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Default ICFAI University MBA Business Ethics and Corporate Governance Exam Papers

Any buddy, please provide me the ICFAI University MBA Business Ethics and Corporate Governance (MB321) Exam Previous Years Question Paper………
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Old June 9th, 2014, 06:01 PM
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Default Re: ICFAI University MBA Business Ethics and Corporate Governance Exam Papers

Here I am sharing the ICFAI University MBA Business Ethics and Corporate Governance (MB321) Exam Previous Years Question Paper:

1. The most important task of an operations manager is making efficient use of materials, capacity and knowledge
available to achieve an output of the desired quality and quantity. To understand the various roles of an
operations manager, they are classified into two models. Which of the following job responsibilities is/are
common with both model 1 and model 2 managers?
I. Receiving incoming calls and mails.
II. Ensuring the health and safety of the workers.
III. Packaging the product.
IV. Negotiating with suppliers.
(a) Only (IV) above
(b) Both (I) and (III) above
(c) Both (II) and (IV) above
(d) (I), (II) and (III) above
(e) All (I), (II), (III) and (IV) above.

2. The effectiveness of an organization nowadays depends on its ability to develop itself into a social organization.
As a result, organizations have evolved overtime to perform a number of functions or tasks in society. Which of
the following tasks of organizations is related to creation and maintenance of wealth?
(a) Financial tasks
(b) Economic and production tasks
(c) Maintenance tasks
(d) Adaptive tasks
(e) Social tasks.

3. Carbon intensity levels are high in India when compared to other Asian countries. Which of the following is/are
the reason(s) for increase in carbon intensity level?
I. Increase in industrial activity.
II. Absence of energy and conservation measures.
III. Indian economic policies like low import tariffs on high-quality coal.
IV. Subsidies on low-quality coal.
(a) Only (II) above
(b) Only (III) above
(c) Both (I) and (IV) above
(d) (I), (II) and (IV) above
(e) All (I), (II), (III) and (IV) above.

4. Hostile takeovers are those that elicit opposition from the boards or employees of the target company.
Management uses many techniques to protect themselves from the unruly predator. In this regard, which of the
following is true regarding sandbag technique?
(a) Management may promote its own interests at the time of biding
(b) The company gives lucrative benefits to its top executives
(c) A potential takeover agent purchases stock in a company
(d) The company under target, changes the articles of association so that a group of shareholders have
special rights, which are evoked by a takeover
(e) Management may stall the buyout attempt in the hope that another more favorable company will try to
take them over.

i. e x e

5. The board relies on independent outside directors to monitor management performance. In order to do so the
board sets up various committees such as audit committee. Which of the following in not a function of the audit
(a) Make recommendations regarding the audit fee, selection and replacement of auditors
(b) Select the new non-executive directors
(c) Review the interim and final accounts
(d) Inform the board about the effectiveness of internal control and the quality of financial reporting as
pointed out by the independent auditors
(e) Discuss with independent auditors about the problems they experience in completing the audit.

6. Talcott Parsons proposed a view called the integration view of ethics. In this context, which of the following
statements is/are false?
I. It expresses that business being an economic entity has the right to make profits, but at the same time, it
should discharge the social obligations.
II. It implies that if businesses want to exist, survive and flourish, morality and ethics cannot be separated
from the operation of the business in the long run.
III. It endorses that the only aim of business is to generate profits.
(a) Only (I) above
(b) Only (II) above
(c) Only (III) above
(d) Both (I) and (III) above
(e) Both (II) and (III) above.

7. Accounting is defined as, “the process by which any business keeps track of its financial activities by recording
its debits and credits and balancing its accounts.” Which of the following is/are true regarding accounting?
I. It provides a system of rules and principles, which govern the format, and content of financial statements.
II. By adhering to the principles and practices in the system of an organization, it can provide fair and accurate
reporting of the financial position of a business.
III. The ethical issues surrounding accounting practices are under reporting income, falsifying documents,
illegally evading income taxes and engaging in fraud.
(a) Only (I) above
(b) Only (III) above
(c) Both (I) and (III) above
(d) Both (II) and (III) above
(e) All (I), (II) and (III) above.

8. Different social laws of states and nations that govern occupational safety and environmental standards is an
example of
(a) Law of economies
(b) Company law
(c) Law of the jungle
(d) Law of conservation of energy
(e) Industrial law.

9. Which of the following implies, adopting the norms of the country, in which an organization operates its
(a) Stakeholder theory, strategy and ethics
(b) Loyalty contract
(c) Psychological contract
(d) Cultural relativism
(e) Leveraged buy-outs.

10.The enhanced competition in the global economy has compelled corporations to perform better by going in for
cost-cutting, corporate restructuring, mergers and acquisitions and downsizing. All these activities can be carried
out successfully only if there is proper
(a) Social responsibility
(b) Business ethics
(c) Corporate governance
(d) Corporate management
(e) Ethical audit.

11.Thomas Donaldson and Thomas Dunfee proposed the Integrative Social Contract Theory. Which of the
following are not true regarding ‘social contract theory’?
I. A social agreement is formal agreement concerning behavioral norms that are developed from shared goals,
beliefs and attitudes of groups of people or communities.
II. Business organizations gain legitimacy through a social contract with society.
III. Social contract can be used as a tool to measure the performance of society.
IV. If the organization fulfills the terms of the social contract, the society can be morally justified for
condemning it.
(a) Both (I) and (IV) above
(b) Both (II) and (III) above
(c) (I), (II) and (IV) above
(d) (I), (III) and (IV) above
(e) All (I), (II), (III) and (IV) above.

12.Organizations, after they identify and are able to clearly state its values, will be in a position to train its
employees to deal with ethical dilemmas. The step-by-step process that will help employees resolve ethical
dilemma is known as
(a) Altruism
(b) Believe
(c) Credos
(d) Deontology
(e) Espoused values.

13.Ferrell and Gresham have identified various factors that determine the code of ethics framed by marketer. Which
of the following factors refer to the extent to which reference groups, top management and peers influence the
(a) Individual factors
(b) Consumers factors
(c) Significant factors
(d) Organizational factors
(e) Opportunity factors.

14.Boards are categorized depending on the way they function, their commitment to effective decision-making and
concern for interpersonal relations. Rubber stamp board
I. Lays emphasis on maintaining cordial interpersonal relations.
II. Accords to high priority to effective decision-making.
III. Gives little importance to either good interpersonal relation.
IV. Ratifies whatever decisions the CEO takes.
(a) Only (III) above
(b) Both (II) and (III) above
(c) Both (III) and (IV) above
(d) (II), (III) and (IV) above
(e) All (I), (II), (III) and (IV) above.

15.Mr. Ramachandran, the new CEO of Spa group of companies takes the initiative for developing the corporate
code. Which of the following is not a guideline that he should follow when developing the corporate code?
(a) He should identify the key behaviors that maximize the long-term owner value
(b) The human resource department must review the code
(c) A copy of the code should be sent each and every employee
(d) Codes should be updated atleast once a year
(e) Codes should ensure that they are in accordance with both company and government laws.

16.Fair economic competition is one of the basic requirements for increasing the wealth of nations. Therefore, the
responsibilities of the organization towards the competitors should not be which of the following?
(a) Foster closed markets for trade and investment
(b) Promote competitive behavior that is socially and environmentally beneficial
(c) Refrain from either seeking or participating in questionable payments
(d) Respect both tangible and intellectual property rights
(e) Refuse to acquire commercial information by dishonesty.

17.According to the Companies Act, an individual holding the position of a director of a firm should act as a trustee,
agent and managing partner. Fiduciary duties of a director include(s)
I. To act with best of skill and expertise.
II. Not to exceed their authority and powers.
III. Not to use unpublished and confidential information belonging to the company for their own purpose.
(a) Only (I) above
(b) Only (III) above
(c) Both (I) and (III) above
(d) Both (II) and (III) above
(e) All (I), (II) and (III) above.

18.Moral standards deal with right and wrong behavior and law compels individuals to act in the “right” or desired
manner. Considering the relationship between moral standards and legal requirements, which of the following
are the requirements laid down to develop a fair law?
I. Laws and moral standards overlap to a certain extent.
II. The law always represents collective moral judgment.
III. The requirement of law tends to be positive while moral standards tend to be negative.
IV. Law represents a minimum set of standards for generating human behavior in society.
(a) Both (I) and (IV) above
(b) Both (II) and (III) above
(c) Both (III) and (IV) above
(d) (II), (III) and (IV) above
(e) All (I), (II), (III) and (IV) above.

19.Business organizations are considered to be social institutions, apart from being economic entities, due to which
of the following reasons?
I. Business organizations exist and operate within a social structure.
II. Businesses need to win social acceptance, for their survival.
III. Business organizations need to be socially responsible as they exercise a wide influence on the society’s
(a) Only (I) above
(b) Only (II) above
(c) Only (III) above
(d) Both (II) and (III) above
(e) All (I), (II) and (III) above.

20.In order to ensure the availability of raw material buyers often resort to forward buying. Therefore, Tandon
committee has laid down certain norms for the inventory requirements. Which of the following is not a reason
for organizations to deviate from these norms?
(a) Irregularities in the import of raw material
(b) Unavoidable interruptions in production due to strikes, power cuts etc.
(c) Transport delays
(d) Piling up of stock of finished goods due to some special circumstances
(e) It’s the role of the purchase department.

21.Multinational companies (MNCs) are companies that have significant investments in several countries, which
derive a substantial part of their income from foreign operations. Which of the following is not a reason for
companies going global?
(a) Lower wage rates
(b) The opportunity to be closer to the suppliers
(c) Saturation of global markets
(d) To exploit opportunities in new markets
(e) Recession or domestic completion.

22.The manner in which a business deals with its employees is a clear indication of its ethical character. Ethics in
personnel function deals with all the issues in the relationship between the employee and the business. Which
of the following is not an ethical issue in human resource management?
(a) Retrenchment
(b) Employment contract
(c) Equality of opportunity
(d) Remuneration
(e) Hiring.

23.As businesses expand the issues concerned with environment started gaining importance. Most western
European countries have faced problems due to environmental degradation. Which of the following did West
Germany prepare to show the extent of damage caused to the environment?
(a) Ecological balance sheet
(b) Anxiological balance sheet
(c) Eco-centric balance sheet
(d) Deontological balance sheet
(e) Psychological balance sheet.

24.The problem with normative theories’ fundamental principle is that there is no agreement among ethicists on
which moral principles are the right ones. For a moral principle to be accepted by most of the ethicists, it must
be all of the following, except
(a) Descriptive
(b) Universal
(c) Overriding
(d) Public
(e) Practical.

25.Six factors are involved in ethical decision-making. Among these six factors if more than one-factor affects an
ethical dilemma then the ethical intensity increases. Ethical intensity is described as the
(a) Degree of minimum conduct expected by persons and businesses in society
(b) Degree of importance given to an ethical issue
(c) Degree of social acceptance that exists in defining something as good or bad
(d) Degree of high innovation and progress
(e) Degree of high legal protection.

26.The stakeholders of an organization are all those who participate in some way in the activities of the
organization. According to Freeman and Reed, stakeholders may be
I. Any group of people who have a stake in the business.
II. Those who are vital to the survival and success of the organization.
III. Any group that is affected by the activities of the organization.
(a) Only (I) above
(b) Only (II) above
(c) Both (I) and (III) above
(d) Both (II) and (III) above
(e) All (I), (II) and (III) above.

27.Corporations perform a wide array of activities, ranging from production of various types of goods and services
that are essential for leading a normal life. Which of the following is/are true regarding the purpose of a
I. Business corporations help human beings satisfy their basic needs of security, success and fulfillment.
II. A well-designed corporation enables individuals to create more wealth.
III. Corporations provide rigidity to individuals enabling them to perform better.
IV. Corporations are living entities exercising different rights and powers compared to any normal citizen.
(a) Only (III) above
(b) Only (IV) above
(c) Both (I) and (II) above
(d) Both (II) and (IV) above
(e) All (I), (II), (III) and (IV) above.

28.Which of the following is a characteristic of the Anglo-American model of corporate governance?
(a) The labor relations officer finds a place on the management board
(b) The board ratifies whatever decisions the president takes
(c) The president is appointed on the basis of a consensus between the shareholders and the banks
(d) The supervisory board appoints and monitors the management board
(e) The creditors have a lien on the assets of the corporation.

29.The ethical decision-making model recommends a step wise process. Which of the following is not a step in the
ethical decision making process?
(a) Judging the decision
(b) Establishing a moral intent
(c) Evaluating the decision
(d) Engaging in ethical behavior
(e) Problem recognition.

30.The first cyber law passed in India in order to curb growing unethical practices in the field of information
technology is
(a) Information Technology Act, 2000
(b) Cyber law
(c) E-commerce law
(d) The ITR Act
(e) Anti hacking law.

Business Ethics & Corporate Governance (MB3I2): January 2009
Section B : Caselets (50 Marks)
• This section consists of questions with serial number 1 – 6.
• Answer all questions.
• Marks are indicated against each question.
• Detailed explanations should form part of your answer.
• Do not spend more than 110 - 120 minutes on Section B.

Caselet 1
Read the caselet carefully and answer the following questions:
1. DotOrg is part of a new mode of philanthropy that is very similar to venture
capitalism, holding those they fund responsible in ways never seen before. In this
light, analyze why Google wanted to adopt a new mode of philanthropy to “make the
world a better place” and also explain the initiatives taken by DotOrg.
( 8 marks)

2. Explain the stages of ethical consciousness in business. Also, discuss in which stage
Google can be placed and why. ( 9marks)

Google announced a plan that begins to fulfill the pledge it made to investors when it
went public to reserve 1% of its profit and equity to “make the world a better place.”
The beneficiaries of Google’s money range from groups that are fighting disease to
those developing a commercial plug-in car.
The company’s philanthropy — Google.org, or DotOrg as Googlers call it — will
spend up to $175 million in its first round of grants and investments over the next
three years, Google officials said. While it is like other companies’ foundations in
making grants, but it will be untraditional in making for-profit investments,
encouraging Google employees to participate directly and lobbying public officials
for changes in policies, company officials said.
Google may be one of America’s 10 richest corporations as measured by market
value, but its budget for philanthropy is minuscule compared with the $70 billion of
the Bill and Melinda Gates Foundation.
Still, Google’s founders, Sergey Brin and Larry Page, expressed a hope back in 2004
that “someday this institution may eclipse Google itself in terms of overall world
impact.” What it lacks in size, though, Google.org may make up in cachet.
Larry Brilliant, a medical doctor who took on the role of director of Google.org 18
months ago, said he could not even begin to count how many spending proposals he
had seen. “There are 6.5 billion people in the world,” Dr. Brilliant said in a recent
interview, “and in the last 18 months I’ve met 6.4 billion, all of whom want, if not
some of our money, then some of the Google pixie dust.”
Dr. Brilliant, who moved to an ashram in northern India in the 1970s and went on to
play a major role in eradicating smallpox in the country, likened his moral quandary
in figuring out how to spend Google.org’s money to that faced by a saint wandering
the streets of Benares.
“There are 500 steps between the road and the Ganges,” he said. “On every step are
beggars, lepers, people who have no arms or legs, people literally starving. The saint
has a couple of rupees; how does a good and honorable person make a resource
allocation decision? Do you weigh a hand that’s missing more than a leg? Someone
who’s starving versus a sick child? In a much less dramatic way, that’s what the last
18 months have been for us.”
DotOrg has focused on what it can do “uniquely,” said Sheryl Sandberg, vice
president for global online sales and operations at Google, who, like all employees, is
permitted to spend 20 percent of her time at the foundation or in other charitable
ventures. “If you do things other people could do, you’re not adding value.”
The only urgency imposed on the foundation is how soon it can live up to the
expectations. “Building a new ecosystem is not an overnight phenomenon,” Dr.
Brilliant said. “Here at Google if you have a project, you press Send. We won’t work
that quickly.”
But for all the enthusiasm for the new organization, there are critics. “It’s wonderful
that this company is devoting massive resources to fixing big world problems, but
they are taking an engineer’s perspective to them,” said Siva Vaidhyanathan, a
cultural historian and media scholar at the University of Virginia. “Machines and
software are not always the answer. Global problems arise from how humans have

undervalued each other and miscommunicated with each other.”
He pointed to Google.org’s decision not to take a step like financing scholarships for
girls in India who have not had access to education. “That’s what is so naïve about
Google.org’s approach,” he said. “If you can educate a thousand girls in one state in
India, you’ve already made a bigger difference than 99 percent of the human beings
on earth because every one of those of girls can make a difference.”
The process of determining what to finance was not easy, said Jacquelline Fuller, the
head of advocacy at Google.org. Beginning in the spring of 2007, “the 20 team
members had 20 ideas.” Team members, she said, “debated, cried and held hands as
we tried to determine what kind of difference we could make.” It took them almost a
year to winnow down the list.
Although it was just announcing its initiatives, Google.org has already begun to give
away some of its money. That is the case with grants for the first of its initiatives —
what the philanthropy calls “predict and prevent.” This effort focuses on
strengthening early warning systems in countries around the world to detect a disease
before it becomes pandemic, or a drought before it becomes a famine.
To attain that, DotOrg has made a grant of $5 million to a nonprofit group that
Dr. Brilliant helped to set up, though it is independent from DotOrg. Called
INSTEDD, for Innovative Support to Emergencies, Diseases and Disasters, the group
seeks to improve data and communication networks. An additional $2.5 million has
been awarded to the Global Health and Security Initiative to respond to biological
threats in Thailand, Vietnam, Cambodia, Laos, Myanmar and China’s Yunnan
“In recent years,” Dr. Brilliant said, “39 new communicable diseases with a potential
to become pandemic have jumped species,” including SARS, or severe acute
respiratory syndrome; monkey pox and bird flu.
“What if we could have been there when the H.I.V. moved from animal to chimp to
human and could have averted that risk?” he asked. “To prevent or abort or slow a
pandemic saves tens of millions of lives.”
The second initiative, called “the missing middle,” refers to the missing middle class
in Africa and South Asia and the missing middle level of financing between
microcredits and hedge funds.
Microcredit funds currently provide families with three or four or five days of
livelihood, Dr. Brilliant said. “No country,” he said, “has ever emerged from poverty
because of microcredit. Jobs make that possible. China did it with manufacturing,
India did it with outsourced call centers.”
To that end, DotOrg has awarded $3 million to TechnoServe to find worthy
entrepreneurs and help them build credit records and get access to larger markets.
The third initiative, “information for all,” is aimed at helping developing countries
provide better government services by making information available on their efforts
to improve health care, roads and electrification. “India has promised health care,
work, and transparency throughout,” Dr. Brilliant said. “Yet it’s hard to do something
like this on the scale that India is trying to do, to let people know what their
entitlement is.”
DotOrg has awarded $2 million to support the Annual Status of Education report in
India to assess the quality of education; $765,000 to create a Budget Information
Service to improve district-level planning, and $660,000 to build communities of
researchers and policy makers to deliver information.
DotOrg decided to finance literacy information because, said Lant Pritchett, a
DotOrg adviser who teaches economic development at the Kennedy School of
Government at Harvard, “We’re looking for things where Google could have a
transformative impact. Ideas, flexibility, entrepreneurship are better than just cash on
the table.”
Google.org’s fourth initiative supports the development of renewable energy sources

that are cleaner and cheaper than coal. DotOrg has invested $10 million in eSolar, a
company in Pasadena, Calif., that specializes in solar thermal power.
The philanthropy is also working to accelerate the commercialization of plug-in
vehicles. Google, whose own computers and customers use plenty of energy, “does
not want to be part of the problem; we want to be part of the solution,” Dr. Brilliant
“We’re not trying to bring returns to Google,” Dr. Brilliant said. “Profits are vital to
businesses that will support the missions.”
Mark Dowie, author of the book “American Foundations,” said DotOrg is part of “a
new mode of philanthropy that is very similar to venture capitalism, holding those
they fund responsible in ways never seen before.” The danger, he said, “is that a lot
of philanthropic work is not quantifiable. How do you qualify arts grant making, for
Still, he added, “what would be worse is for Google not to give away its money, but
to hoard it.”

Caselet 2
Read the caselet carefully and answer the following questions:
3. Felipe Montez as a Purchasing Director and Product Designer for a Spanish
electronics company was uncomfortable about continuing to source the majority of
his company’s products from the factory with bad working conditions. In this regard,
discuss the purchasing code of ethics with examples. Also analyze how SHAPE
inspection can help Felipe to take decision regarding outsourcing to companies in
South China. ( 9 marks)

4. Felipe knows that the factory that his company is outsourcing from was prized for
the speed and quality of its work and that his job was to maintain the quality of his
company’s goods. In this context, discuss the role and responsibility of a purchasing
manager and purchasing department. ( 9 marks)

In 2003 Felipe Montez was hired to be a Purchasing Director and Product Designer
for a Spanish electronics company. This company focused on supplying fashionforward
personal electronics (such as cell phones or MP3 players) and had built their
reputation by quickly responding to trends in electronics while still maintaining a
reasonable price point. In order to keep prices low and produce products quickly, the
company outsourced certain elements of their production, most recently to factories
in South China.
Until Felipe was hired, the company had a 27 year history of working with a
distributor in Hong Kong, during which time no one from the Spanish headquarters
had ever visited the actual Chinese factories where their goods were manufactured.
Felipe had previous experience working in Asia, and decided to cut out the middleman
by working directly with the factories in China that supplied his company’s
goods. Working directly with their factories eliminated the distributor’s mark-up
(which was sometimes as high as 30%) and allowed for faster communication and
delivery from the factory.
On Felipe’s first trip to China he visited several factories. Conditions varied from one
factory to another. A few of them were clean and very organized, but some facilities
seemed more chaotic. Felipe was particularly concerned about the conditions in the
factory that produced the majority of his company’s goods.
Many of the employees at this factory appeared to be very young (Felipe guessed
they were 12- 16 years old). In response to questions about the youth of the workers,
the factory manager told Felipe that younger girls were valued for their precision
work: they had small hands and could mount chips on motherboards very carefully.

Although younger girls were slower than an assembly machine, the factory manager
told Felipe they were cheaper to “run” and “maintain”.
The young factory workers had to work for what the foreman claimed to be an 8-
hour work day, 6 days a week. In general, the factory manager seemed to regard the
workers less as human beings and more as part of a mechanical process. Felipe was
shocked to discover that during their shifts the workers were not allowed to look up,
because the factory manager did not want them to lose one second of concentration.
In spite of these long hours of concentrated work, the young girls installing chips
into motherboards did not have magnifying glasses to ease the strain on their eyes.
Felipe was also concerned that working conditions in the factory were unhealthy. He
noticed that, in spite of high temperatures in the region (often above 100º
Fahrenheit), the only employees working in an air-conditioned space were the ones
working with the assembly machines, because the machines needed a constant room
temperature. Felipe was especially troubled by the fact that some factory employees
worked in the immediate vicinity of melted lead, while others painted plastic cases
with only paper masks for respiratory protection from resulting gasses. (In fact, on a
later visit Felipe discovered that these workers were paid more, as it was well-known
in the community that these workers would often get seriously ill, and perhaps even
die.) The workers’ lives outside of the factory also concerned Felipe: all of the
workers lived next door in a factory-owned building that did not have windows or
running water.
After his visit, Felipe could not stop thinking about what he had seen at this factory.
He had visited a number of factories in China, and while there were certainly
factories with worse conditions, there were many where conditions were far better.
He was uncomfortable about continuing to source the majority of his company’s
products from the factory with conditions as they were. On the other hand, Felipe
knew that this particular factory was prized for the speed and quality of its work and
that his job was to maintain the quality of his company’s goods.
Felipe was unsure if he had the expertise to find a suitable replacement factory, and
he reasoned that even if he took his company’s business elsewhere, it would do
nothing to change the lives of the young people working in the factory.
Felipe knew some representatives for the other companies that sent work to this
factory, and he talked to them about his concerns. On the whole, they seemed far less
concerned. In fact, many of his colleagues pointed out that without a job in the
factory, the young people who worked there would likely be doing more difficult
work in the fields, or in the case of the young girls, might be pressured into
prostitution. They suggested that working in the factory was a way out of poverty for
these young people, even if conditions were a little rough.
He knew that many of these other company representatives were far more senior than
he was and had been visiting this factory for years. Faced with their responses to his
concerns, Felipe wondered, “If it is okay for them to do nothing about the conditions,
maybe it is alright for me to do nothing as well? After all, they seem to know more
about the situation than I do.” But with more thought Felipe realized he wasn’t
comfortable with this mentality—while working in a factory may have been better
than the alternative for these young people, that did not mean that conditions could
not still be improved.
When he returned to Spain, Felipe discussed what he had seen with his manager and
detailed his concerns about certain conditions in the factory. His manager encouraged
Felipe to follow up on specific issues he had identified, such as the need for
magnifying glasses for the young girls doing precision work. However, he was
discouraged from raising the larger issues, such as long hours and lack of breaks for
the workers, since his manager reasoned that any changes in the factory’s policies
would increase costs and therefore increases the purchase price of the goods they
were sourcing from the factory.
Felipe knew that some larger public companies had more stringent requirements for
their factories. He had also heard that some electronics companies were talking about
creating an industry group to enforce better labor standards in their factories in Asia.

However, most of these companies were placing orders on a much larger scale than
his company (often working as the exclusive client of large factories, unlike his
company, which worked with factories that were serving a variety of different
clients), and he suspected his management wouldn’t want to get involved in issues
that might ultimately raise prices. He did find out, however, that his company had a
small charitable fund that focused on providing micro-finance loans to women in
Still, as a junior member of the staff, Felipe was concerned about pressing this issue.
He could tell that his manager considered the discussion over, and going above his
head seemed like a bad idea. Felipe was also concerned that he could undermine his
credibility in the company or be branded as too naïve. However, when he thought
about things he had seen in China, he felt guilty and sad, even when he tried to tell
himself that this was just the reality of the world. He wants to act prudent and

Caselet 3
Read the caselet carefully and answer the following questions:
5. The genesis of Corporate Social responsibility (CSR) at Eicher Motors Ltd. (EML),
began with the growth of business. Discuss. ( 9 marks)

6. The CSR at Eicher Motors is more than philanthropy. It takes care of all its
stakeholders, which can be very well understood by their corporate initiative. In this
context, discuss the responsibilities of corporate towards their consumers and justify
whether EML is fulfilling its responsibility towards its consumers. ( 6 marks)

Eicher Motors Ltd. (EML), belonging to the Eicher group, is a leading Commercial
Vehicle (CV) manufacturer, with a significant presence in the 6 to 9 ton segment. It
has a market share of 33% in this segment. Recently, the company has decided to
enter the medium/ heavy commercial vehicle segment. Recognizing the need for an
"environment friendly vehicle", EML has developed a new engine compliant with
Bharat 2001 norms in collaboration with AVL of Austria.
Eicher Motors has acquired formidable expertise in designing and developing
commercial vehicles. It has a world-class R&D centre manned by a team of
engineers and equipped with latest Computer Aided Design (CAD) and Computer
Aided Engineering facilities like NASTRAN, FEM analysis packages. Leveraging its
in-house expertise, this unit has successfully developed a wide range of commercial
vehicles to meet varying customer needs.
The inception of Eicher goes back to the year 1948, when the Goodearth Company
was set-up to sell and service imported tractors in India. Slowly and steadily the
company started gaining a strong hold in the Indian market. The Eicher Tractor
Corporation of India Private Ltd. was incorporated on April 24, 1959. It was a
company formed in technical collaboration with the reputed Gebr. Eicher of
Germany. This was a very critical phase in the company’s history, since the idea was
not only to come out with Eicher’s first tractor, but India’s very first tractor. The
consistent efforts of Eicher towards indigenous manufacture of tractors were
rewarded on September 3, 1960, when Eicher rolled out India’s first indigenously
built tractor from its Faridabad factory.
The genesis of Corporate Social responsibility (CSR) at EML began with the growth
of business. The company has undergone numerous changes since its inception,
based on mergers and acquisitions and a growing realization of the environmental
impacts of a large automotive company.
The management communicates and demonstrates support for CSR at Eicher Motors.
Business units and managers are required to incorporate economic, social and
environmental objectives into their business plans. The understanding of CSR is very
well articulated under “corporate Values” and thereby the actions are guided
accordingly from those values of the company: The core values are being secular,

apolitical, fair, trusting, empowering of employees and adopting ethical practices.
The CSR at Eicher Motors is more than philanthropy. It takes care of all its
stakeholders, which can be very well understood by a corporate initiative under emotion.
The CSR principles of the company are found mostly in the areas of environment,
employer-employee relationship, ethics and community investments. Eicher Motors
is committed to be environmental leader and puts a great deal of emphasis on
environment as a priority CSR program. Company environmental commitments are
reflected in its EHS policy and its environmental management system. EMP
(Environmental management plan) at Eicher Motors is a logical conclusion of EIA
(Environment Impact Assessment). The company is very conscious of the
environmental impacts and pollution hazards. The EMP was integrated into the
business plan to guide the business operations, which mitigate the environmental
risks and concerns.
The EMP is prepared for formulation, implementation and monitoring of all local
processes, development and environment protection measures during plant operation.
EMP includes the following four stages:
• Conceptualization: Existing environmental scenario;
• Planning: detailed study of environmental impact and identifying the
necessary control/ mitigation measures;
• Implementation: Implementation of environmental control measures;
• Operation: Monitoring the effectiveness of existing measures and those
proposed in the EMP.
The mitigation measures of the company include the management and maintenance
of air quality, water quality, land, noise levels, ecology, solid waste, socio-economic
and health aspects of the community.
Over the year the consumption of water in the region has gone up and the water table
and the level of water in dams and reservoir has gone down. The worst was seen in
2002 when it rained the lowest ever, about 20 inches against the average of about 35
inches in the previous years. It was around that time Eicher Motors took initiatives
towards water conservation and Rainwater harvesting. Under this rain water from the
hill slopes was channelized through specially constructed trenches and was dropped
in 20 percolation pits made at pre-defined locations. Stored rainwater was filtered
and used for the industrial purposes and rest was allowed to percolate down to the
ground. Rain water even from the roof slopes was collected through pipelines and
was discharged into the percolation pits through the same channel.
During 2003-04 the following energy conservation measures were adopted at Eicher
• Promoting non-conventional and green energy by harvesting additional
windmill power resulting in lower costs;
• Installation of new natural draft cooling towers, Air booster for coordinates
and measuring machine;
• Energy Efficient motors and pumps for water supply in the plant;
• High luminous low wattage lamps for boundary and plant lighting etc;
• Usage of energy saving air blow guns and optimization of compressors;
• Cold washing of components and eliminating electrical heating;
• Automatic switch off of Press motor during idle conditions.
New initiatives are being taken with regard to modified piping system of engine shop
cooling tower and installing automatic cut off for pumps and blower of engine
washing machines. Use of CNG as green energy for internal use of paint shop and
washing machine chemicals was another effort in this direction. In order to reduce
the power consumptions, the company has replaced the corrugated sheets with
transparent sheets in the entire assembly and store area. During the day hours the
area is naturally lighted and does not require electrical energy for lighting purpose.
Another innovative idea to conserve the energy is through enhancing the efficiency

of the systems installed in pneumatic lines where the pressure and flow of air is
controlled. This saves the power requirement significantly.
Eicher Motors has also taken a proactive step in developing superior fuel-efficient
and environmental friendly vehicles. The heavy commercial vehicle project, which
started in 1997, in the beginning was planed for introduction with BS-I (Euro-I)
compliant engine. However, considering the concern for environment, a pro-active
step to introduce BS-II (Euro-II) compliant engine was developed. With a view to
conserve the precious fuel, the engines have been designed to improve fuel
consumption by reducing the emissions of various pollutants as well as CO2, again a
green house gas. The vehicles have demonstrated improved fuel economy up to 8-
10%. Investing in employee programs is a very important focus area for Eicher
Motors. The company as manufacturer knows that people are its strongest asset and
has thus developed many progressive employee programs to retain and attract
skilled, quality employees. Eicher has around 5000 employees located in 5
manufacturing facilities and 56 marketing & area offices all around India.
The company provides a wide range of employees’ welfare programs, which ensures
the social security of the employees and their families. The welfare scheme includes
the provident fund, health care, education & scholarships support, interest free loans
for marriage, death benefits, leave, maternity benefit and uniforms etc. There is a
canteen at the work place for all employees where food is made available to
employees at a subsidized rate.
Eicher as a company is committed to the community in its broadest sense. This
commitment takes many forms, with special attention to enhancing education and
quality of healthcare facilities throughout the country. Eicher’s commitment to the
cause of education saw the birth of the three Eicher Schools at different locations in
the country. These schools are recognized co-educational, English medium and are
affiliated to the Central Board of Secondary Education, Delhi. A Foundation was also
set up by the Eicher Group of companies to strengthen the educational system and
provide quality education to the children in rural India. This program currently runs
in Rai Bareilly, Alwar and Solan districts. In the field of healthcare, Eicher’s
contribution is in the management and funding of the Dr. Shroff Charitable Eye
Hospital, located in Delhi. Eicher has been managing the operations of this hospital
since the year 1996. Located in the heart of Delhi, this hospital is a non-commercial,
non-profit trust set up to enable people from all walks of life and all sections of
society to receive quality eye care. A School Screening Programme is also in place
for identification and treatment of kids who are visually impaired. To combat the
blindness problem a satellite clinic has also been set up in the Alwar district of
Rajasthan. In the city of Indore in Madhya Pradesh the company has taken the
responsibility of road safety. The company has provided traffic light equipments at
all the crossroads and is also responsible for its maintenance.

Section C : Applied Theory (20 Marks)
• This section consists of questions with serial number 7 - 8.
• Answer all questions.
• Marks are indicated against each question.
• Do not spend more than 25 -30 minutes on Section C.
7. Lily Textiles incorporate corporate governance committee that spends a lot of
time discussing corporate governance matters, including business ethics and
best practices. In one such meeting they decided that they should follow the
principles recommended by OECD Report. Discuss the broad areas OECD
principles fall into.
( 10 marks)

8. Arun Motors is ready to takeover Vishnu Motors. Mr. Feroz, the manager of
Vishnu Motors is worried about the impact this is going to create. Therefore Mr.
Feroz and a group of employees are looking for ways in which to protect
themselves from the unruly predator. Explain the various techniques Mr. Feroz
can use to protect the company.
( 10 marks)
Answered By StudyChaCha Member
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Old November 4th, 2015, 02:13 PM
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Default Re: ICFAI University MBA Business Ethics and Corporate Governance Exam Papers

Hey buddy I’m Garv preparing for the MBA examination from ICFAI University for that can you please get the exam paper of Business Ethics and Corporate Governance so that I can get idea about the exam?
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Old November 4th, 2015, 02:17 PM
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Default Re: ICFAI University MBA Business Ethics and Corporate Governance Exam Papers

As per your demand I will help you here to get the exam paper of Business Ethics and Corporate Governance of MBA program for ICFAI University so that you can score well in exam.

Here I the exam paper of MBA Business Ethics and Corporate Governance

MBA Business Ethics and Corporate Governance exam paper 1
1. Mr. Anand Desai is in an ethical dilemma regarding purchase of a machine. If he buys the machine from Best
Electronics, who are ready to give 5 years warranty, he will not get any monetary benefit for himself. Therefore
he decides to buy the machinery from GL Electronics, who is giving only 1year warranty, in order to gain the
personal monetary benefit. Which of the following factors involved in decision-making affects the ethical
dilemma of Mr. Anand Desai?
(a) Concentration of effect
(b) Time interval
(c) Proximity
(d) Social agreement
(e) Magnitude of consequence.

2. When the implications and consequences of managers’ decisions become more evident, managers are faced with
the challenge of ethical dilemma. To avoid ethical dilemmas managers can follow the approaches by Clutterbuck
and Drummond and Carmichael’s. Which of the following does not belong to Clutterbuck’s approach?
(a) It includes ethics in recruitment criteria
(b) It uses reward and punishment mechanisms
(c) It establishes openness and transparency into decision-making processes
(d) It provides mechanism for negotiating concerns
(e) It draws up personal and corporate ethics checklist.

3. When a company adopts an anti-pollution environment policy, it is said to be ‘going green’. Organizations adopt
green initiative due to which of the following reasons?
I. Economic benefits from increased efficiency.
II. Competitive advantage through innovation.
III. Set a standard or code for moral behavior.
IV. Public image.
(a) Only (I) above
(b) Only (II) above
(c) Both (II) and (III) above
(d) (I), (II) and (IV) above
(e) (I), (III) and (IV) above.

4. If Vijay Motors is taken over by Vishnu Motors, Mr. Feroz and many other top executives are going to lose their
jobs. Therefore in order to discourage the unwanted takeover attempt, the management of Vijay Motors gave
stock options, bonuses and severance pay to all the top executives. By adopting which of the following
techniques, was the management of Vijay Motors able to protect themselves from hostile takeover?
(a) Golden parachute
(b) Sandbag
(c) Greenmail
(d) People pill
(e) Poison pill.

5. The primary role of the board is to supervise the quality of strategic thinking of the executive committee and
performs its role in strategy development at various levels. Structural and portfolio level of strategic thinking
involves discussions among the board of directors and the management, relating to which of the following?
I. External environment.
II. Mergers and acquisitions.
III. Potential market trends.
IV. Strategic alliance.
(a) Only (IV) above
(b) Both (I) and (III) above
(c) Both (II) and (IV) above
(d) (I), (III) and (IV) above
(e) All (I), (II), (III) and (IV) above.
6. Prakash Industries Ltd. concentrates on profits so that they can continue to sponsor the blind school and the other
social activities they have undertaken. They measure their success not only in financial terms but also in terms of
contribution to society. In which of the following stages of ethical consciousness Prakash Industries Ltd., can be
(a) Law of the jungle
(b) Corporate citizenship
(c) Profit maximizing in the long-term
(d) Stakeholder concept
(e) Anything for profit.

7. The accountants who look into the operations of internal accounts of various departments and make a record of
the financial activities are management accountants and financial accountants. Which of the following is/are true
regarding management accountants?
I. The role of management accountant is to provide information that the management needs for
formulating policies.
II. The management accountant provides economic information to the investors.
III. The role of management accountant also involves advising directors on the items that have to be
included in the financial statement.
IV. The task of management accountant is to provide trustworthy and credible information on which
management can base its decisions.
(a) Only (I) above
(b) Both (I) and (II) above
(c) Both (I) and (IV) above
(d) (I), (II) and (III) above
(e) All (I), (II), (III) and (IV) above.

8. Global Tech Ltd., as a corporation enjoys the right to make donations to the leading political parties to push an
agenda in favor of it. Which of the following characteristics of a corporation, is Global Tech Ltd. enjoying?
(a) Transferability
(b) Limited liability
(c) Liability for investors
(d) Centralized management
(e) Legal personality.

9. Apart from taking strategic decisions and carrying moral risks of the business, a leader even has to maintain a
healthy relationship with stakeholders through ‘contracts’. Psychological contract is one among the various
Cannon contracts. Psychological contract
I. Aims at motivating employees and giving recognition to stakeholders and also offers some security.
II. Enables managers to use their competence and skills for the benefit of the enterprise.
III. Helps managers to make decisions that minimize wastage and at the same time, maintain a consistent
effort in reward standards.
(a) Only (I) above
(b) Only (II) above
(c) Only (III) above
(d) Both (I) and (II) above
(e) Both (II) and (III) above.

10.Governance is concerned with the intrinsic nature, purpose, integrity and identity of the institution. Corporate
management is more of hands on activity. Which of the following is/are true regarding corporate management?
I. External focus.
II. Management assumes an open system.
III. Task oriented.
IV. Concerned with where the company is going.
(a) Only (I) above
(b) Only (III) above
(c) Both (I) and (IV) above
(d) (I), (II) and (III) above
(e) All (I), (II), (III) and (IV) above.
11.When relationships among peers, superiors and subordinates are based on trust, there is less friction among
employees and a reduction in employee turnover. Jitendra Mishra and Molly Morrissey have identified which of
the following factor(s) that promote trust in an organization?
I. Open communication.
II. Sharing of critical or important information.
III. Encouraging employee participation in decision-making.
IV. Sharing of perceptions and feelings.
(a) Only (I) above
(b) Both (I) and (III) above
(c) Both (II) and (IV) above
(d) (I), (III) and (IV) above
(e) All (I), (II), (III) and (IV) above.

12.Managers generally adopt different ethical standards when carrying different tasks. They justify their behavior
in resolving the dilemma rationalization. According to Gelleraman, a manager uses which of the following
I. They will be protected by their family.
II. Their actions are aimed at the individuals or corporations best interest.
III. Their actions are within reasonable ethical and legal limits.
IV. Their actions will be disclosed and published.
(a) Only (I) above
(b) Both (I) and (IV) above
(c) Both (II) and (III) above
(d) (II), (III) and (IV) above
(e) All (I), (II), (III) and (IV) above.

13.Marketing mix which includes 4P’s is crucial for the marketing decision making process. Assembling and
managing these 4P’s is an important task for any marketer. Marketing mix also includes the service aspects of
I. People.
II. Action.
III. Process.
(a) Only (I) above
(b) Only (II) above
(c) Only (III) above
(d) Both (I) and (III) above
(e) All (I), (II) and (III) above.

14.The decisions taken at Fashions Ltd. were always influenced by Mr. Pratap, uncle of Mr. Rahul who owns the
company. Mr. Pratap was held responsible along with the board directors for the acts of the company. Mr. Pratap
is playing the role of which of the following types of directors?
(a) Non-executive director
(b) Alternate director
(c) Shadow director
(d) Associate director
(e) Representative director.

15.Corporate codes are voluntary to organizations and enhance the freedom to address any issue such as employees’
safety and health, workers rights, etc. A corporate code can be developed in various formats. Which of the
following formats reflects the company’s policies on certain issues concerning suppliers, contractors and buying
(a) Circulated letters
(b) Special documents
(c) Management philosophy statements
(d) Purchase orders
(e) Compliance codes.
16.The stakeholders of an organization are all those who participate in some way in the activities of the
organization. A company’s relationship with which of the following stakeholders must be based on mutual
respect to foster long-term stability in return for value, quality, competitiveness and reliability?
(a) Creditors
(b) Suppliers
(c) Community
(d) Employees
(e) Competitors.

17.The board of directors can exercise some powers on behalf of the company. Which of the following powers can
be exercised only with the consent of the company at the general meeting?
I. The power to invest funds of the company.
II. Power to remit debt due by a director.
III. Power to appoint sole selling agents.
IV. Power to borrow in excess of capital and reserves for the company.
(a) Both (I) and (II) above
(b) Both (III) and (IV) above
(c) (I), (III) and (IV) above
(d) (II), (III) and (IV) above
(e) All (I), (II), (III) and (IV) above.

18.Law can be defined as a consistent set of universal rules that are widely published, generally accepted and
usually enforced. Which of the following is not true regarding the characteristics of law?
(a) Laws are enforced when people disobey them
(b) If a minority of members do not obey the law, it becomes difficult to enforce it
(c) The requirement how to act or not to act in a particular situation has to be published in written form
(d) Law is applicable to everyone who faces similar circumstances
(e) There should be any contradiction between two requirements of the act.

19.Focus on corporate responsibility was highlighted through the industrial revolution and the years thereafter.
Which of the following happenings pertain to the industrial revolution during ‘nonconformist challenge’ in
I. Wealth and industry were approached in different ways from the perspective of the religion that people
heading big businesses followed.
II. Quakers played an important role in shaping values of new entrepreneurial groups.
III. It reflected the needs of people who failed to prosper from the industrial revolution.
(a) Only (I) above
(b) Only (II) above
(c) Both (I) and (II) above
(d) Both (II) and (III) above
(e) All (I), (II) and (III) above.

20.A research was conducted by the Center for Advanced Purchasing Studies to find out the relationships of the
American buyers with the foreign suppliers. Which of the following is not a result of this study?
(a) Buyers who were least satisfied with the supplier relationship were those who perceived their suppliers
to be most involved in unethical activities
(b) Significant differences did exist between buyers’ and suppliers’ perceptions regarding how each
believed the other to be involved in these activities
(c) Buyers believed that suppliers are involved in unethical practices and felt that suppliers are performing
less effectively
(d) It appeared that American buyers realized that employing unethical practices will result in short-term
success, but the foreign suppliers did not give hear to this aspect
(e) There is no relationship between the supplier’s nationality and the level of unethical activity in the
buyer-supplier relationship.

21.Which of the following is/are not true regarding the study conducted to examine ethical practices in the US,
France and Germany?
I. The American managers said that bribery was unethical and illegal under the Foreign Corrupt Practices
II. Only one third of the French managers felt signing a purchase order with the cost price more than the
current market price, would be dishonest.
III. It was concluded that the US and German executives were more concerned with ethical and legal
(a) Only (I) above
(b) Only (III) above
(c) Both (I) and (II) above
(d) Both (II) and (III) above
(e) All (I), (II) and (III) above.
22.At times of recession it has become common for businesses to reduce their size and overhead costs by
discharging some of the employees, and creating which of the following styles of management?
(a) Autocratic
(b) Bureaucratic
(c) Lean and mean
(d) Hire and fire
(e) At-will.

23.Laws can be enforced only if they are unduly accepted. Which of the following is not a process involved in the
formulation of law?
(a) Society process
(b) Political process
(c) Group process
(d) Individual process
(e) Economic process.

24.Money laundering can be defined with reference to situations such as
I. Acquisition, ownership, possession or transfer of any proceeds of crime.
II. Knowingly entering into a transaction related to the proceeds of crime, directly or indirectly.
III. Concealment or aiding in the concealment of the proceeds of crime.
IV. Those that violate equality of opportunity.
(a) Both (I) and (II) above
(b) Both (III) and (IV) above
(c) (I), (II) and (III) above
(d) (II), (III) and (IV) above
(e) All (I), (II), (III) and (IV) above.

25.Which of the following financial frauds can be detected by comparing financial statements over a period of
time, examining unusual journal entries, verifying supporting sales documents and unusual sales transactions?
(a) Fraudulent asset evaluations
(b) Concealed liabilities and expenses
(c) Fictitious revenues
(d) Fraudulent timing differences
(e) Fraudulent disclosures or omissions.

26.Which of the following is known as an assessment of the social impact of a corporation on society?
(a) Social audit
(b) Venture philanthropy
(c) Social initiative
(d) Ethical audit
(e) Cause-related marketing.

27.The enlightenment matrix is used to measure corporate giving. As per the matrix, a company that is high in
philanthropy and high in self-interest is involved in which of the following activities?
(a) Social responsibility
(b) Pure philanthropy
(c) Cause-related marketing
(d) Enlightened self-interest
(e) Community involvement.

28.Which of the following is the main purpose of corporate governance?

(a) Disbursement of organizational resources to individuals based on positive contributions made to the
(b) To adopt new technology
(c) To maximize shareholder value
(d) To separate ownership and management control of organizations
(e) To ensure that regulatory frameworks are adhered to.
29.In which of the following corporate governance models, do financial institutions have a major say in
governance mechanism?
(a) Anglo-American model
(b) German model
(c) Japanese model
(d) Indian model
(e) Russian model.

30.Which of the following pertains to the ‘conformance role’ of a director?
(a) It is a tricky role as it involves the director monitoring and evaluating his own performance
(b) The director acting as a source of know-how expertise and external information
(c) Outside directors act as the eye of the board to the external world
(d) The outside directors representing the company on public forums or committees
(e) The director catering to the needs of the corporation for networking, representing and adding status.
Section B : Caselets (50 Marks)
•This section consists of questions with serial number 1 – 6 .
•Answer all questions.
•Marks are indicated against each question.
•Detailed explanations should form part of your answer.
•Do not spend more than 110 - 120 minutes on Section B.
Caselet 1
Read the caselet carefully and answer the following questions:
1. On July 31, 2006, Murthy said that Infosys was started with a vision of global
delivery. Analyze Infosys vision statement in terms of ethical issues involved while
developing the vision statement? ( 8 marks)

2. Infosys has majority of the board structure and compensation, nomination, investor
grievance and audit committees, which are comprised of independent directors.
Discuss. Also discuss the other corporate governance initiatives taken by Infosys
where it sought to be a global leader. ( 9 marks)

Chief Mentor N.R. Narayana Murthy is as well known as a promoter of corporate
governance reform and excellent corporate workplace ethical practices, as he is as
the co-founder of Infosys Technologies Ltd., the Mysore-based company that is one
of India’s new technology leaders. Murthy, who turned 60, is relinquishing key
executive positions in the company he co-founded in 1982 to become the
enterprise’s Chief Mentor. Much like Bill Gates at Microsoft, Murthy has pioneered
a technology revolution and as his corporation has become firmly established and
very successful, so he has distanced himself from day-to-day operations.
Infosys, which employs over 58,000 people worldwide, provides consulting and IT
services. It is one of the pioneers in strategic offshore outsourcing of software
services. Murthy is a fervent believer in globalization, a major influence on the
thinking of author Tom Friedman (The World Is Flat: A Brief History of the Twentyfirst
Century) and a leader of India’s technology revolution. His approach to
corporate governance and workplace values has been no less influential on the most
dynamic and successful technology companies in India. Infosys highlights its
perspectives at
On July 31, 2006, Murthy opened the NASDAQ market from his corporate
headquarters in Mysore. He said, “Twenty-five years ago, we founded Infosys with
a vision of the global delivery model. That vision has been validated as the tide of
globalization has swept across the world and businesses are dramatically changing
how they run their organizations. Opening the NASDAQ market from India is not
only a great honor for Infosys, but also illustrative of the emerging new world.”
The Company’s Vision is: “To be a globally respected corporation that provides
best-of breed business solutions, leveraging technology, delivered by best-in-class
people.” And, its Mission is: “To achieve our objectives in an environment of
fairness, honesty, and courtesy towards our clients, employees, vendors and society
at large.”
Infosys has built a state of the art office complex in Bangalore with all modern
facilities which helps in giving its employees a sense of belonging. While offering
stock options to its employees, it ensures that the workforce has a stake in its overall
growth. Actions speak louder than words and leaders must speak in a way that
inspires integrity and a vision for the company.
Corporate Governance is an area of critical importance to Infosys and one where it
has sought to be a global leader. It is seeking to use its model example to promote
far higher standards in India and Murthy has been one of the most vocal and
influential advocates of corporate governance reform in his country.
The company states: “We believe that sound corporate governance is critical to
enhance and retain investor trust. Accordingly, we always seek to ensure that we
attain our performance rules with integrity. Our Board exercises its fiduciary
responsibilities in the widest sense of the term. Our disclosures always seek to attain
the best practices in international corporate governance. We also endeavor to
enhance long-term shareholder value and respect minority rights in all our business
The Infosys corporate governance philosophy is based on the following principles:
•Satisfy the spirit of the law and not just the letter of the law.
•Corporate governance standards should go beyond the law.
•Be transparent and maintain a high degree of disclosure levels. When in doubt,
•Make a clear distinction between personal conveniences and corporate
•Communicate externally, in a truthful manner, about how the company is run
•Comply with the laws in all the countries in which the company operates.
•Have a simple and transparent corporate structure driven solely by business
•Management is the trustee of the shareholders’ capital and not the owner.
Infosys stresses that at the core of its corporate governance practice is the Board,
which oversees how the management serves and protects the long-term interests of
all the stakeholders of the company. It states: “We believe that an active, wellinformed
and independent Board is necessary to ensure the highest standards of
corporate governance.
Majority of the Board, 9 out of 16, are independent members. Further, Infosys has
compensation, nomination, investor grievance and audit committees, which are
comprised of independent directors.”
“As a part of our commitment to follow global best practices, we comply with the
Euroshareholders Corporate Governance Guidelines 2000, and the
recommendations of the Conference Board Commission on Public Trusts and
Private Enterprises in the U.S.
We also adhere to the UN Global Compact Programme.” To promote corporate
social responsibility the company established a philanthropic foundation in 1996,
which is mostly engaged in social, health and education programs in India.
Murthy is the chairman of the governing body of the Indian Institute of Information
Technology, Bangalore and the Indian Institute of Management, Ahmedabad. He
was the Chairman of the Committee on Corporate Governance appointed by the
Securities and Exchange Board of India (SEBI) in 2003. He is a member of the
Board of Overseers of the University of Pennsylvania’s Wharton School; Cornell
University Board of Trustees; Singapore Management University Board of Trustees;
INSEAD’s Board of Directors and the Asian Institute of Management’s Board of
Governors. He is also a member of the Advisory Boards and Councils of the
William F. Achtmeyer Center for Global Leadership at the Tuck School of Business,
the Corporate Governance initiative at the Harvard Business School, and the Yale
University President’s Council on International Infosys Foundation, the
philanthropic arm of Infosys Technologies Ltd., came into existence on 4th
December 1996 with the objective of fulfilling the social responsibility of the
company by supporting and encouraging the underprivileged sections of society. In
a short span of time, the Foundation has implemented numerous projects in its
chosen areas. The Foundation has undertaken various initiatives in providing
medical facilities to remote rural areas, organizing novel pension schemes and in
aiding orphans and street children. It has undertaken a large rural education program
titled “A library for every school” under which 5500 libraries have been set up in
government schools spread across many villages. Other activities include the
reconstruction of old school buildings, setting up of rural Science Centers and
schemes to provide support to dying traditional art and culture forms.
Read the caselet carefully and answer the following questions:
3. Bribery, of course, is the most widespread form of corruption, and corporate
strategies for dealing with bribe requests vary. With respect to the caselet, discuss
the strategies for saying no to bribe and explain risks and costs abound for
companies that succumb to the bribery game. ( 7 marks)

4. There’s no doubt that corruption, endemic in emerging economies around the world.
Discuss the various unethical behaviors that constitute in business and their impact
of corruption on market system. ( 8 marks)

In Turkey, the apartment buildings that collapse during earthquakes are known as
“bribe buildings.” In Africa, bridges dot the landscape with no roads to connect
them. There’s no doubt that corruption, endemic in emerging economies around the
world, throws economic development into chaos. It affects decisions made by
bureaucrats, degrades the quality of those in power, and discourages foreign
investment. It’s also an increasingly hot business topic, with a growing number of
influential business and political leaders from around the globe regularly
pinpointing corruption as one of the greatest threats to global economic
“Corruption and bribery have moved to the forefront in discussions about business,”
says Wharton legal studies professor Philip M. Nichols. “The list of countries that
have been politically or economically crippled by corruption continues to grow, and
businesses with long-term interests abroad will ultimately be harmed by any plans
that include bribery.”
Bribery, of course, is the most widespread form of corruption, and corporate
strategies for dealing with bribe requests vary. According to Nichols, some
companies opt to pay, sometimes damaging their public images and making it more
difficult to refuse future requests. Others have the sheer bulk and revenues to
successfully and consistently say “no.” Oil giant Texaco, for example, has such a
formidable reputation for refusing to pay bribes that its jeeps are often waved
through even remote African border crossings without paying a penny.
A key, Nichols suggests, is wiring this no-bribe ideal into a corporation’s culture,
starting with a corporate code for managers and employees, affiliates and potential
business partners. But coming to grips with what appears to be an international
groundswell of corruption is far from a simple matter. Nichols believes that
unraveling and explaining the mechanics of corruption is critical to helping the
growing body of government and corporate organizations trying to fight it.
On a practical level, what does the upswing in international corruption mean to a
company? “The fact that a great number of government officials in a great number
of countries, including some potentially large markets, seem to demand bribes is
critical to any business that has a cross-border presence,” says Nichols. “Then
there’s the reality that more than 20 nations, including the wealthiest and mostactive
trading nations, have made bribe paying illegal, and the fact that despite this
there are still competitors who will pay bribes.
“These facts combined make for some extremely difficult terrain. Officials expect
you to pay bribes, some of your competitors will pay them, but you might go to jail
if you do.”
Corporations, Nichols believes, must create a corporate culture that doggedly
refuses bribe requests and establish clear corporate codes that employees
unwaveringly adhere to. They must also assure managers that the company will
back them when they refuse to pay. “A company would be foolish not to develop
two general strategies, one for dealing with bribe demands and another for dealing
with competitors who offer bribes,” he says. “The potential, in terms of criminal
liability, skewed relationships, lost contracts, disqualification from government
contracts, loss of reputation and so on is simply too great to ignore.
“Perhaps the most useful action a business can take is to really understand
corruption, and to create and articulate a general response to corruption before it
encounters difficult situations,” Nichols says. “It’s also useful for businesses to
work together to create assurances that each will adhere to some agreed level of
Other risks and costs abound for companies that succumb to the bribery game,
Nichols says. Because bribery is illegal, it is conducted behind closed doors, with
those involved expending time and resources to keep their secret. “For obvious
reasons, we have not really been able to study the quality of corrupt relationships,”
he says. “But those who have endured them often describe them as unhealthy,
unstable and unenforceable.” He adds that firms’ reputations suffer when word
ultimately leaks, as happened with those who conducted business with the family of
former Indonesian President Suharto. Prior to and just following Suharto’s 1998
resignation, the former leader, his children and associates were widely accused of
taking advantage of benefits such as monopolies and tariff breaks to amass
enormous personal wealth.
Companies also face the very real possibility of being pushed to pay more and more
bribes as their reputation as a bribe-payer spreads. “One European businessman told
me that after his company made its first few payments, bribery became a part of the
normal course of business because bureaucrats worldwide expected similar
treatment,” Nichols says. “This is far from uncommon.”
Lastly, there are international trade implications surrounding bribery. Bribery
degrades markets. Economist Paolo Mauro, in the article “Corruption and Growth,”
finds a direct link between high levels of corruption and low levels of foreign direct
investment. Though Mauro’s work does not explain this finding, Nichols offers
three likely reasons. “First, corruption actually increases the amount of time a
company must spend with a bureaucracy; second, corruption makes it more difficult
to obtain information, which increases transaction costs, and third, corrupt
relationships are less predictable and less enforceable. There’s probably a fourth
reason too, which is that most business people are good people and have a distaste
for endemically corrupt environments,” he says.
“Corruption also drastically affects economic development by causing a
misallocation of resources. Yes, Africa is littered with bridges instead of hospitals.
But more damaging is the fact that in endemically corrupt systems, regular people
are not getting served by the government; they don’t trust the government so they
don’t interact with the government,” Nichols says. “But people have to get things
done. So they create their own systems to do things, such as resolve disputes or
enforce contacts or even police neighborhoods.”
These systems, however, “are not free,” Nichols adds. “They cost money. So money
goes to supporting the government system and money goes to supporting the
shadow system; twice as much money goes to bureaucracies as it should. That
means money is not going to increasing food production, or to health, or to
enlarging the economy. And that stinks.”
Read the caselet carefully and answer the following questions:
5. Define environmental ethics and explain the various approaches Fetzer Vineyards
used concerning the moral responsibility of environment. (

6. Fetzer is recognized as a zero waste company by the state of California. Analyze the
initiatives adopted by Fetzer to become the zero waste company. (

Imagine a football field covered in garbage. It’s a foot deep, so when you walk
around in it - slogging through office paper, food pulp, old Bic pens - it reaches up
past your ankles. Now imagine that someone has cleaned that field. The waste is the
same depth, but now it only reaches from the first to the seventh yard line, and 93%
of the field is pristine and green again. That’s a major cleanup. And that’s what
Fetzer Vineyards, in Hopland, California (Calif), has accomplished with its own
waste since 1991. Fetzer has done it during a time when sales more than doubled.
Not being one to rest on its laurels, the Fetzer winery aims to go further - to zero
waste by the year 2009. “We are already recognized as a zero waste company by the
state of California,” said Patrick Healy, environmental coordinator at Fetzer. What
they do with all that non-waste is instructive. They recycle everything from
cardboard to antifreeze; compost organic waste and turn it into fertilizer; and work
to keep materials out of the waste stream - by restoring oak barrels rather than
discarding them, for example.
There’s almost no aspect of the winery that escapes this kind of detailed
environmental scrutiny. Take the administration building, for example. This10,000-
square-foot facility, completed in 1996, is one of the world’s first large-scale
examples of rammed-earth (underground) construction. It was built almost entirely
with recycled wood. Carpets are natural fiber. Lights are on motion sensors, so they
go off as you leave the room. Heat comes from waste heat off chillers used in wine
making. And instead of air conditioning, the building uses night-air cooling.
“Computerized and motorized windows open at night to admit cool air,” Healy
explained. Even landscaping is environmentally conscious. It’s “zeroscape, “he said,
because the drought-resistant plants take little water.
And then, of course, there’s the photovoltaic array on the roof, which got up and
running in June. “It’s the largest photovoltaic display in northern California not
owned by a utility company,” Healy said. It supplies three-quarters of the building’s
energy needs. All other power used by the winery is from renewable sources, thanks
to a unique utility contract signed in May.
Most telling, perhaps, is the vineyard’s approach to grape growing itself: an organic
approach that relies on natural pest control and soil management. Techniques
include the use of “cover crops” grown between the vines, like crimson clover and
purple vetch, which attract beneficial insects. “They keep the bad guys in check, so
to speak,” said President Paul Dolan. Another technique is “canopy management,”
in which the leaf and cane canopy is opened to bring in sunlight, to reduce the
chance of mold and rot, and eliminate the need for fungicides.
The process “brings us closer to the vine,” Dolan said. “We don’t have the quick
fixes of chemicals, so we’re in the vineyards more. We find that our farmers are
better farmers as a result.” And the grapes simply taste better. That’s where the
financial payoff lies. There’s some demand for specially labeled “organic” wine,
which Fetzer meets with an organic label, Bonterra. Butit doesn’t label most of its
wine organic. Organic growing “is part of who we are,” Dolan said. “It’s not
something the consumer is aware of.”
About 20% to 30% of grapes used now are organic, but Fetzer plans to reach 100%
by 2010. Toward that end, it formed “Club Bonterra” to help share ideas on
sustainable farming among its outside farmers, who provide more than 90% of the
Does all of this environmental focus cost more? Yes and no. Organic methods are a
little more expensive to begin with, but not in the long run. The solar array really
won’t pay for itself, but it was built with the help of grants. Renewable power is
slightly more expensive, but Fetzer is offsetting that by pursuing efficiencies in
usage. And recycling is decidedly less expensive than land filling. It all does make
economic sense. “But it’s not like we’re using it as a competitive edge,” Dolan said.
It simply fits with how the company does business. Fetzer’s vision statement is to
enhance the quality of life.
What’s remarkable is that Fetzer takes this holistic approach as a publicly held
company. This $160 million firm is owned by the $2 billion Brown-Forman Corp.,
based in Louisville, Kentucky (Ky). “They’ve been great about it,” Dolan said.
Fetzer runs its own show, as long as the profit is there. And as Dolan says, Fetzer is
“very profitable.” Over the last six years, profits and revenues have grown at a 15%
annual compounded rate.
It’s a model worth showcasing for a new century - a thoughtful and deep
commitment to the environment, combined with financial excellence. As Dolan
said, “it helps other people see it can be done.”

more paper detail attached pdf file;
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