10

File: Ch10, Chapter 10: Ethical Leadership
True/False
1. A relativistic manager tends to reject universal moral rules and make decisions on
the basis of personal values.
Ans: True
Response: See page 261
2. In general, relativism leads to better ethical decisions than idealism.
Ans: False
3. Idealists accept moral codes and believe that good outcomes for all can be achieved
by morally correct actions.
Ans: True
4. Providing entertainment for potential customers is standard practice in American

business and it rarely leads to ethical problems.
Ans: False
5. Ethical problems are usually the result of poor decisions by individual salespeople or
company policies that encourage wrong doing.
Ans: True
247
6. Ethical problems occur because executives frequently choose what is expedient
rather than what is morally correct.
Ans: True
7. Managers don’t need any background on ethical issues to solve important moral
problems.
Ans: False
8. Being a gentleman and avoiding methods of deceit is an inherent part of

Machiavellinism.
Ans: False
9. Kickbacks are ethical if the amount is small (less than $500) and the company
awarded the contract offered the best price anyway.
Ans: False
10. Machiavelli was philosophically a realist.
Ans: True
11. Conventional morality can be expressed as “When in Rome, do as the Romans do.”
Ans: True
12. Ethics is not directly concerned with the impact of acts on the good of the individual,
248
the firm, the business community and society as a whole.
Ans: False
13. General values and norms of society can affect managerial decisions.
Ans: True
14. The most frequent area for ethical abuse in a sales organization is with expense
accounts.
Ans: True
15. A good way to handle expense account cheating is for managers to set an
appropriate standard for others to follow.
Ans: True
16. In cases of bribery and extortion it is often easy to distinguish right from wrong.
Ans: False
17. The moral climate of a business is seldom based on the words and actions of its
top executives.
Ans: False
18. One way to keep your sales force straight is to encourage employees to call for
help when they face an ethically troublesome sale.
249
Ans: True
19. “Blowing the whistle” on other employees is an easy thing to do.
Ans: False
20. A good way to keep your sales force straight is to develop and circulate a sales
ethics policy.
Ans: True
21. The Clayton Antitrust Act prohibits price discrimination.
Ans: True
22. The Magnuson-Moss Warranty Act allow salespeople to sell replacement

components from the salesperson’s firm at whatever price is deemed fair by the
salesperson.
Ans: False
23. Both the employee and employee’s company are responsible for compliance with
federal regulations.
Ans: True
24. The Consumer Credit Protection Act is designed to protect consumers from false
statements by salespeople about a product or service.
250
Ans: True
25. An agreement among sales managers in the aluminum siding industry is not an
ethical issue.
Ans: False
26. It is legal to offer a payment to a foreign government official to retain the foreign
company’s business because everyone else does it.
Ans: False
27. With conventional morality, the idea is to determine how each party to a moral
decision will be affected and then to pick the solution that satisfies the greatest number
of people.
Ans: False
28. A production manager in your firm has made an error resulting in overproduction of
widgets. This will represent a significant loss to your company since the marketing
department has planned the introduction of wadgets – which will make the widgets
obsolete. Under these circumstances, withholding information about the wadgets from
prospective clients represents and acceptable business decision.
Ans: False
29. It is perfectly legal to set your company’s own hiring practices.
Ans: False
251
30. One difference between and gift and a bribe is that a bribe is part of an agreed-
upon payment for business; whereas a gift is unexpected.
Ans: True
31. According to the text, entertaining customers should be a complementary part of a

salesperson’s relationship strategy, not the sole selling strategy.
Ans: True
32. The problem for whistle blowers is that by speaking up they violate role morality.
Ans: True
33. Research has shown that top management has the primary responsibility for setting
the ethical tone of a company.
Ans: True
Multiple Choice
1. Why is it sometimes difficult for sales managers to recognize an ethical problem?
a. Sales managers may not be trained to identify these problems.

b. The activities in question are not specifically prohibited by company rules or
legislation.
c. Other firms in the industry employ the questioned activities.
d. Sales managers are paid to increase revenue and they sometimes use unethical
tactics in their rush to boost sales.
e. All of the above.
252
Ans: e
2. Prudential Insurance Company of American had to take a $2.6 million charge against
earnings because:
a. it failed to tell stockholders of an impending decline in earnings at the company.

b. of bad investments in shopping centers and junk bonds that reduced profits.
c. the company let its salespeople use deceptive sales practices that encouraged
customers to trade in old policies.
d. it opened too many branch offices and staffed them with unethical salespeople.
e. none of the above.
Ans: c
3. A code of moral behavior followed by a particular group is best termed as:
a. secularization.
b. Disabilities Act.
c. Robinson-Patman Act.
d. work place etiquette.
e. ethics.
Ans: e
4. When Joe, the regional sales manager at a medium-sized packaged goods

company, made his decision to fire a salesperson because he felt the salesperson was
not earning the highest profits possible given the potential of the territory, Joe was using
which moral philosophy?
a. Shareholder view.
b. Stakeholder view.
c. Back door politics.
d. Work place etiquette.
e. Implied responsibility.
Ans: a
253
5. Sally, the regional sales manager at a medium-sized manufacturer, denied
permission of her sales manager, Fred, to fire a salesperson. While the salesperson
was not achieving the potential of the territory, Sally felt that there were other issues to
consider besides the bottom line. For example, the company states that it is “family
friendly” and this salesperson has had some recent family issues that have limited the
salesperson’s time in the field. Based on this, which moral philosophy was Sally using in
her decision?
a. Shareholder view.
b. Stakeholder view.
c. Back door politics.
d. Work place etiquette.
e. Implied responsibility.
Ans: b
6. Your best customer has asked you to contribute $1,500 to the memorial fund for the
customer’s son who recently died in an automobile accident. You should:
a. send a check to the memorial fund and bury the amount in your expense account.
b. tell your customers that company policy forbids payments of this type.
c. report the customer’s bribe attempt to the FBI and the sheriff’s office.
d. report the request to your boss and ask permission to tell the Vice President of
Human Relations at your customer’s head office about the request.
e. Answers b and d are both acceptable responses.
Ans: e
7. Which of the following statements is/are true with regard to ethical problems and the
sales organization?
a. There are often laws or court decisions to guide salespeople in ethically ambiguous
situations.
b. Hiring the “right” people is a good hedge against unethical behavior when operating
policies promote misdeeds.
c. Ethical problems in sales organizations result when the values of the firm do not
match the values held by the employee.
d. Every ethical situation can be resolved by removing the offending party from the
company.
254
e. None of the above.
Ans: c
8. Two ways to describe individual moral philosophies that are relevant to business
decision making are relativism and idealism.
a. In general, relativism leads to better ethical decisions.

b. Usually, idealism leads to better ethical decisions.
c. Relativism and idealism produce about the same quality of ethical decision making.
d. The quality of ethical decisions is only indirectly affected by relativism and idealism.
e. None of the above.
Ans: b
9. On a recent business trip you notice that the person sitting next to you on the
airplane works for the competition. She gets up to use the restroom and on her desktop
is a marketing plan for the next year stamped “Confidential.” You could easily look at the
documents and make notes since there is a line to use the restroom and her back is
turned. Thoughts go through your head of the number of people in your company that
would peek at the documents because of the low probability of getting caught and the
potentially high rewards for obtaining this information. Your decision not to look and tell
her who you work for when she returns is based on which pattern of moral reasoning?
a. relativism
b. idealism
c. Machiavelliansim
d. moral high brow
e. none of the above adequately describe your moral reasoning
Ans: b
10. Niccolo Machiavelli was:
a. a humanist.
b. an artist interest in business ethics.
c. a leading economist in the 17th century.
d. a 16th century Italian statesman.
255
e. a and c above.
Ans: d
11. You have just been promoted to regional sales manager and your replacement for
your previous job (branch sales manager) is a very hard-driving person who tends to
manipulate people and bend the ethical norms somewhat to achieve her own goals. By
focusing on making sure the sales manager does not take power away from you, you
would be applying which moral principle?
a. conventional morality
b. idealism
c. Machiavellianism
d. relativism
e. stakeholder view
Ans: c
12. With __________, the salesperson believes that a problem-solving approach is the
best way to make moral judgments. Standards of right and wrong are some that are
equivocal. The belief is that an intelligent decision is a morally good decision.
a. conventional morality
b. Machiavellians
c. relativism
d. role morality
e. none of the above
Ans: e
13. If a salesperson displays Machiavellian tendencies, we would also expect to find:
a. psychological disorders.
b. abnormally low customer satisfaction.
c. lower ethics than other salespeople.
d. lax ethical rules or guidelines put in place by the organization.
e. a sales management team rewarding such behavior.
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Ans: c
14. Using bribery as a business tactic because “everyone does it” is an example of:
a. stakeholder view.
b. Machiavellianism.
c. conventional morality.
d. idealism.
e. survival of the fittest.
Ans: c
15. “When in Rome do like the Romans do” is best termed as:
a. conventional morality.
b. shareholder view.
c. idealism.
d. survival of the fittest.
Ans: a
16. The statement that “Any person who decides in every situation to act as a good
man is bound to be destroyed in the company of so many men who are not good” was
made by:
a. Plato.
b. Machiavelli.
c. Charles Darwin.
d. the conventional moralists.
Ans: b
17. With morality being based on a group consensus the problem is:
257
a. lack of leadership.
b. Machiavellianism.
c. the majority can be wrong.
d. profits may suffer.
Ans: c
18. According to the text ethical decisions by managers are a function of:
a. The relationship between the company’s values and the manager’s values.
b. The goals and ethical standards of business corporations.
c. The general values and norms of society.
d. All of the above will impact managerial decision making.
Ans: d
19. The impact of acts on the good of the individual, the firm, the business community
and society as a whole can be directly classified under:
a. politics.
b. sociology.
c. ethics.
d. none of the above.
e. all of the above.
Ans: c
20. The usual hierarchical order (from top to bottom), with respect to making decisions
on ethical problems is most correctly exemplified by:
a. general values of society, values of business corporations, relationship of values

between corporations and manager, managerial decisions.
b. managerial decision, relationship of values, definition of values, general values.
c. definition of values, relationship between values, managerial decisions, general
values.
d. managerial decisions, general values, relationship between values, definition of
258
values.
Ans: a
21. You decide it is time to develop a sales ethics program because of some rumors
you had heard about some salespeople on you staff. All of the following are directly
relevant in building a sales ethics program except:
a. setting reasonable goals for salespeople.

b. encouraging salespeople to ask for assistance.
c. avoiding top management input since they don’t deal with salesperson issues
d. having highly ethical people in top management positions.
e. building a sales ethics policy statement.
Ans: c
22. The first place to look for guidelines on ethical behavior in the workplace is:
a. the job description.

b. court opinion and legislation.
c. the Golden Rule.
d. Social Darwinism.
e. Machiavelli
Ans: a
23. Which of the following dos not characterize a job description:
a. it specified the number of hours of work.

b. it resembles a legal contract.
c. it lists the goals that are to be accomplished.
d. it describes salaries and benefits in detail.
Ans: d
259
24. When evaluating an option on a difficult moral decision, managers must consider:
a. legal implications.
b. appearances to top management.
c. benefits to the employee and the organization.
d. all of the above.
e. both a and c of the above.
Ans: e
25. The first step in attempting to arrive at a decision for a moral problem is to:
a. create alternative solutions.

b. write down your recommendation.
c. assemble the facts.
d. conduct in-depth analysis.
e. recognize the dilemma.
Ans: e
26. You are the sales manager of WGASA Corp. and are concerned about “Big Pete”
Burke, who used to be one of the star members of your sales force. You have the
following facts:
(1) “Big Pete” had an excellent sales record, and you’re having trouble finding good
replacements for salespeople who leave.
(2) Burke’s excessive cocaine use is preventing him, a potentially good salesperson,
from performing up to standard.
(3) “Big Pete’s” drug use is hurting AMAP sales and the situation must be corrected.
Which of the following is/are your optimal ethical choices?
a. Cover for Burke and write letters of recommendation to get him transferred to
another division.
b. Send “Big Pete” to a detoxification center for treatment and rehabilitation. On
returning, Burke would presumably be able to perform at his former high level.
c. Place a sales trainee in Burke’s territory and let them compete to see who could
produce the most sales. The one who survives the test would keep the territory.
d. Ignore the problem and hope that “Big Pete” will make up the deficiency without
260
outside interference or unnecessary prodding.
Ans: e
27. The best way to handle an alcoholic salesperson is to:
a. fire him or her.

b. transfer his or her to another division.
c. promote him or her out of the field.
d. send him to Alcoholics Anonymous.
e. depends on the situation.
Ans: e
28. A sales manager, it is your responsibility to hire and fire salespeople in your area.
You need to add 5 new salespeople to your staff. Hiring ____________ would represent
an ethical problem.
a. only white Christians

b. four qualified candidates and the company president’s daughter who was unqualified
c. only white females between the ages of 25 and 30
d. all of the above
e. both a and b of the above
Ans: b
29. A sales manager is likely to confront difficult ethical situations in which area?
a. forecasting next year’s sales levels.

b. hiring and firing new salespeople.
c. attending meetings at the corporate headquarters.
d. allocating next year’s pay increases.
e. reallocating territories among the sales force.
Ans: b
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30. Which of the following can pose ethical problems for a sales manager?
a. giving recommendations for former employees who performed below average

b. hiring salespeople from competitors
c. hiring relative of current employees when these relatives are possibly unqualified for
the job
d. all of the above
Ans: d
31. According to the text, the most frequent area for ethical abuse in a sales
organization usually occurs with:
a. promotions.
b. hiring.
c. firing.
d. expenses accounts.
e. house accounts.
Ans: d
32. Which of the following is not a way to keep your employees straight?
a. encourage employees to call for help when they face an ethically troublesome sale
b. setting up realistic goals
c. instituting large expense accounts with informal rules
d. encourage employees to “blow the whistle” when they must
e. all of the above are ways
Ans: c
33. “How much is too much” in today’s business world?
a. taking a customer to lunch

b. occasionally taking a client and spouse to a dinner and floor show
c. twenty-five dollar gifts once a year
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d. all of the above
Ans: e
34. The ethical dilemma surrounding house accounts is based upon which of the
following facts?
a. House accounts often generate high commission income.

b. House accounts generally require less servicing.
c. Transferring the house account will certainly be viewed as unfair by the
representative losing the account.
d. a and c of the above.
e. b and c of the above.
Ans: d
35. A good and practical solution to the problems of expense account-related ethical
problems is to:
a. present all expense reports to the IRS for review.

b. compare the reports to actual expenses of reliable salespeople and then set
reimbursement guidelines based on your findings.
c. ignore the problem if it involves amounts less than $25 per week and is associated
with the higher performing salespersons.
d. remove the expense report and move to a 100% commission-based plan where reps
pay their own expenses.
e. all of the above.
Ans: b
36. The quote, “Following the path of least resistance is what makes people and rivers
crooked,” might be referring to:
a. whistleblowing.
b. bribery.
c. sabotaging competitive plans.
d. withholding information.
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Ans: b
37. Entertainment provided for customers:
a. is always ethical.
b. is basically unethical.
c. is not standard American business practice.
d. can sometimes lead to ethical problems.
e. b and c of the above.
Ans: d
38. A whistle blower is an employee who informs the public about immoral or illegal
behavior of an employer or supervisor. Which of the following is/are false about whistle
blowing?
a. It is a last resort that is justified only if the employee has the appropriate moral
motive.
b. the evidence should be strong enough to convince the common man that a violation
is taking place.
c. the act of telling the public must have some chance for success.
d. the violation should be serious enough to require immediate attention.
Ans: e
39. Which of the following is usually the hardest to perform?
a. circulating an ethics policy statement to all levels of management

b. blowing the whistle on an unethical situation
c. setting realistic sales quotas
d. getting general verbal support from top management for a firing of an executive
Ans: b
Response: 272
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40. To help encourage whistleblowers to come forward with their claims:
a. federal laws have been made to hide the identity of the whistle-blower.
b. rules for what could fall under violations subject to whistleblowing have been
relaxed.
c. the government has vigorously pursued any suspected retaliation to whistleblowers.
d. federal laws have been modified to pay rewards of 15-25% of any recovery, plus
attorneys’ fees.
e. the government publishes a list of the ethical violators.
Ans: d
41. Someday you may have to establish a code of ethics to keep your sales force on
the “straight and narrow.” The first step, of course, is to get assurance from your board
chairman and your president that they expect you to follow both the letter and the spirit
of the law. Which of the following is/are another important step(s) for you to take?
a. set realistic sales goals

b. blow the whistle when you must
c. set the proper moral climate
d. all of the above
e. both a and c of the above
Ans: d
42. All of the following are ways to keep your sales force straight except:
a. getting assurance from both the chairman and president that they expect you to
follow the letter of the law.
b. developing and circulating a sales ethics policy.
c. setting up the proper moral climate.
d. instituting controls when needed.
e. giving salespeople the greatest amount of discretion possible on all issues.
Ans: e
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43. One of the best ways to install a sense of morality within salespeople:
a. build a sales ethics program within the company.

b. have then read a book by Charles Darwin.
c. threaten to use drug testing.
d. install one-way mirrors where appropriate.
e. c and d of the above.
Ans: a
4. An excellent way for a manager to build a strong sales ethics program is:
a. to fire unethical people.

b. to fire people who have had traffic violations.
c. to get the backing of the CEO.
d. initiate a drug testing program.
Ans: c
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File: Ch10, Chapter 10: Ethical Leadership

2. In general, relativism leads to better ethical decisions than idealism.

4. Providing entertainment for potential customers is standard practice in American

8. Being a gentleman and avoiding methods of deceit is an inherent part of

10. Machiavelli was philosophically a realist.

19. “Blowing the whistle” on other employees is an easy thing to do.

21. The Clayton Antitrust Act prohibits price discrimination.

22. The Magnuson-Moss Warranty Act allow salespeople to sell replacement

29. It is perfectly legal to set your company’s own hiring practices.

31. According to the text, entertaining customers should be a complementary part of a

1. Why is it sometimes difficult for sales managers to recognize an ethical problem?

a. Sales managers may not be trained to identify these problems.

a. it failed to tell stockholders of an impending decline in earnings at the company.

3. A code of moral behavior followed by a particular group is best termed as:

4. When Joe, the regional sales manager at a medium-sized packaged goods

a. In general, relativism leads to better ethical decisions.

10. Niccolo Machiavelli was:

13. If a salesperson displays Machiavellian tendencies, we would also expect to find:

a. general values of society, values of business corporations, relationship of values

a. setting reasonable goals for salespeople.

a. the job description.

23. Which of the following dos not characterize a job description:

a. it specified the number of hours of work.

a. create alternative solutions.

Which of the following is/are your optimal ethical choices?

27. The best way to handle an alcoholic salesperson is to:

a. fire him or her.

a. only white Christians

a. forecasting next year’s sales levels.

a. giving recommendations for former employees who performed below average

33. “How much is too much” in today’s business world?

a. taking a customer to lunch

a. House accounts often generate high commission income.

a. present all expense reports to the IRS for review.

37. Entertainment provided for customers:

39. Which of the following is usually the hardest to perform?

a. circulating an ethics policy statement to all levels of management

a. set realistic sales goals

a. build a sales ethics program within the company.

a. to fire unethical people.

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