c3

2. _____ refers to the moral principles or values that generally govern the conduct of an individual or a group. a. Righteousness b. Social consensus c. Sustainability d. Virtue e. Ethics

E

2. Ethical questions apply to narrow, defined issues and broad philosophical, social questions.

T

7. A code of ethics can be an effective internal control on behavior, which is more desirable than external controls like government regulations.

T

Some "green' products have an easily recognizable benefit to consumers and the environment.

T

Today's business ethics are difficult to learn because they are different from those used outside the business world.

ANS: F Today's business ethics actually consist of a subset of major life values learned since birth.

3. Morals are rules people develop as a result of cultural values and norms.

ANS: T

36. The movement to develop and market products designed to minimize negative effects on the physical environment or to improve the environment is known as: a. enviromarketing b. green marketing c. cause marketing d. social marketing e. minimalist marketing

ANS: B Green marketing is an outgrowth of the social responsibility movement and focuses on the environment.

29. In the future, electrical power may come from quantum nucleonics, a form of nuclear power that produces no residual radiation. The ability to use this form of power will require equipment adaptations, but it will solve the world's need for clean and efficient power. Companies that replace inefficient sources of power with quantum nucleonics only after they are required to by the Environmental Protection Agency (EPA) are operating at a(n) _____ responsibility level. a. legal b. philanthropic c. ethical d. economic e. cultural

ANS: A At the legal responsibilities level, the business obeys the law.

18. NSTAR Gas & Electric Company in Boston provides continuing financial support for an injury prevention program run by the Children's Hospital Boston. This funding is an example of: a. corporate social responsibility b. ethical conveyance c. a duty to engage in cause marketing d. a right to engage in social marketing e. multiculturalism

ANS: A Corporate social responsibility is a business's concern for society's welfare, in this case an injury prevention program.

17. For every home built by Habitat for Humanity, Whirlpool Corporation has given and continues to give free kitchen appliances to the deserving family. This donation of appliances is an example of how companies assume their: a. corporate social responsibility b. ethical conveyance c. duty to engage in cause marketing d. right to engage in social marketing e. multiculturalism

ANS: A Corporate social responsibility is a business's concern for society's welfare, in this case deserving families selected by the Habitat organization.

NARRBEGIN: Drug Marketing Drug Marketing Pharmaceutical companies spent $4.4 billion on prescription drug advertising in 2008, mostly on television and in magazines. While the Internet is becoming a more prominent medium to reach consumers and is the primary source used to seek health information, these companies spent less than $130 million on Web marketing. One reason is that there are no guidelines, which makes these heavily-regulated marketers uneasy. For example, television commercials for prescription drugs must include disclosures regarding the major side effects if the brand name is mentioned in the ad. The Food and Drug Administration (FDA) claims that existing regulations address many of the Internet advertising issues, but other aspects of Web marketing, such as social networking and search marketing, must be reviewed. That's why the FDA hearings on this issue were attended by pharmaceutical giants and Web companies like Google, Yahoo, and WebMD Health. NARREND 38. Refer to Drug Marketing. Which level of the pyramid of social responsibility is most relevant to this situation in which the drug companies want to ensure that they are "playing by the rules"? a. legal responsibilities b. ethical responsibilities c. philanthropic responsibilities d. economic responsibilities e. standard responsibilities

ANS: A Legal responsibilities are based on obeying the law. Law is society's codification of right and wrong.

12. All of the following are factors influencing ethical decision making and judgments EXCEPT: a. rate of prosecution b. top management actions on ethics c. probability of a harmful outcome d. number of people to be affected e. social consensus

ANS: A Other factors include extent of ethical problems within the organization, potential magnitude of the consequences, and the length of time between the decision and the onset of consequences.

Hallie is a calculating, self-centered salesperson. She never engages in relationship marketing. She looks on any sales situation as a "win-lose" situation, and she believes any legal method she can use is justified when she wins. Hallie is most likely at the _____ stage of ethical development. a. preconventional morality b. transformationalism c. conventional morality d. egocentrism e. basic morality

ANS: A Preconventional morality is the most basic level of morality.

21. _____ is the idea that socially responsible companies will outperform their peers by focusing on the world's social problems and viewing them as opportunities to build profit and help the world at the same time. a. Sustainability b. Philanthropy c. Cause marketing d. Creative ethics e. International ethics

ANS: A Sustainability looks at the long term and is based on the notion that companies cannot thrive for long in a world where billions of people are suffering and are desperately poor.

5. Ethical development can be thought as having three levels. The most basic, childlike level is the _____ stage. a. preconventional morality b. transformationalism c. conventional morality d. postconventional morality e. actualized morality

ANS: A The three levels morality are preconventional, which is the most basic, conventional, and postconventional.

28. Japanese law prohibits the storage of more than 50 pounds of explosive at any single site in the nation. Every night Universal Studios Japan hosts a fireworks display. The theme park recently came under government investigation when allegations were made that the park was detonating more than 50 pounds of explosives in its nightly fireworks displays. If the allegations are true, in terms of the pyramid of corporate social responsibility, then Universal Studios Japan is not operating at a(n) _____ responsibility level. a. legal b. philanthropic c. ethical d. economic e. cultural

ANS: A Universal Studios Japan is not obeying the letter of the law.

33. Pacific Gas and Electric (PG&E) Company has donated almost $300,000 to 58 local governments and community-based organizations for local economic development projects. Recipients of these grants include the San Benito County Economic Development Corporation's Business Outreach Program, the San Jose Conservation Corps' Hennessy Place Affordable Single-Family Housing Project, and Mariposa County's Business Development Training Program. This sort of donation indicates PG&E was operating at a(n) _____ responsibility level of the pyramid of corporate social responsibility. a. legal b. philanthropic c. ethical d. economic e. cultural

ANS: B By supporting local economic development projects, PG&E was being a good corporate citizen.

7. Which level of ethical development moves from an egocentric viewpoint toward the expectations of society? a. postconventional morality b. conventional morality c. preconventional morality d. secondary morality e. primary morality

ANS: B Conventional morality is the second level of morality and moves from an egocentric viewpoint of the preconventional level toward the expectations of society.

15. _____ is the concern of business for the long-range welfare of both the company and its relationships to the society within which it operates. a. Consumerism b. Corporate social responsibility c. Cultural sensitivity d. Conventional morality e. Environmental consideration

ANS: B Corporate social responsibility is a business's concern for society's welfare.

39. Refer to Drug Marketing. If a drug manufacturer claimed that its manufacturing processes were environmentally-friendly in its advertising, this is an example of: a. sustenance marketing b. green marketing c. philanthropy d. deontological marketing e. clean marketing

ANS: B Green marketing is an outgrowth of the social responsibility movement and is the development and marketing of products designed to minimize negative effects on the physical environment or to improve the environment.

4. One approach to developing a personal set of ethics is to: a. rely solely on one's personal character to determine what action to take b. stress the importance of rules c. ignore problems associated with the magnitude of consequences d. avoid examining the consequences of particular acts e. never trust your own behavioral instincts

ANS: B One approach to developing a personal set of ethics stresses the importance of rules. Another is to examine the consequences of a particular act.

32. At what level of the pyramid of corporate social responsibility will a company be a good corporate citizen? a. economic b. philanthropic c. social d. legal e. ethical

ANS: B Philanthropic responsibilities involve being a good corporate citizen by contributing resources to the community and improving the quality of life.

35. Which of the following is an argument used to support corporate social responsibility (CSR)? a. The free market, not companies, should decide what is best for the world. b. CSR can be a profitable undertaking. c. Businesses are not responsible for social or environmental problems. d. Businesses don't have the expertise to make social decisions. e. All of the above are arguments used in support of CSR.

ANS: B Smart companies can prosper and build shareholder value by tackling global problems.

19. Novartis created the Novartis Research Institute for Tropical Diseases in Singapore. The institute is unique because it is a not-for-profit organization that focuses on the discovery of new drugs for the treatment of neglected diseases, such as dengue fever and tuberculosis. Not only is this good business, it is also: a. mandated by Supreme Court rulings b. socially responsible c. not ethically motivated d. demonstrating a lack of concern for diversity e. using environmental marketing

ANS: B Social responsibility is the duty that a business feels for the welfare of society. By helping developing nations, Novartis is helping to meet the needs of society.

20. Many airlines offer passengers the option to purchase carbon offsets as an environmentally-friendly compensation for their carbon footprint. For example, Delta customers can pay $10 to a fund that plants trees as a way to offset the carbon emissions from the airplane. Some would say Delta is: a. acting in accordance with recent rulings by the U.S. Supreme Court b. socially responsible c. not ethically motivated d. demonstrating a lack of concern for diversity e. using issue-oriented marketing

ANS: B Social responsibility is the duty that business feels for the welfare of society.

22. Which of the following statements about the theory of sustainability is true? a. Sustainability is an internal process in which companies match resources and objectives. b. Sustainability is the idea that socially responsible companies will outperform their peers when they focus on the world's problems as marketing opportunities. c. According to the theory of sustainability, a company cannot be socially responsible without a code of ethics and managerial support of that code. d. According to the theory of sustainability, ethical behavior should never be viewed as the means of obtaining a competitive advantage. e. Sustainability is only successful if it focuses on organizational strengths.

ANS: B Sustainability is the idea that socially responsible companies will outperform their peers by focusing on the world's social problems and viewing them as opportunities to build profit and help the world at the same time.

25. At the most basic level, a firm must be profitable. What level of the pyramid of corporate social responsibility is this? a. social b. economic c. ethical d. legal e. accountability

ANS: B The pyramid of corporate social responsibility portrays economic performance as the foundation for the other three responsibilities (legal, ethical, and philanthropic).

27. At which level of the pyramid of corporate social responsibility must a business "play by the rules"? a. economic b. philanthropic c. legal d. ethical e. conformist

ANS: C Firms operating at the legal level obey the law and play by the rules of the game.

31. Girls between the ages of 8 and 15 are one of the growing markets for high-end shoe manufacturers, and podiatrists say the trend is leading to many stylish young girls with grown-up foot problems. Shoe manufacturers who develop and market adult-styled shoes to this group are not operating at a(n) _____ responsibility level of the pyramid of corporate social responsibility. a. legal b. philanthropic c. ethical d. economic e. cultural

ANS: C The companies are not doing what is right, just and fair and so are not operating ethically.

In the _____ stage of ethical development, loyalty and obedience to the organization or to society become paramount. a. preconventional morality b. transformationalism c. conventional morality d. postconventional morality e. actualized morality

ANS: C The conventional stage moves from an egocentric viewpoint toward the expectations of society.

24. The pyramid of corporate social responsibilities contains all of the following components EXCEPT: a. economic responsibilities b. ethical responsibilities c. cultural responsibilities d. legal responsibilities e. philanthropic responsibilities

ANS: C The four components of the pyramid of corporate social responsibility are economic, legal, ethical, and philanthropic responsibilities.

Which of the following factors will influence ethical decision making and judgments? a. likelihood of stakeholder responsibility b. proactive nature of organizational sustainability c. potential magnitude of the consequences d. probability of ethical consensus e. consequence of adjacencies

ANS: C The potential magnitude of the consequences is one of several factors that tend to influence ethical decision making and judgment.

13. Like many other professional organizations and businesses, the American Marketing Association has developed a formal, written guideline to help its members make better ethical decisions. This document is a: a. behavioral practice b. moral ruling c. code of ethics d. direction of value e. principled regulation

ANS: C While codes of ethics are most often defined as guidelines for businesses, they are also important moral guides for professional organizations.

30. At what level of the pyramid of corporate social responsibility will firms do what is right, just, and? a. economic b. philanthropic c. legal d. ethical e. moral

ANS: D At the ethical responsibilities level, firms will be ethical and do what is right, just, and fair.

10. The _____ stage of ethical development represents the morality of the mature adult. a. preconventional morality b. transformationalism c. conventional morality d. postconventional morality e. actualized morality

ANS: D At this level, people are less concerned about how others might see them and more concerned about how they see and judge themselves over the long run.

16. Corporate social responsibility is defined as the: a. belief that the legal system defines ethical behavior b. development of inclusive codes of ethics c. rules by which social rewards are attained d. concern for social welfare by businesses e. coordination of social programs for publicity purposes

ANS: D Corporate social responsibility is a business's concern for society's welfare.

NARRBEGIN: Florida Hospitals Florida Hospitals A group of hospital administrators in Florida were discussing the amount of resources used to care for patients that were illegal immigrants and had no medical insurance. One man discussed how his hospital had spent over $2 million on one illegal immigrant who had no family or friends and who was not getting better. Another administrator stated that his hospital was losing $20 million annually in order to provide care for the influx of illegal immigrants into the state. After a great deal of discussion, it was determined that there was probably nothing anyone of them could do about the situation, and that each of them had very definite ideas about how to deal with the problems. NARREND 37. Refer to Florida Hospitals. In order to make an ethical decision on how to handle uninsured illegal immigrants, the Florida hospital administrators must consider all of the following EXCEPT: a. social consensus b. number of people affected by the decision c. probability of harmful outcome to the hospital and to the individuals d. magnitude of morality e. length of time between decision and the onset of consequence

ANS: D Other considerations include potential magnitude of the consequences, top management actions on ethics, and the extent of ethical problems within the organization

Ruthanne Ross is a sales manager for Pampered Chef, a company that sells kitchen tools and other aids for cooking through party plans. She is very concerned about making sure her salespeople understand the importance of treating each customer fairly and developing long-term relationships with them. She asks that before a sale is made, the salesperson should make sure customers can afford the items and are not buying due to social pressures. Ross is most likely at the _____ stage of ethical development. a. preconventional morality b. transformationalism c. conventional morality d. postconventional morality e. actualized morality

ANS: D Postconventional morality is that of the mature adult. At this level, the individual is more concerned about others than about himself or herself.

26. One of the favorite foods in Thailand is shark fin soup. A San Francisco-based organization claimed the soup made by its leading producer contained mercury poison, yet the leading producer of shark fin soup wanted to continue selling the soup because it believes it has a responsibility to its investors to be profitable. In terms of the pyramid of corporate social responsibility, this indicates that the soup manufacturer was operating at a(n) _____ responsibility level. a. legal b. philanthropic c. ethical d. economic e. cultural

ANS: D The company believed its mission was to be profitable.

14. All of the following statements about the creation of a code of ethics are true EXCEPT: a. A written code helps employees avoid confusion when determining whether their decisions are ethical. b. A code can be an effective internal control on behavior. c. The process of formulating the code facilitates discussions that ultimately create better decisions. d. A code helps employees identify what their firm recognizes to be acceptable business practices. e. A code guarantees ethical behavior among a firm's employees.

ANS: E Creating ethics guidelines has several advantages, but it does not guarantee ethical behavior.

3. _____ are the rules that people develop as a result of cultural values and norms. a. Virtues b. Ethics c. Socialization d. Conscience e. Morals

ANS: E Morals are the rules that people develop as a result of cultural values and norms.

23. The four components of the pyramid of corporate social responsibility are: a. sustainability, creativity, profit, and culture b. organizational culture, creativity imagery, economic performance, and objectivity c. organizational, financial, social, and cultural responsibilities d. sustainability, legality, creativity, and competition e. economic, legal, ethical, and philanthropic responsibilities

ANS: E The four components of the pyramid of corporate social responsibility are economic, legal, ethical, and philanthropic responsibilities.

34. The fact that many people believe that businesses should focus on making a profit and leave social and environmental issues to nonprofit organizations is: a. one of the arguments in support of social responsibility b. one of the reasons why so many organizations have a sustainability plan c. creating a competitive disadvantage for larger corporations d. forcing organizations to choose between stakeholders and the environments in which the stakeholders live e. one of the arguments against social responsibility

ANS: E This is just one argument against social responsibility

8. When writing codes of ethics, businesses must ensure their codes deal with every possible situation.

ANS: F Codes that are too detailed encourage employees to substitute rules for judgment.

14. The development and marketing of products designed to minimize negative effects on the physical environment or to improve the environment is sustainability

ANS: F Green Marketing is the development and marketing of products designed to minimize negative effects on the physical environment or to improve the environment.

1. Most people have not applied ethical standards in their everyday lives.

ANS: F If you've experienced resentment at a line-cutter, you've applied ethical standards.

5. Unfortunately, most businesspeople have not progressed beyond the self-centered and manipulative actions of preconventional morality

ANS: F Preconventional morality is childlike--calculating, self-centered, and even selfish, based on what will be immediately punished or rewarded. Fortunately, most businesspeople have progressed beyond this behavior.

While there are plenty of benefits for a socially responsible company, there is no clear-cut determination that ignoring social responsibility will have an adverse impact.

ANS: F See AOL example in text.

. Because social responsibility has proven to have a limited return on investment, the number of businesses opting to act socially responsible is declining.

ANS: F Social responsibility of business is growing around the world.

10. Sustainability refers a business's concern for society's welfare.

ANS: F Sustainability refers to the idea that socially responsible companies will outperform their peers by focusing on the world's social problems and viewing them as opportunities to build profits and help the world at the same time.

11. The foundation for the pyramid of corporate social responsibility is philanthropic responsibility.

ANS: F The pyramid of corporate social responsibility portrays economic performance as the foundation for the other three responsibilities (legal, ethical, and philanthropic).

6. Top managers who behave ethically can influence others in an organization to behave ethically.

ANS: T

9. The greater the number of persons affected by a negative outcome, the more likely that marketers will recognize a problem as unethical.

ANS: T

Which of the following statements describes ethics? a. Ethics are the moral principles or values that generally govern the conduct of an individual. b. Ethics is the standard of behavior by which conduct is judged. c. Morals are a foundation for ethical behavior. d. Ethical values are situation specific and time oriented. e. All of the statements describe ethics.

E