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Business Ethics and Entrepreneurship

An analysis of the intersection between business ethics and entrepreneurial decision-making.

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    Page 1 Business Ethics and Entrepreneurship This test has a total maximum score of 100 marks. Please answer the multiple choice questions on the test paper by selecting the one best answer to each question. Please answer the short answer and paragraph questions in the test booklet provided. 1. When comparing small businesses to their larger competitors, it is clear that: A) bigger is always better. B) small firms can always outperform big firms on a level playing field. C) small firms often can offer more personalized customer services than big firms. D) small firms are slower to respond to opportunities than are large firms. 2. Insider trading involves: A) an Internet activity that establishes a barter exchange system between businesses. B) investors using private company information to further their own fortunes. C) the exchange of assets between companies in the same industry. D) a payment or reward for socially conscious behaviour. 3. Mel is a major stockholder in Precision Transmission Services (PTS), a nationwide network of transmission repair shops founded by his father. Currently, PTS stock is sold on the open market, but Mel has talked to several relatives about his desire to get all of the PTS stock back in his family's hands. Mel is interested in: A) taking the firm private. B) a hostile takeover in the firm. C) converting the firm to a general partnership. D) forming a master limited partnership. 4. In a limited liability partnership, each partner's risk of losing personal assets is: A) limited to the amount that partner invested in the company. B) limited to losses that result from their own acts and omissions and the acts and omissions of those who work under their supervision. C) determined entirely by the maximum loss provision established by the articles of co - partnership. D) nonexistent. 5. The importance of entrepreneurs to our economy is found in their: A) impact on the political process. B) ability to create jobs for others. C) contributions of money to organizations that help people in need. D) ability to influence national macroeconomics polices. 6. The largest source of capital for entrepreneurs is usually from A) venture capitalists. B) loansharks. C) provincial and municipal governments. D) personal savings.

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    Page 2 7. After developing a code of ethics, it should be communicated to: A) everyone with whom the business has dealings. B) the police in jurisdictions where the business has operations. C) all levels of management. D) stockholders. 8. Lamont wants to improve his chances to be a successful entrepreneur and so he has written a business plan. One advantage of developing this plan is that it: A) meets federal reporting requirements of Revenue Canada. B) insures financing will be available from the venture capitalists. C) forces Lamont to think carefully about all aspects of his planned business. D) will enable him to switch from a sole proprietorship to a corporation without any further paperwork. 9. Three questions often help individuals and organizations in deciding if their decisions are ethical. All of the following are ethics check questions except : A) Is it legal? B) Is it balanced? C) Has it been done before? D) How will it make me feel about myself? 10. A major reason given for conglomerate mergers is that they: A) diversify business operations and investments. B) allow the firm to have a more dominant position in its market. C) enable the firm to enjoy a higher degree of specialization. D) give the firm a more secure access to needed materials and components and better control over quality. 11. As a new employee, Vanessa has heard her boss say, "Do whatever it takes to meet your sales quota. However, anyone caught violating a law will be immediately fired." Vanessa recognizes this as a(n) ________ - based code of ethics. A) Internet B) personal responsibility C) compliance D) integrity 12. An ethic of care is based on: A) justice B) fairness C) equality D) responsibility

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    Page 3 13. Sally Wright has just taken early retirement, including a substantial retirement allowance. She wishes to continue working and wants to invest her retirement allowance in her own small business. She worked for the same employer in the same job all of her working career and therefore has no experience with running her own business. In starting her own business she would be well - advised to: A) start the business from scratch. B) buy an existing business. C) buy a franchise. D) work for someone in an existing small business for the next 10 years. 14. A(n) ________ - based ethics code emphasizes the prevention of unlawful behaviour by increasing control and penalizing wrongdoers. A) legal B) corporate responsibility C) compliance D) integrity 15. Finley is a limited partner in Gettout & Associates. Heywood U. Gettout, one of the senior general partners in the company, must temporarily leave the company to attend to some personal matters. Heywood has asked Finley to temporarily perform his managerial duties while he is gone. As a limited partner, Finley: A) can fill in as a manager whenever necessary, as long as it is for only a limited time. B) can make managerial decisions as long as they do not involve the payment of money. C) cannot participate in the management of the partnership. D) can manage the firm as long as he gets approval from the company's other general partners. 16. A ____________ is the share of profits or percentage of sales a franchisee pays to a franchisor. A) royalty B) dividend C) premium D) co - pay 17. The majority of CEOs blame unethical employee conduct on: A) the breakdown of traditional religious institutions. B) a failure of leadership to establish ethical standards. C) the increase in lawsuits used to avoid personal responsibility. D) the nation's business schools that tolerate unethical behaviour in students. 18. Todd and Jorge have considered starting their own business but are concerned about the possibility of losing their personal assets if the business fails. One way for both Todd and Jorge to avoid this risk would be to organize their firm as a: A) general partnership. B) limited partnership. C) corporation. D) sole proprietorship.

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