2.3, “Comparative Income Levels,” has been updated to reflect the latest census data
available.
Figure 2.4, “Relative Earnings of Male and Female Workers,” has been updated to reflect the
latest census data available.
A new Sustaining the Planet feature describes how Xerox approaches its corporate social respon-
sibility and citizenship by designing waste-free products.
The Spotlight feature, “Recession and Responsibility,” has been deleted.
British Petroleum’s 2012 settlement to pay out $7.8 billion has been added to the discussion of
the Deepwater Horizon disaster.
A new Entrepreneurial Success feature describes how growing numbers of young entrepreneurs
are starting businesses with the goal of using their skills for a socially responsible purpose.
The Entrepreneurial Success feature about recycling entrepreneurs has been deleted.
A new Return to Inside Business featuring Panera Cares is provided at the end of the chapter.
A new Case 2.2 describes Unilever’s plan for green and clean growth.
The Building Skills for Career Success section contains a new Social Media Exercise.
The Exploring the Internet feature in Building Skills for Career Success has been deleted.

2.3 QUICK REFERENCE GUIDE
Instructor Resource Location
Transition Guide IM, pp. 41–42
Learning Objectives Textbook, p. 35; IM, p. 44
Brief Chapter Outline IM, pp. 44–45
Comprehensive Lecture Outline IM, pp. 45–57
Ethical Success or Failure? Is Personal Data Really Pri-
vate?
Textbook, p. 53
At Issue: How should employers deal with proselytiz-
ing?
IM, p. 55
Sustaining the Planet Social Responsibility at Xerox Textbook, p. 59
Entrepreneurial Success Social Entrepreneurs of Tomor-
row
Textbook, p. 61
Inside Business Panera Cares About Its Communities Textbook, p. 36
Return to Inside Business Textbook, p. 63
Questions and Suggested Answers, IM, p. 58
Marginal Key Terms List Textbook, p. 64
Review Questions Textbook, p. 64
Questions and Suggested Answers, IM, pp. 58–61
Discussion Questions Textbook, p. 65
Video Case 2.1 (Scholfield Honda—Going Green with
Honda) and Questions
Textbook, p. 65
Questions and Suggested Answers, IM, p. 62
Case 2.2 (Unilever’s Plan for Green and Clean Growth)
and Questions
Textbook, p. 66
Building Skills for Career Success Textbook, pp. 66–67
Suggested Answers, IM, pp. 63–65
IM Quiz I & Quiz II IM, pp. 66–68
Answers, IM, p. 69
Classroom Exercises IM, pp. 69–70

2.4 LEARNING OBJECTIVES
After studying this chapter, students should be able to:
1. Understand what is meant by business ethics.
2. Identify the types of ethical concerns that arise in the business world.
3. Discuss the factors that affect the level of ethical behavior in organizations.
4. Explain how ethical decision making can be encouraged.
5. Describe how our current views on the social responsibility of business have evolved.
6. Explain the two views on the social responsibility of business and understand the arguments for
and against increased social responsibility.
7. Discuss the factors that led to the consumer movement and list some of its results.
8. Analyze how present employment practices are being used to counteract past abuses.
9. Describe the major types of pollution, their causes, and their cures.
10. Identify the steps a business must take to implement a program of social responsibility.
2.5 BRIEF CHAPTER OUTLINE
I. Business Ethics Defined
II. Ethical Issues
A. Fairness and Honesty
B. Organizational Relationships
C. Conflict of Interest
D. Communications
III. Factors Affecting Ethical Behavior
A. Individual Factors Affecting Ethics
B. Social Factors Affecting Ethics
C. “Opportunity” as a Factor Affecting Ethics
IV. Encouraging Ethical Behavior
A. Government’s Role in Encouraging Ethics
B. Trade Associations’ Role in Encouraging Ethics
C. Individual Companies’ Role in Encouraging Ethics
V. Social Responsibility
VI. The Evolution of Social Responsibility in Business
A. Historical Evolution of Business Social Responsibility

VII. Two Views of Social Responsibility
A. The Economic Model
B. The Socioeconomic Model
C. The Pros and Cons of Social Responsibility
1. Arguments for Increased Social Responsibility
2. Arguments Against Increased Social Responsibility
VIII. Consumerism
A. The Six Basic Rights of Consumers
1. The Right to Safety
2. The Right to Be Informed
3. The Right to Choose
4. The Right to Be Heard
5. Additional Consumer Rights
B. Major Consumerism Forces
IX. Employment Practices
A. Affirmative Action Programs
B. Training Programs for the Hard-Core Unemployed
X. Concern for the Environment
A. Effects of Environmental Legislation
1. Water Pollution
2. Air Pollution
3. Land Pollution
4. Noise Pollution
B. Who Should Pay for a Clean Environment?
XI. Implementing a Program of Social Responsibility
A. Developing a Program of Social Responsibility
1. Commitment of Top Executives
2. Planning
3. Appointment of a Director
4. The Social Audit
B. Funding the Program
2.6 COMPREHENSIVE LECTURE OUTLINE
Most managers today are finding ways of balancing a growing agenda of socially responsible activi-
ties with the drive to generate profits.
I. BUSINESS ETHICS DEFINED. Ethics is the study of right and wrong and of the morality
of choices individuals make. Business ethics is the application of moral standards to business
situations.

Teaching Tip: Ask students how they decide what is right and what is wrong. Is there an internal
mechanism or process they use or a code? Follow up by asking where they learned their personal
code.
II. ETHICAL ISSUES. Businesspeople face ethical issues every day, and some of these issues
can be difficult to assess. These issues arise out of a business’s relationship with investors,
customers, employees, creditors, and competitors.
A. Fairness and Honesty. Fairness and honesty in business are important ethical concerns.
Businesspeople must obey all laws and regulations as well as refrain from knowingly
deceiving, misrepresenting, or intimidating others.
B. Organizational Relationships. It may be tempting to place personal welfare above the
welfare of others or of the organization. Relationships with customers and co-workers
often create ethical problems such as taking credit for others’ ideas or work, not meeting
one’s commitments, and pressuring others to behave unethically.
C. Conflict of Interest. Conflict of interest results when a businessperson takes advantage
of a situation for his or her own personal interest rather than for the employer’s interest.
D. Communications. Business communications, especially advertising, can present ethical
questions. Advertisers must take precautions to guard against deception.
III. FACTORS AFFECTING ETHICAL BEHAVIOR. The factors that affect the level of eth-
ical behavior in organizations are individual, social, and opportunity. (See Figure 2.1.)
A. Individual Factors Affecting Ethics
1. Individual Knowledge of an Issue. A decision maker with a greater amount of
knowledge regarding a situation may take steps to avoid ethical problems, whereas
a less-informed person may take action unknowingly that leads to an ethical quag-
mire.
2. Personal Values. An individual’s moral values and central, value-related attitudes
also clearly influence his or her business behavior.
3. Personal Goals. The types of personal goals an individual aspires to and the manner
in which these goals are pursued have a significant impact on that individual’s be-
havior in an organization.
B. Social Factors Affecting Ethics
1. Cultural Norms. A person’s behavior in the workplace, to some degree, is deter-
mined by cultural norms, and these social factors vary from one culture to another.
2. Co-workers. The actions and decisions of co-workers constitute another social fac-
tor believed to shape a person’s sense of business ethics.

3. Significant Others. The moral values and attitudes of “significant others”—
spouses, friends, and relatives—can also affect an employee’s perception of what is
ethical and unethical behavior in the workplace.
4. Use of the Internet. Even the Internet presents new challenges for firms whose em-
ployees enjoy easy access to sites through convenient high-speed connections at
work. An employee’s behavior online can be viewed as offensive to co-workers
and possibly lead to lawsuits against the firm if employees engage in unethical be-
havior on controversial Web sites not related to their job.
Teaching Tip: A classroom can be considered a workplace for the time students are there. Ask stu-
dents to take a minute and write down three examples of ethical behavior in the classroom and three
examples of unethical behavior. Beyond the obvious cheating issues, students may mention things
such as one student constantly monopolizing the instructor’s time, etc.
C. “Opportunity” as a Factor Affecting Ethics
1. Presence of Opportunity. Opportunity refers to the amount of freedom an organiza-
tion gives an employee to behave unethically if he or she makes that choice.
2. Ethical Codes. The existence of an ethical code and the importance management
places on this code are other determinants of opportunity.
3. Enforcement. The degree of enforcement of company policies, procedures, and eth-
ical codes is a major force affecting opportunity.
IV. ENCOURAGING ETHICAL BEHAVIOR. Most authorities agree that there is room for im-
provement in business ethics. A more problematic issue is whether business can be made more
ethical in the real world.
A. Government’s Role in Encouraging Ethics. The government can establish acceptable lev-
els of behavior by passing more stringent regulations. For example, the Sarbanes-Oxley Act
of 2002 gives those who report corporate misconduct sweeping new legal protection.
B. Trade Associations’ Role in Encouraging Ethics. Trade associations can, and often do,
provide ethical guidelines for their members to follow.
C. Individual Companies’ Role in Encouraging Ethics
1. Codes of ethics that companies provide to their employees are perhaps the most ef-
fective way to encourage ethical behavior. A code of ethics is a written guide to ac-
ceptable and ethical behavior as defined by an organization that outlines uniform
policies, standards, and punishments for violations.
2. However, codes cannot possibly cover every situation.
a) Companies must also create an environment in which employees recognize
the importance of following the written code.

b) Managers must provide direction by fostering communication, actively en-
couraging ethical decision making, and training employees to make ethical
decisions.
c) Assigning an ethics officer who coordinates ethical conduct gives employees
someone to go to if they aren’t sure of the right thing to do.
d) An ethics officer meets with employees and top management to provide ethi-
cal advice, establishes and maintains an anonymous confidential service to an-
swer questions about ethical issues, and takes action on ethics code violations.
3. See Figure 2.2 for Texas Instruments’ code of ethics.
4. Unethical practices often become ingrained in an organization.
5. Employees with high personal ethics may take a controversial step called whistle-
blowing—informing the press or government officials about unethical practices
within one’s organization.
a) Whistle-blowing can have serious repercussions for an employee.
b) The Sarbanes-Oxley Act of 2002 protects whistle-blowers who report corpo-
rate misconduct. Any executive who retaliates against a whistle-blower can be
held criminally liable and imprisoned for up to 10 years.
c) The Whistleblower Protection Act of 1989 protects federal employees who
report an agency’s misconduct.
6. When firms set up anonymous ethical hotlines to handle ethically questionable sit-
uations, employees may be more likely to engage in whistle-blowing.
7. When firms create an environment that educates employees and nurtures ethical
behavior, whistle-blowing is greatly reduced because fewer ethical problems arise.
8. See Table 2.1 for general guidelines for making ethical decisions.
V. SOCIAL RESPONSIBILITY
A. Social responsibility is the recognition that business activities have an impact on society
and the consideration of that impact in business decision making.
1. Social responsibility can cost companies a considerable amount of money, but it is
also good business.
B. Examples of Socially Responsible Organizations
1. Through Young Eagles, underwritten by S. C. Johnson, Phillips Petroleum, Lock-
heed Martin, Jaguar, and other corporations, 22,000 volunteer pilots take a half
million youngsters on free flights to teach flying basics.
2. The General Mills Foundation, created in 1954, is one of the largest U.S. company-
sponsored foundations and has awarded over $535 million to communities since its
creation. Millions of dollars have been donated to Feeding America.
3. Dell’s outreach programs include projects that bring technology to underserved
communities around the world. Globally, the Michael and Susan Dell Foundation

has contributed more than $700 million to improve student performance and in-
crease access to education.
4. Improving public schools around the world continues to be IBM’s top social priori-
ty. Its efforts are focused on preparing the next generation of leaders and workers.
IBM launched the World Community Grid in 2004. It combines excess processing
power from thousands of computers in a virtual supercomputer that enables re-
searchers to gather and analyze unprecedented quantities of data aimed at advanc-
ing research on genomics, diseases, and natural disasters. IBM’s Corporate Service
Corps. is a group of high performing employees that provide technology-related as-
sistance to foreign governments and communities including economic develop-
ment, health care, and entrepreneurship.
5. General Electric Company (GE) has a long history of supporting the communities
where its employees work and live through its unique combination of resources,
equipment, and employee and retiree volunteers. The company devotes its efforts
in philanthropy to making communities around the world stronger. For example,
the GE Foundation awarded $20 million to Milwaukee Public Schools as part of
GE’s Developing Futures™ in Education program to help students compete in a
global economy.
6. With the help of dedicated Schwab volunteers, the Charles Schwab Foundation
provides programs and funding to help adults and children learn the basics of fi-
nancial literacy. Since 1993, the Schwab Foundation has distributed an average of
$4 million a year to 2,300 nonprofit organizations.
7. Improving basic literacy skills in the United States is among the Verizon Founda-
tion’s major priorities because of its enormous impact on education, health, and
economic development. Recently, Verizon employees and retirees donated more
than 608,000 hours of service and, with the Verizon Foundation, contributed over
$25 million in combined matching gift funds, making Verizon Volunteers one of
the largest corporate volunteer incentive programs in the United States.
8. ExxonMobil’s commitment to education spans all levels of achievement. The Na-
tional Math and Science Initiative and the Mickelson ExxonMobil Teachers Acad-
emy are programs emphasizing long-term educational improvement. The company
supports new generations pursuing studies and careers in math and science. Recent-
ly, ExxonMobil employees and retirees contributed a total of $238 million to
communities worldwide. In addition, the company celebrated 2011 International
Women’s Day by granting $6 million to support economic opportunities for wom-
en around the world.
9. AT&T has built a tradition of supporting education, health and human services, the
environment, public policy, and the arts in the communities it serves. Since 1984,
AT&T has invested more than $600 million in support of education. To respond to

the high school drop-out crisis, AT&T launched Aspire, a $100 million job shad-
owing program that has reached more than 23,000 students in over 200 cities.
10. At Merck & Co., Inc., the Patient Assistance Program makes the company’s medi-
cines available to low-income Americans and their families at no cost. For over 50
years, Merck has provided its medicines completely free of charge to people in
need through this program. Since 1957, the Merck Company Foundation has con-
tributed more than $560 million to develop programs that help improve the health
and well-being of people around the world.
These are just a few illustrations from a long list of companies big and small that at-
tempt to behave in socially responsible ways.
VI. THE EVOLUTION OF SOCIAL RESPONSIBILITY IN BUSINESS
A. Historical Evolution of Business Social Responsibility. During the first quarter of the
twentieth century, businesses were free to operate pretty much as they chose.
1. Working conditions were often deplorable by today’s standards.
a) The average work week exceeded 60 hours in most industries.
b) There was no minimum-wage law.
c) There were no employee benefits.
d) Work areas were crowded and unsafe, and industrial accidents were the rule
rather than the exception.
2. During this period, consumers were generally subject to the doctrine of caveat
emptor, a Latin phrase meaning “let the buyer beware.”
a) Victims of unscrupulous business practices could take legal action, but going
to court was very expensive and consumers rarely won their cases.
b) There were no consumer groups or government agencies to hold sellers re-
sponsible for their activities.
3. Prior to the 1930s, government became involved in day-to-day business activities
only when there was an obvious abuse of the free-market system and competition
was endangered. (See Table 2.2 for a list of early government regulations affecting
business.)
B. The collapse of the stock market on October 29, 1929, triggered the Great Depression
and years of economic problems for the United States.
1. Public pressure mounted for government to “do something” about the economy and
about worsening social conditions.
2. As a result, laws were passed to correct what many viewed as monopolistic abuses
of big business, and various social services were provided for individuals.
VII. TWO VIEWS OF SOCIAL RESPONSIBILITY. Government regulation and public
awareness are external forces that have increased the social responsibility of business. But

business decisions are made within the firm—and there, social responsibility begins with the
attitude of management. There are two models of social responsibility.
A. The Economic Model. The economic model of social responsibility holds that society
will benefit most when business is left alone to produce and market profitable products
that society needs.
B. The Socioeconomic Model. The socioeconomic model of social responsibility holds
that business should emphasize not only profits but also the impact of its decisions on
society.
C. The Pros and Cons of Social Responsibility. The merits of the economic and socio-
economic models have been debated for years. Each side seems to have four arguments.
1. Arguments for Increased Social Responsibility. Proponents of the socioeconom-
ic model offer the following arguments:
a) Business cannot ignore social issues because business is a part of our society.
b) Business has the technical, financial, and managerial resources needed to tackle
today’s complex social issues.
c) By helping to resolve social issues, business can create a more stable envi-
ronment for long-term profitability.
d) Socially responsible decision making by business firms can prevent increased
government intervention, which would force businesses to do what they fail to
do voluntarily.
2. Arguments Against Increased Social Responsibility. Opponents of the socioeco-
nomic model offer these arguments:
a) Business managers are responsible primarily to stockholders, so management
must be concerned with providing a return on owners’ investments.
b) Corporate time, money, and talent should be used to maximize profits, not to
solve society’s problems.
c) Social problems affect society in general, so individual businesses should not
be expected to solve these problems.
d) Social issues are the responsibility of government officials who are elected for
that purpose and who are accountable to the voters for their decisions.
3. Table 2.3 compares the economic and socioeconomic viewpoints in terms of busi-
ness emphasis.
4. Today, few firms are either purely economic or purely socioeconomic in outlook;
most have chosen some middle ground between the two.
a) However, our society generally seems to want—and even to expect—some
degree of social responsibility from business.
b) Thus, within this middle ground between the two extremes, businesses are
leaning toward the socioeconomic view.

VIII. CONSUMERISM. Consumerism consists of all those activities that are undertaken to pro-
tect the rights of consumers. The consumer movement issues fall into three categories: envi-
ronmental protection, product performance and safety, and information disclosure.
A. The Six Basic Rights of Consumers. During the 1960s, President John F. Kennedy de-
clared that the consumer was entitled to a new “bill of rights.”
1. The Right to Safety. The right to safety means that products purchased by con-
sumers must be safe for their intended use, include thorough and explicit directions
for proper use, and have been tested by the manufacturer to ensure product quality
and reliability. American business firms must be concerned about product safety
for several reasons.
a) Federal agencies have the power to force businesses that make or sell defec-
tive products to take corrective actions.
b) Consumers and the government have been winning an increasing number of
product-liability lawsuits against sellers of defective products.
c) The consumer is demanding safe products.
2. The Right to Be Informed. The right to be informed means that consumers must
have access to complete information about a product before they buy it. In addi-
tion, manufacturers must inform consumers about the potential dangers of using
their products.
3. The Right to Choose. The right to choose means that consumers have a choice of
products, offered by different manufacturers and sellers, to satisfy a particular
need.
a) The government has encouraged competition through antitrust legislation.
b) Competition and the resulting freedom of choice provide an additional benefit
for consumers by reducing prices.
4. The Right to Be Heard. The right to be heard means that someone will listen and
take appropriate action when customers complain.
a) Today, businesses are listening more attentively, and many larger firms have
consumer relations departments that can easily be contacted via toll-free
phone numbers.
b) Most large cities and some states have consumer affairs offices to act on citi-
zens’ complaints.
5. Additional Consumer Rights. In 1975, President Ford added the right to consum-
er education which entitles people to be fully informed about their rights as con-
sumers. In 1994, President Clinton added the sixth right—the right to service,
which entitles consumers to convenience, courtesy, and responsiveness from manu-
facturers and suppliers.

Teaching Tip: Go to the Federal Trade Commission’s site and view the rights provided to consum-
ers (http://www.ftc.gov/consumer). Students may want to know about these rights.
B. Major Consumerism Forces. Major advances in consumerism have come through fed-
eral legislation. Major federal laws that have been passed since 1960 to protect consum-
er rights are listed and described in Table 2.4.
The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 was
passed by the House of Representatives to protect consumers and investors.
IX. EMPLOYMENT PRACTICES. Everyone who works for a living should have the oppor-
tunity to land a job for which he or she is qualified and to be rewarded on the basis of ability
and performance. Although this is an important issue for society, over the years this oppor-
tunity has been denied to members of various minority groups.
1. A minority is a racial, religious, political, national, or other group regarded as dif-
ferent from the larger group of which it is a part and that is often singled out for un-
favorable treatment.
2. The federal government responded to the outcry of minority groups during the
1960s and 1970s by passing a number of laws forbidding discrimination in the
workplace.
a) Now, almost 50 years after passage of the Civil Rights Act of 1964, abuses
still exist.
b) There is a disparity among income levels for whites, blacks, and Hispanics.
(See Figure 2.3.)
c) Lower incomes and higher unemployment rates also affect Native Americans,
handicapped persons, and women.
3. Responsible managers have instituted several programs to counteract the results of
discrimination.
A. Affirmative Action Programs. An affirmative action program is a plan designed to in-
crease the number of minority employees at all levels within an organization.
1. Employers with federal contracts of more than $50,000 per year must have written
affirmative action plans. The objective of such programs is to ensure that minori-
ties are represented within the organization in approximately the same proportion
as in the surrounding community.
2. Affirmative action programs have been plagued by two problems.
a) The first problem involves quotas. In the beginning, many firms pledged to
recruit and hire a certain number of minority members by a specific date. To
achieve this goal, they were forced to consider only minority applicants for
job openings.

b) The second problem is that not all businesspeople are in favor of affirmative
action programs, although most such programs have been reasonably success-
ful.
3. Congress created (and later strengthened) the Equal Employment Opportunity
Commission (EEOC), a government agency with the power to investigate com-
plaints of employment discrimination and sue firms that practice it.
4. The threat of legal action has persuaded some corporations to amend their hiring
and promotional practices, but the discrepancy between men’s and women’s sala-
ries still exists. (See Figure 2.4.)
B. Training Programs for the Hard-Core Unemployed. Some firms have assumed the
task of helping the hard-core unemployed: workers with little education or vocational
training and a long history of unemployment.
1. Such workers require training; this training can be expensive and time consuming.
2. To share the costs, business and government have joined together in a number of
cooperative programs. The National Alliance of Business (NAB) is a joint business-
government program to train the hard-core unemployed. The National Alliance’s
5,000 members include companies of all sizes and industries as well as educators
and community leaders.
X. CONCERN FOR THE ENVIRONMENT. Pollution is the contamination of water, air, or
land through the actions of people in an industrialized society.
1. For several decades, environmentalists have been warning us about the dangers of
industrial pollution.
2. Unfortunately, business and government leaders either ignored the problem or
weren’t concerned about it until pollution became a threat to life and health in
America.
3. Today, Americans expect business and government leaders to take swift action to
clean up our environment—and to keep it clean.
A. Effects of Environmental Legislation. As in other areas of concern to our society, leg-
islation and regulations play a crucial role in pollution control. The Environmental Pro-
tection Agency (EPA) is the federal agency charged with enforcing laws designed to
protect the environment. (See Table 2.5.)
Some business owners and managers take the position that environmental standards
are too strict. Consequently, it has often been necessary for the EPA to take legal action
to force firms to install antipollution equipment and clean up waste storage areas. Expe-
rience has shown that the combination of environmental legislation, voluntary compli-
ance, and EPA action can succeed in cleaning up the environment and keeping it clean.

At Issue
The United States has been at the forefront in negotiating opportunities and expanding rights for mi-
norities. Recently, much attention has been given to the rights of religious minorities. Employers
must permit employees to engage in religious expression, “unless the religious expression would
impose an undue hardship on the employer.” They are also required to provide a workplace in which
religious harassment of employees is not allowed. Undue hardship can be claimed if the accommo-
dation interferes with legitimate business interests. According to the EEOC:
“An employer can show undue hardship if accommodating an employee’s religious practices re-
quires more than ordinary administrative costs, diminishes efficiency in other jobs, infringes on oth-
er employees’ job rights or benefits, impairs workplace safety, causes coworkers to carry the ac-
commodated employee’s share of potentially hazardous or burdensome work, or if the proposed ac-
commodation conflicts with another law or regulation.”
Workplace proselytizing presents a special challenge to employers: failure to respond to employees’
complaints about proselytizing could lead to charges of religious harassment, but requiring a reli-
gious employee to cease proselytizing may result in liability for failure to reasonably accommodate
the employee’s beliefs.
How should employers deal with proselytizing?
For Proselytizing Against Proselytizing
1. Existing laws require “reasonable ac-
commodation.” The proselytizing em-
ployees could be separated from em-
ployees who feel harassed by the prac-
tice.
2. Employees have certain rights to ex-
press their religious views in the work-
place, such as the wearing of yarmulk-
es or the display of a cross in a private
office.
3. If proselytizing is kept to a mini-
mum and has no impact on co-
workers, it could be considered “rea-
sonable accommodation.”
1. Existing law allows for undue hardship
for the employer in terms of increased
administrative costs, infringement of
other employee rights, and diminished
efficiency.
2. Title VII of the Civil Rights Act does
not permit employees’ religious ex-
pression that could reasonably be per-
ceived by patrons of the business as an
expression of the employer’s views.
3. Title VII permits restriction of
religious expression that disrupts oper-
ations or is hostile or demeaning to
customers or co-workers.

1. Water Pollution. The Clean Water Act has been credited with greatly improving
the condition of waters in the United States. However, the task of water cleanup
has proved to be extremely complicated and costly due to pollution runoff and tox-
ic contamination. Improved water quality is not only necessary, but it is also
achievable. Today, acid rain, which results from sulfur emitted by smokestacks in
industrialized areas, is destroying many lakes and reservoirs.
2. Air Pollution. Aviation emissions are a potentially significant and growing per-
centage of greenhouse gases that contribute to global warming. Usually, two or
three factors combine to form air pollution in any given location.
a) The first factor is large amounts of carbon monoxide and hydrocarbons emit-
ted by many motor vehicles concentrated in a relatively small area.
b) The second factor is the smoke and other pollutants emitted by manufacturing
facilities.
c) The third factor is the combination of weather and geography.
d) Air pollution control efforts are encouraging. The EPA estimates that the
Clean Air Act eventually will result in the removal of 56 billion pounds of
pollution from the air each year, thus measurably reducing lung disease, can-
cer, and other serious health problems.
3. Land Pollution. Today, land pollution is a serious problem.
a) The fundamental issues are basically twofold.
(1) The first issue is how to restore damaged or contaminated land at a rea-
sonable cost.
(2) The second issue is how to protect unpolluted land from future damage.
b) The land pollution problem has been worsening over the past few years be-
cause modern technology has continued to produce more and more chemical
and radioactive wastes.
c) To help pay for the enormous costs of cleaning up land polluted with chemi-
cals, Congress created a $1.6 billion Superfund in 1980.
4. Noise Pollution. The Noise Control Act of 1972 established noise emission stand-
ards for aircraft and airports, railroads, and interstate motor carriers. Noise levels
can be reduced by two methods.
a) The source of noise pollution can be isolated as much as possible, and engi-
neers can modify machinery and equipment to reduce noise levels.
b) If it is impossible to reduce industrial noise to acceptable levels, workers
should be required to wear earplugs to guard against permanent hearing dam-
age.
B. Who Should Pay for a Clean Environment? Government and business are spending
billions of dollars annually to reduce pollution.

1. Current estimates of the annual costs of improving the environment are $45 billion
to control air pollution, $33 billion to control water pollution, and $12 billion to
treat hazardous wastes.
2. Much of the money required to purify the environment is supposed to come from
already depressed industries.
3. The big question is: “Who will pay for the environmental cleanup?”
a) Business leaders believe tax money should be used to clean up the environ-
ment.
b) Environmentalists believe that the cost of proper treatment and disposal of in-
dustrial wastes is an expense of doing business and therefore the responsibility
of the manufacturer.
c) In either case, consumers will probably pay a large part of the cost either in
the form of taxes or through higher prices.
Teaching Tip: Bring in three to five products from home. Write down the approximate prices. Tell
students how much each cost, and then ask how much more they would be willing to pay in order for
these products to be “environmentally friendly.” Products might include an apple or other fruit that
was grown with pesticides, a package of non-biodegradable garbage bags, and so forth.
XI. IMPLEMENTING A PROGRAM OF SOCIAL RESPONSIBILITY. A firm’s decision
to be socially responsible is a step in the right direction—but only a first step. The firm must
then develop and implement a tangible program to reach this goal.
A. Developing a Program of Social Responsibility. The following steps are required to
implement a social responsibility program.
1. Commitment of Top Executives. Without the support of top executives, any pro-
gram will soon falter and become ineffective.
2. Planning. A committee of managers should be appointed to plan the program.
3. Appointment of a Director. A top-level executive should be chosen to direct the
organization’s activities in implementing the plan.
4. The Social Audit. The director of the program should prepare a social audit for the
firm at specified intervals. A social audit is a comprehensive report of what an or-
ganization has done, and is doing, with regard to social issues that affect it.
B. Funding the Program. Like any other program, a program to improve social responsi-
bility must be funded. Funding can come from three sources.
1. Management can pass the cost on to consumers in the form of higher prices.
2. The corporation may be forced to absorb the cost of the program if, for example,
the competitive situation does not permit a price increase.
3. The federal government may pay for all or part of the cost through special tax re-
ductions or other incentives.

2.7 TEXTBOOK ANSWER KEYS
2.7a Return to Inside Business
Panera Cares
1. How does Panera Cares fit into the socioeconomic model of social responsibility?
Panera Cares is a good example of the socioeconomic model at work because, as the text ex-
plains, each of these cafés must be self-supporting and generate a small profit to be invested in
other community programs, such as job training. Panera is going beyond its basic economic re-
sponsibility to owners and other stakeholders. It is also inviting the public to “do the right
thing,” as the CEO says, by contributing more than the cost of each meal so that people with lit-
tle or no money can enjoy a good meal.
2. What ethical issues are raised by the idea of expecting some people to pay more for a
Panera meal so that others can pay less?
Students are likely to identify fairness as one ethical issue involved in the Panera Cares “sug-
gested funding” levels. Is it fair to leave the decision about how much to donate up to individu-
als? Some people who can afford to pay may take advantage of this situation by donating very
little or nothing. This unfairly shifts the burden to others who choose to donate the suggested
amount or much more. Is it even fair for Panera to expect customers to share the cost when the
company could make a philanthropic contribution to cover free meals for people in need? Stu-
dents may mention other ethical issues, as well.
2.7b Review Questions
1. Why might an individual with high ethical standards act less ethically in business than in
his or her personal life?
With more and more examples of businesspeople behaving unethically, the cause of unethical
behavior is one that psychologists and economists are examining. Pressure from low or
declining profits can cause a person with normally high ethical standards to behave less
ethically in business. But financial incentives are not the only reason. People make unethical
decisions to support colleagues or friends with whom they are doing business.
2. How would an organizational code of ethics help to ensure ethical business behavior?
An organizational code of ethics would help a firm establish a guide to acceptable and ethical
behavior for employees to follow. It shows the company’s commitment to ethical behavior and
sets a standard for all employees in the firm. Often, a company’s code of ethics communicates
the method for reporting unethical or illegal actions.
3. How and why did the American business environment change after the Great Depression?
The Great Depression and its national consequences showed both the American people and the
government that a more centralized control over certain kinds of businesses and business

activities would be required in the future to prevent our economy from falling victim to the
forces that caused the Depression.
4. What are the major differences between the economic model of social responsibility and
the socioeconomic model?
The economic model of social responsibility holds that society will benefit most when business
is left alone to produce and market profitable goods. The socioeconomic model places emphasis
not only on profits but also on the impact of business decisions on society. (See Table 2.3.)
5. What are the arguments for and against increasing the social responsibility of business?
The arguments for increasing the social responsibility of business are the following:
a. Business cannot ignore social issues because it is a part of our society.
b. Business has the technical, financial, and managerial resources that are needed to tackle
today’s complex social issues.
c. By helping resolve social issues, business can create a more stable environment for long-
term profitability.
d. Socially responsible decision making by business firms can prevent increased government
intervention.
The arguments against increasing social responsibility are the following:
a. Business managers are primarily responsible to stockholders, so management must be
concerned with providing a return on owners’ investments.
b. Corporate time, money, and talent should be used to maximize profits, not to solve society’s
problems.
c. Because social problems affect society in general, business should not be expected to solve
these problems.
d. Social issues are the responsibility of officials who are elected for that purpose and who are
accountable to the voters for their decisions.
6. Describe and give an example of each of the six basic rights of consumers.
The right to safety. The products consumers purchase must be safe for their intended use,
include thorough and explicit directions for proper use, and have been tested by the
manufacturer to ensure product quality and reliability. Consumer safety would be an especially
important consideration in the manufacture and sale of a product such as a hedge trimmer.
The right to be informed. Consumers should be given complete information about a product,
such as ingredients in food or how to take care of a specific garment. Producers should also
give information about the potential dangers of using their products, such as a reaction to drugs.
The right to choose. Because of competition, consumers can choose the particular product they
want among several similar products, such as automobiles or men’s shirts.
The right to be heard. Citizens can complain through the Better Business Bureau or can often
call a company directly on a toll-free number.

The right to consumer education. People are entitled to be fully informed about their rights as
consumers. An example would be the disclosure notices provided by banks or credit card
companies.
The right to service. Consumers have the right to convenience, courtesy, and responsiveness
from manufacturers and sellers of consumer products, which is one of the reasons that
companies put 800 numbers on their products for customers to contact them.
7. There are more women than men in the United States. Why, then, are women considered
a minority with regard to employment?
Women are a minority, not because they are fewer in number, but because there are fewer of
them employed than men and fewer in positions of true responsibility. Women also fit the
definition of a minority because they have been singled out as a group for unfavorable
treatment.
8. What is the goal of affirmative action programs? How is this goal achieved?
The goal of affirmative action programs is to increase the number of minority employees at all
levels within an organization. The Equal Employment Opportunity Commission (EEOC) was
created by Congress to investigate complaints of discrimination and to sue firms that practice
discrimination in employment.
9. What is the primary function of the Equal Employment Opportunity Commission?
The primary function of the EEOC is to investigate complaints of discrimination in
employment.
10. How do businesses contribute to each of the four forms of pollution? How can they avoid
polluting the environment?
Businesses contribute to water pollution by dumping wastes into the water; to air pollution by
admitting hazardous chemicals into the air from motor vehicles and smokestacks; to land
pollution by burying harmful wastes and chemicals; and to noise pollution by allowing
excessive noise caused by traffic, aircraft, and machinery. Water pollution can be reduced by
building larger and more efficient sewage treatment plants and removing sulfur emissions, a
cause of acid rain. Pollution control devices on vehicles and smokestacks help reduce air
pollution. The EPA has been working to clean up the land. Suits against companies that dump
could help fund the cleanup operation. Noise levels can be reduced by isolating the source of
noise away from the population and by modifying machinery and equipment to reduce noise
levels.
11. Our environment can be cleaned up and kept clean. Why haven’t we simply done so?
The environment hasn’t been cleaned up and kept clean because of the costs involved and the
problems associated with deciding who will pay for the cleanup.
12. Describe the steps involved in developing a social responsibility program within a large
corporation.
The steps are as follows:

a. Commitment of top executives. Top executives should develop a policy statement that
outlines key areas of concern.

b. Planning. Managers should form a plan that deals with each of the issues described in the
policy statement.
c. Appointment of a director. A top-level executive should be appointed to direct the
organization’s activities in implementing the policy.
d. The social audit. The social audit is a comprehensive report of what an organization has
done, and is doing, with regard to social issues that affect it.
2.7c Discussion Questions
1. When a company acts in an ethically questionable manner, what types of problems are
caused for the organization and its customers?
When an organization engages in ethically questionable behavior, it hurts the integrity of the
organization and damages the company’s image held by customers and potential customers.
Customers lose trust in this type of organization and sometimes seek other sellers. An
organization sometimes has to spend considerable resources to rebuild relationships with
customers when the firm’s integrity is questioned.
2. How can an employee take an ethical stand regarding a business decision when his or her
superior already has taken a different position?
By whistle-blowing, the employee can inform the press or government officials of his or her
firm’s unethical practices. (You may want to discuss the repercussions of whistle-blowing with
students.)
3. Overall, would it be more profitable for a business to follow the economic model or the
socioeconomic model of social responsibility?
In the short run, the economic model would be more profitable because the focus is on profits,
not on social responsibility. The socioeconomic model would be more profitable in the long
run. It is a proactive stance for companies and one that many firms are embracing. Consumers
have come to expect this of companies with which they do business. Money spent on acts of
social responsibility would be considered business expenses.
4. Why should business take on the task of training the hard-core unemployed?
This task is another aspect of social responsibility. When these people receive training, they
become more employable. As a result, they can earn a wage and then return it to business
through their spending for consumer goods. Overall, such training programs improve the
economy, which in turn helps the firms that sponsor the programs.
5. To what extent should the blame for vehicular air pollution be shared by manufacturers,
consumers, and government?
Manufacturers should help in producing and/or using pollution control devices for cars and
trucks. Consumers should buy and use products that limit air pollution. The government should
set guidelines for the production and use of such products.

6. Why is there so much government regulation involving social responsibility issues?
Should there be less?
There is so much government regulation because unethical businesses continue to ignore their
social responsibility. There should not be less government regulation until businesses are ready
to police themselves.
2.7d Comments on Video Case 2.1
Suggestions for using this video case are provided in the Pride/Hughes/Kapoor Video Guide.
Scholfield Honda—Going Green with Honda
1. How would you rate Scholfield Honda’s sense of social responsibility? Does the dealership
meet all the criteria for a socially responsible company?
Scholfield Honda’s sense of social responsibility is open to discussion. On the one hand, it can
be argued that by adding the Civic GX to its line and its gift to Greensburg, Kansas, the
dealership was being socially responsible. On the other hand, it could be argued that the
dealership’s actions were minimal and its motive was simply to promote the dealership by
associating itself with a popular environmental issue. Whatever its motives, Scholfield’s actions
appear to meet the criteria to be considered a socially responsible company.
2. What is Scholfield Honda’s primary ethical responsibility in situations where a proposed
green initiative is cost-prohibitive or even detrimental to the company’s bottom line?
Scholfield Honda’s primary ethical responsibility is to provide a fair return to its investors. If a
green initiative is cost-prohibitive or detrimental to the bottom line, it should be avoided or
alternative green plans should be pursued that are not detrimental to the company.
3. Should the government regulate companies’ claims that their products are green? Should
official classifications for environmental friendliness be defined?
In some product categories such as automobiles, the government already regulates green
standards and claims that particular products are green. However, in most cases, consumers are
the best judge of which products meet their green standards. If products don’t meet consumer
standards, they simply won’t purchase them. Official classifications for environmental
friendliness already exist in areas such as auto emissions, airplane noise, and asbestos usage, to
name a few. Again, for most product categories, it would appear that consumers are better at
defining environmental friendliness than the government is.
2.7e Comments on Case 2.2
Unilever’s Plan for Green and Clean Growth
1. Every year, Unilever posts on its web site and distributes to the media a report detailing
its progress toward the 2020 sustainability goals. Why would the public be interested in
such a report?

One reason that customers, suppliers, employees, and others would be interested in Unilever’s
sustainability reports is that they want to know what kind of company they’re doing business

with. Many customers are concerned about the environment. By demonstrating its ongoing
commitment to sustainability, Unilever shows that it is doing its part to save the planet and
gives customers another reason to remain loyal. Employees who hold similar views would be
interested in finding out what their employer is doing. Competitors may also be taking a close
look to see how they might differentiate themselves by taking action in other areas of social re-
sponsibility.
2. Is Unilever applying the economic or the socioeconomic model of social responsibility?
How do you know?
Based on the CEO’s comments about “advocating a business model that gives to the
environment and society,” Unilever appears to be closer to the socioeconomic model of social
responsibility. The company is focused on profitability through sustainability, as the case indi-
cates. Programs that save energy and water not only help the environment, but they also save
Unilever money and therefore help its profitability. The Cool Farm Tool is available without
charge to suppliers and other companies. This is another way Unilever is helping society as a
whole to live greener.
3. Do you agree with Unilever’s approach of promoting its Lifebuoy soap brand in programs
to teach consumers about hand-washing? Explain your answer.
Students who agree with Unilever promoting Lifebuoy in hand-washing lessons may say that
the socioeconomic model emphasizes profits as well as social responsibility. By linking the
Lifebuoy brand to programs that keep people healthy and safe, Unilever is making a business
decision that benefits shareholders and enables the company to do the right thing for society at
large. Lifebuoy soap isn’t required for hand-washing—any brand will do, and people are free to
choose what they wish. Students who disagree may say that Unilever shouldn’t put its brand in-
to the program because any soap can be used to clean hands, not just Lifebuoy. If Unilever
wants to educate people about hand-washing as part of its social responsibility, it can do that
without turning the program into a commercial for its brand.
2.7f Building Skills for Career Success
1. Social Media Exercise
In 2010, Pepsi decided to develop a new social media–based project, called Pepsi Refresh
Project, aimed at Millennials and allowing consumers to post ideas for improving their
communities. This replaced the $20 million they spent on Super Bowl advertising. The
project received more than 57 million votes. However, the general consensus was this was
not a successful program for Pepsi. Using the Internet for research, answer the following
questions:
1. Why do you think the Pepsi Refresh Project was not as successful as the company
hoped?
Although the project was a success on the social media side, that success did not translate
into sales. Pepsi lost market share, possibly because the money designated for advertising
was put into this social media campaign.

2. Do you think this is a good example of corporate social responsibility (CSR)? Why or
why not?
The idea of distributing $20 million in $5,000 to $250,000 increments for projects that are
determined to be “worthy” is a good example of social responsibility; however, the way this
project was structured turned out to be filled with technical issues and privacy problems.
Pepsi’s plan is to engage its customers by having them vote for their favorite project.
Money was given to the projects that received the most votes. It is a different model than
previously used and didn’t engage stakeholders at the level of other CSR models.
3. How does this CSR example for Pepsi compare with that of its main rival Coca-Cola
(see http://www.thecoca-colacompany.com/citizenship/index.html)?
Coca-Cola’s responsibility to the environment, community, and employeesis is clearly
stated on its Web site. Its commitment to sustainability is also stated in several places on the
Web site. On the other hand, Pepsi’s level of responsibility is not as clearly seen nor stated.
2. Journaling for Success
Assume that you are an accountant at ABC Corporation, where you question the compa-
ny’s accounting practices. What legal and managerial changes would you suggest to pre-
vent the use of accounting tricks to manipulate corporate earnings?
Student answers may include the following:
a. I would recommend immediate implementation of an ethics code spelling out which ac-
counting practices are acceptable and which are not.
b. I would suggest a policy that requires all accounting methods, whether internal or conduct-
ed by external auditors, to be vetted against Sarbanes-Oxley rules.
c. I would recommend that the company hire someone at the corporate vice presidential level
with direct responsibility for Sarbanes-Oxley enforcement. He or she should report directly
to the board of directors.
d. Anyone found to be in direct violation of the Sarbanes-Oxley Act should immediately be
terminated.
e. The company should institute a method by which employees can report ethical lapses
without fear of reprisal. An anonymous hotline is one possible example.
1. Assume that your manager refuses to incorporate any of your suggestions. Would you
blow the whistle? Why or why not?
Student responses to this question will vary. Some may say that they will get another job first,
and then anonymously report their previous employer. Others will feel that the risks associated
with whistle-blowing are too great, and some will take the idealistic route of avoiding an Enron
situation.

2. Suppose that you blow the whistle and get fired. Which law might protect your rights,
and how would you proceed to protect yourself?
The law that protects whistle-blowers is the Sarbanes-Oxley Act of 2002. Any executive who
retaliates against a whistle-blower can be held criminally liable and imprisoned for up to 10
years.
Some students will indicate that the first move they would make would be to hire a lawyer
experienced in dealing with whistle-blowing situations. They may suggest that going to the
media would help. In actuality, however, it might be better for their future employment
prospects if they settle out of court. Some companies might be leery of someone who invites
media attention.
3. Developing Critical-Thinking Skills
The answers will vary from students of different ethnic backgrounds, social status, workplace
experiences, and ages. Some students will feel very strongly about what they believe to be right
and wrong and how they would conduct themselves in the workplace. Other students will
endure the stress associated with working on projects they feel are morally wrong just to keep
their job.
Two important points in this exercise are (1) to get students to discuss why they believe certain
things are either right or wrong and (2) for all students to understand other people’s positions
regardless of whether or not they agree. As the world becomes the workplace, more Americans
will be faced with examining their positions on what they believe to be right and wrong and/or
finding employment with a company that fits within their ethical and moral beliefs.
Business ethics begins at the top of an organization. It creates the corporate culture. Strong
leadership is needed to raise the level of ethics and morality. Leadership must set an example
and encourage everyone in the organization to exercise integrity.
4. Building Team Skills
Assign several students the responsibility of finding a code of ethics from a business firm.
Before class, prepare copies for everyone in the class. In class, have each group work with a
different code of ethics in completing the exercise. Ask a member of each group to report the
results before the class.
5. Researching Different Careers
Who is to say what is right and what is wrong? This question is debated every day in the
newspapers and courtrooms across the country. Things that influence our values include
religious teachings, parental guidance, television, cultural traditions and values, peers’ values
and behaviors, major events in the world, and social acceptance of behavior over time.
Each student’s code of ethics will be a little different. It should include (1) the student’s
responsibilities to life, work, friends, family, etc. (How will the student treat others?) and (2)
the student’s expectations from life, work, friends, family, etc. (How does the student expect to
be treated by others?).

2.8 QUIZZES I AND II
True-False Questions
Select the correct answer.
Quiz I
1. T F Social responsibility is the recognition that business activities have an impact on society
and the consideration of that impact in business decisions.
2. T F The economic model of social responsibility places emphasis not only on profits but al-
so on the impact of business decisions on society.
3. T F Consumerism consists of all those activities that are undertaken to protect the rights of
consumers in their dealings with business.
4. T F Six basic rights of consumers are the right to safety, the right to be informed, the right to
choose, the right to be heard, the right to consumer education, and the right to service.
5. T F Whistle-blowing is an attempt by business to stop employees from exposing their uneth-
ical business behavior.
Multiple-Choice Questions
Circle the letter before the most accurate answer.
6. One factor that influences ethical decision making is the factor.
a. business
b. consumer
c. marketing
d. opportunity
e. internal
7. A plan designed to increase the number of minority employees at all levels within an organiza-
tion is called
a. the hard-core unemployed.
b. an affirmative action program.
c. the Equal Employment Opportunity Commission.
d. the socioeconomic initiative.
e. the right to work.
8. Initiating a social responsibility program takes
a. the commitment of top executives.
b. the commitment of middle managers.
c. the commitment of employees.
d. no commitment.
e. the commitment of competitors.

9. Funding for a program of social responsibility can come from
a. the employees in the corporation.
b. volunteer efforts of the American public.
c. corporations that absorb the costs as a business expense.
d. governmental sources.
e. environmental groups.
10. A guide to acceptable and ethical behavior is known as
a. a code of ethics.
b. business ethics.
c. a social audit.
d. consumerism.
e. an ethical behavior guide.
True-False Questions
Select the correct answer.
Quiz II
1. T F A policy of considering only nonminority applicants for job openings is called reverse
discrimination.
2. T F Today, few firms are either purely economic or purely socioeconomic in their outlook.
3. T F Working conditions in the early twentieth century were not much different from those
that exist today, except for the more advanced technology involved.
4. T F Government intervention into business increased after the Great Depression of the
1930s.
5. T F An argument for increased social responsibility is the fact that, because business man-
agers are primarily responsible to business owners, they must be concerned with provid-
ing a return on the owners’ investments.
Multiple-Choice Questions
Circle the letter before the most accurate answer.
6. A group of people who have been singled out for unfavorable treatment on the basis of race,
religion, politics, or national origin is called
a. an affirmative action group.
b. the hard-core unemployed.
c. a minority.
d. the economically disadvantaged.
e. a majority.

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No. VI.—SOLVITUR AMBULANDO
A man, tracing step by step the various readings of ROTATOR on
this chequered floor, can exhaust all of them, according to the
arrangement on our diagram, in 21,648 steps, spelling out the word
as he goes in the many directions 3608 separate times!
R O T A T O R O T A T O R
O R O T A T O T A T O R O
T O R O T A T A T O R O T
A T O R O T A T O R O T A
T A T O R O T O R O T A T
O T A T O R O R O T A T O
O T A T O R O R O T A T O
T A T O R O T O R O T A T
A T O R O T A T O R O T A
T O R O T A T A T O R O T
O R O T A T O T A T O R O
This large total is due mainly to the fact that ROTATOR is a
palindrome, and lends itself to both backward and forward reading.
The man, a veritable rotator, will thus have walked more than four
miles within a compass of one hundred and forty-four square feet.
Back to Puzzle

No. VIII.—AN OLD SAMPLER
AL. IT.
T.L EW. O. MA!
N.T. Ho! UGH. AVE. Ryli.
T.T. Let. Hi! N.G.I.
S.S. We. Et. Erf. Art. Ha!
N.S. Ug. Ara. N.D.F. Lo!
W.E. R.S.T. Ha! TB.
L.O. O! Mins. Pri.
N. G.
The cross-stitch legend on the old sampler, if its letters are read in
regular sequence, runs thus:—
A little woman, though a very little thing,
Is sweeter far than sugar, and flowers that bloom in spring.
Back to Puzzle
No. XII.—STRIKE A BALANCE
This diagram shows how, while the odd and even numbers of the
nine digits add up to 25 and 20 respectively, they can be arranged in
two groups so that the odd and the even add up to exactly the same
sum.

1 2
3
5 4
79
7 6
842⁄6
9 8 51⁄3
25 20 841⁄3 841⁄3
Back to Puzzle
No. XIII.—PUZZLE LINES
The puzzle lines—
HKISTA!
MRS LR’S SR
MR LR KRS.
“BLR MR LR!”
MRS LR HRS—

when read according to the usual pronunciation of Mr and Mrs, and
taking the title from the Greek, become, by affinity of sound—
He kissed her!
Mrs Lister’s sister
Mr Lister kisses.
“Blister Mr Lister!”
Mrs Lister hisses.
Back to Puzzle
No. XIV.—IN MEMORIAM
The puzzle epitaph—
WEON . CEW . ERET . WO
WET . WOM . ADEO . NE
NON . EFIN . DUST . WO
NO . WLI . FEB . EGO . NE
WILLIAM and MARGARET
TAYLOR
Anno Domini 1665.
reads thus—
We once were two,
We two made one.
None find us two
Now life be gone.
Back to Puzzle
No. XVI.—A QUAINT EPITAPH

I T - O B I T - M O R T I - M E R A
P U B L I - C A N O - F A C T O - N A M
AT - R E S - T - M - A N N O - X X X
A L E T H A - T E - V E R I TA S
T E - D E - Q U A - LV - V A S T O
M I - N E - A - J O V I - A LT O
P E R A G O - O - D O - N E - AT
S T O - U T - I N - A - P O T O R - A C
A N - I V - V A S - N E - V E R - A
R - I - P
reads into English thus:—
“I Tobit Mortimer, a publican of Acton, am at rest. Man, no treble X
ale that ever I tasted equal was to mine. A jovial toper, a good one
at stout in a pot or a can, I was never a rip!”
Back to Puzzle
No. XIX.—SHAKESPEARE RECAST
If you start with the first T in this combination, and then take
every third letter—

HOUSE.CANOE.AFTER.
HOUR.PRINT.CAVE.CHILD
SASH.SLEVE.ACORN.
AMPLE.SAD.TATTA.HENA
MAT.ACHE.CAKE.TACHES.
HELIAC.SACQUE.USUAL.
ARBOR.SEE.MULCH.JACUR.
USE.STOP.
you will form the popular quotation, “Thrice is he armed that hath
his quarrel just.”
Back to Puzzle

No. XX.—A DOUBLE ACROSTIC
The excellent double Acrostic—
An old Italian bird we know
Whose heart was ever touched by snow.
1. None can press me without pain,
Pressure is against the grain.
2. I am a king without my head.
3. Here is another king instead.
is solved thus:—
CORNIX
1. C orN
2. (R) O— I
3. R e X
We may tell those of our readers who have not studied the dead
languages that cornix is the Latin for a crow, and that the word can
be broken up into cor, heart, and nix, snow, while rex is, of course, a
king in Latin, as roi is in French. The double meaning of corn is
brought out by “against the grain.”
Back to Puzzle
No. XXI.—HIDDEN PROVERBS
The five hidden proverbs are:—
“A rolling stone gathers no moss.”
“Too many cooks spoil the broth.”
“A live dog is more to be feared than a dead lion.”
“You cannot eat your cake and have it.”
“Peace hath her victories no less renowned than war.”
Start from the central A, and work round and round.
Back to Puzzle
No. XXVII.—WAS IT VOLAPÜK?
Read backwards it becomes “Old birds are not caught with chaff.”

Back to Puzzle
No. XXVIII.—ANOTHER EPITAPH
(On an Old Pie Woman)
BENE AT hint HEDU S.T.T.H. emo Uldy O
L.D.C. RUSTO F.N.E. L.L.B.
AC. hel orl AT Ely
W ASS hove N.W. how ASS Kill’d
Int heart SOF pi escu Star
D. sand Tart Sand K N ewe,
Ver yus E oft he ove N.W. Hens he
’Dliv’ Dlon geno
UG H.S. hem Ade he R la STP uffap
UF FBY HE RHU
S. B an D. M.
Uchp R.A. is ’D no Wheres He dot
H L. i.e. TOM a Kead I.R.T.P. Iein hop est
Hat he R.C. Rust W I
L.L.B. ERA IS ’D——!
This puzzle epitaph, written aright, runs thus:—
Beneath in the dust the mouldy old crust
Of Nell Bachelor lately was shoven,
Who was skilled in the arts of pies, custards, and tarts,
And knew every use of the oven.
When she’d liv’d long enough she made her last puff,
A puff by her husband much prais’d;
Now here she doth lie to make a dirt pie,
In hopes that her crust may be rais’d.
Back to Puzzle

No. XXXI.—BY LEAPS AND BOUNDS
tle to a cat- life and live In
By tle ow-
bro
wse
of non tle fall
ter tur- gain like land one’s quiet And
of
ar
m
Bet-
me
ad-
and Than a- bat-
bask
Be
t-
lau- or tle ness done wan-
rel let Than die With der of
smo
ke
ter in brain myr- on and har- un-
Ch
ap-
or to sun with work In heat
The “Knight’s Tour” verses run as follows:—
Better to die with harness on
In smoke and heat of battle,
Than wander and browse, and fall anon
In quiet of meadow-land cattle.
Better to gain, by arm or brain,
Chaplet of laurel or myrtle,
Than bask in sun, with work undone,
And live one’s life like a turtle,
beginning with “Bet,” and ending in the top left-hand corner.
Back to Puzzle

No. XXXII.—A BROKEN SQUARE
The Broken Word Square is made perfect thus—
S O B E R
O L I V E
B I S O N
E V O K E
R E N E W
Back to Puzzle
No. XXXIII.—A KNIGHT’S TOUR PROVERB
E
E T
L H
E R S
E A S
D E O S

S P M
To solve the “Knight’s Tour” proverb start with M, and by a
succession of moves, as of a knight on the chess-board, you can
spell out the proverb “More haste less speed.”
Back to Puzzle
No. XXXIV.—GUARINI’S PROBLEM
The solution of Guarini’s Problem, to transpose the positions of the
white and black knights on the subjoined diagram on which they
appear, is made clear by following the moves on the lettered
diagram:—
First move the pieces from a to A, from b to B, from c to C, and
from d to D. Then move them from A to d, from B to a, from C to b,
and from D to c. The effect so far is as if the original square had
been rotated through one right angle. Repeat the same sequence of
moves, and the required change of positions is completed.
Back to Puzzle

No. XXXV.—AN ANAGRAM SQUARE
This is the solution of the Word Square.
A M E N D S
M I N I O N
E N A B L E
N I B B L E
D O L L A R
S N E E R S
Back to Puzzle
No. XXXVII.—A KNIGHT’S TOUR
The letters on the board below, read aright in the order of a
Knight’s moves at chess, starting from the most central E form the
following popular proverb:—
R L T E Y L R O
Y H L T O B T A
T A A A H T I
E L E I N E O

D H W Y E S Y
R T E S D B W
Y N E S N D A E
H A A A W I D E
“Early to bed, and early to rise,
Is the way to be healthy, and wealthy, and wise.”
Back to Puzzle
No. XXXVIII.—A WORD SQUARE
Dr Puzzlewitz completed his Word Square thus:—
E R A S E
R A V E N
A V E R T
S E R V E
E N T E R
Back to Puzzle
No. XXXIX.—THE SQUAREST WORD
This is completed thus:—

D E L F
E V I L
L I V E
F L E D
It will be seen that there are four distinct readings of each word.
Back to Puzzle
No. XL.—A PUZZLE DIAMOND
The Diamond is completed thus:—
D
T I P
T I A R A
D I A M O N D
P R O U D
A N D
D
Back to Puzzle

No. XLI.—A DEFECTIVE DIAMOND
The Defective Diamond is completed thus:—
S
G E M
P E R I L
G E N E R A L
S E R E N A D E R
M I R A C L E
L A D L E
L E E
R
Back to Puzzle
No. XLIII.—LETTER PUZZLE
The word is Level, filled in thus:—
L E V E L
E E E E
V V V

E E E E
L E V E L
Back to Puzzle
No. XLVII.—THE CIRCLE SQUARED
The Circle can be squared thus:—
C I R C L E
I N U R E S
R U L E S T
C R E A S E
L E S S E E
E S T E E M
Back to Puzzle
No. XLVIII.—A BROKEN SQUARE
This is the completed Square:—
B O A S T E R
O B S C E N E

A S S E R T S
S C E P T R E
T E R T I A N
E N T R A N T
R E S E N T S
Back to Puzzle
No. XLIX.—A CARD PROBLEM
Here is the arrangement of the aces, kings, queens, and knaves of
a pack of cards in a kind of Magic Square:—
CLUBS
ACE
SPADES
KING
HEARTS
QUEEN
DIAMONDS
KNAVE
HEARTS
KNAVE
DIAMONDS
QUEEN
CLUBS
KING
SPADES
ACE
DIAMONDS
KING
HEARTS
ACE
SPADES
KNAVE
CLUBS
QUEEN
SPADES
QUEEN
CLUBS
KNAVE
DIAMONDS
ACE
HEARTS
KING

In each row, column, and diagonal, one, and one only, of the four
suits and of the four denominations is represented.
Back to Puzzle
No. L.—TURF-CUTTING
The eight thin strips of turf, cut from my lawn to form the four
sides of two square rose-borders, can be placed on a level surface of
soil thus without being broken or bent:—
This forms a framework for the three flower-beds of similar shape
and size.
Back to Puzzle
No. LI.—A READY RECKONER
The gardener decided that the water-butt was more than half-full
thus:—

He tilted it steadily, and some of the water ran over its edge
before the bottom corner A came into sight; but as soon as the
water level stood at A B the cask was exactly half full.
Back to Puzzle
No. LII.—A TRANSFORMATION
The flat-headed 3 can be turned into a 5 by one continuous line,
without scratching out any portion of the 3, by treating the flat top
of the 3 as part of a square drawn round the 5, thus:—

Back to Puzzle
No. LIII.—A CLEAR COURSE
Here is a list of ninety-two positions, in which eight pieces can be
placed upon the chess or draughtboard so that each has a clear
course in every direction.
1 1586 3724 24 3681 5724 47 5146 8273 70 6318 5247
2 1683 7425 25 3682 4175 48 5184 2736 71 6357 1428
3 1746 8253 26 3728 5146 49 5186 3724 72 6358 1427
4 1758 2463 27 3728 6415 50 5246 8317 73 6372 4815
5 2468 3175 28 3847 1625 51 5247 3861 74 6372 8514
6 2571 3864 29 4158 2736 52 5261 7483 75 6374 1825
7 2574 1863 30 4158 6372 53 5281 4736 76 6415 8273
8 2617 4835 31 4258 6137 54 5316 8247 77 6428 5713
9 2683 1475 32 4273 6815 55 5317 2864 78 6471 3528
10 2736 8514 33 4273 6851 56 5384 7162 79 6471 8253
11 2758 1463 34 4275 1863 57 5713 8642 80 6824 1753
12 2861 3574 35 4285 7136 58 5714 2863 81 7138 6425
13 3175 8246 36 4286 1357 59 5724 8136 82 7241 8536
14 3528 1746 37 4615 2837 60 5726 3148 83 7263 1485
15 3528 6471 38 4682 7135 61 5726 3184 84 7316 8524
16 3571 4286 39 4683 1752 62 5741 3862 85 7382 5164
17 3584 1726 40 4718 5263 63 5841 3627 86 7425 8136

18 3625 8174 41 4738 2516 64 5841 7263 87 7428 6135
19 3627 1485 42 4752 6138 65 6152 8374 88 7531 6824
20 3627 5184 43 4753 1682 66 6271 3584 89 8241 7536
21 3641 8572 44 4813 6275 67 6271 4853 90 8253 1746
22 3642 8571 45 4815 7263 68 6317 5824 91 8316 2574
23 3681 4752 46 4853 1726 69 6318 4275 92 8413 6275
The numbers indicate the position on the eight successive columns
of the cells on which the men are to be placed. Of course, many
similar arrangements arise from merely turning the board.
Back to Puzzle
No. LIV.—QUARRELSOME NEIGHBOURS
This diagram shows, by the dotted lines, how the three unfriendly
neighbours made the covered pathways to their gates, so that they
might never meet or cross each other’s paths.

Back to Puzzle
No. LVI.—THE CROSS KEYS
The Cross Keys puzzle when put together takes the form shown
below.

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