Drill 5 ·
Business Ethics: Thornwick Nursery is a practice drill. It contains 5 original questions created by Brian Stewart, a Barron's test prep author with over 20 years of tutoring experience.
This drill explores a business ethics stakeholder tradeoff and uses an invented company and original figures.
Thornwick Nursery grows and sells potted plants, shrubs, and trees. To lower costs, managers are considering switching from a slow-release fertilizer that staff mix by hand to a cheaper pre-mixed fertilizer that a supplier delivers ready to use. The change would cut labor hours and supply costs, but the cheaper fertilizer is known to run off into nearby waterways more easily during heavy rain, which has drawn complaints from a neighborhood association downstream. The table shows how the change would affect four groups connected to the nursery.
Estimated effect of the fertilizer change on each stakeholder group
| Stakeholder group | Main effect of the change |
|---|---|
| Owners | Lower costs; higher profit margin |
| Seasonal workers | Fewer mixing hours; reduced pay |
| Nearby residents | More fertilizer runoff into local water |
| Customers | Slightly lower plant prices |
Question 1. According to the table, which group is harmed by the runoff effect of the change to the cheaper pre-mixed fertilizer?
Explanation: Nearby residents are the harmed group (C). The table lists their main effect as more fertilizer runoff into local water, a clear harm. A is wrong because owners see higher margins, not lower. B reverses the table, which shows slightly lower prices for customers. D reverses the worker effect, which is fewer hours and reduced pay, not more hours.
Question 2. The groups affected by Thornwick's decision, including owners, workers, residents, and customers, are best described by which business term?
Explanation: Stakeholders is the right term (A). Stakeholders are all the groups affected by or with an interest in a firm's decisions, which fits owners, workers, residents, and customers alike. B, shareholders, covers only owners of stock, so it is too narrow. C, competitors, are rival firms, not the groups listed. D, suppliers, is only one possible group and does not describe all four.
Question 3. The fertilizer runoff that affects nearby residents is best classified as which kind of issue for Thornwick Nursery?
Explanation: This is an external stakeholder issue (B). Runoff reaching residents and waterways affects parties outside the business, so it is external. A and C call it internal, but staffing and profit are not what the runoff effect describes; the runoff lands on outside parties. D uses the same category label as B, external, but gives the wrong reason, since the runoff issue is environmental harm to residents, not a price increase for customers.
Question 4. Why does the fertilizer decision present an ethical tradeoff for Thornwick rather than a simple cost-saving choice?
Explanation: C is the best answer because an ethical tradeoff arises when the gain for owners, higher margins, is paired with harms to other stakeholders, namely runoff for residents and lost hours for workers. A is wrong because the groups are not all helped; some are harmed. B misreads the table, which shows customers get lower prices, not lower quality. D is wrong because the table lists real effects on every group.
Question 5. If Thornwick wants to weigh the harm its decision creates for parties outside the firm, which group from the table should it consider first?
Explanation: Nearby residents are the right answer (A). They are outside the firm and bear the runoff harm, so they are the external group most directly hurt by the decision. B, owners, and C, seasonal workers, are internal to the business. D, customers, are outside the firm too, but the table shows they receive slightly lower prices rather than the runoff harm.