Chapter 03 Ethics and Social Responsibility

CASE ACTIVITY: COURTYARD BY MARRIOTT In making the decision to raise the room rates by 75 percent, the manager of the Courtyard by Marriott thought that his boss would be pleased with the profits resulting from the higher rates. The manager was hoping the increased profits would result in a promotion for himself. He was demonstrating which stage of morality? A. Pre-conventional morality B. Conventional morality C. Ethical morality D. Post-conventional morality

A. Pre-conventional morality In this situation, the manager was thinking, "What is in it for me?" This is the most basic level and is selfish and immature. (3.3)

State Farm Insurance Company noticed a suspicious increase in claims due to flooding as a result of one Whirlpool washing machine model made. Apparently, the high-velocity spinning mode on this particular machine would begin too soon, resulting in a malfunction and an overflow of water. State Farm reported this information to Whirlpool, which immediately acted to notify its retailers and consumers by issuing a recall on the model to correct the problem. The voluntary recall served to prevent future accidents and damage to consumers' homes that State Farm estimated could be up to $6,000 per customer. Which factor influencing ethical decision making is demonstrated in this example? A. Probability of a harmful outcome B. Top management's actions on ethics C. Social consensus D. Extent of ethical problems within the organization

A. Probability of a harmful outcome The greater the likelihood that an action will result in a harmful outcome, the more likely it is that marketers will recognize the action as unethical. (3.3B)

Volkswagen is concerned about the effects of climate change and how the use of fossil fuels is contributing to these changes. As a result, VW has made a commitment to focus on electric vehicles and to produce 22 million such vehicles in the next 10 years. Which ethical theory best describes Volkswagen's decision to focus on electric vehicles? A. Utilitarianism B. Deontology C. Moral relativism D. Social compact

A. Utilitarianism Utilitarian principles support acting in a way that yields the greatest benefit to the most people. This is correct since producing electric vehicles will positively impact society. (3.2A)

During the month of November, many men participate in "Movember," a promotion to increase awareness and detection of prostate cancer. The Art of Shaving, which has boutiques scattered across the United States, matches contributions that customers make to the Movember Foundation. The company's Barber Spas also offer free shaves to registered Movember participants at the conclusion of the campaign. The brand has a Movember web page to market a specially launched comb and grooming book, as well a "Keep It Neat!" section of grooming essentials to help customers look their best. The Art of Shaving company is using _______ marketing to support the Movember Foundation and their efforts to improve men's health. A. cause-related B. environmental C. sustainability D. green

A. cause-related Cause-related marketing is the cooperative efforts of a for-profit firm and a nonprofit organization for mutual benefit. (3.6)

Adidas manufactures sports apparel and shoes in various countries around the world. When Adidas is selecting manufacturers, the company has an extensive contract agreement stipulating a variety of policies regarding workers, such as pay, hours worked per day or week, working conditions, and worker safety. Adidas believes that it is important to ensure fair labor practices even if there are no regulations or laws governing these practices. Based on the pyramid of corporate social responsibility, Adidas is fulfilling its _______ responsibilities. A. ethical B. legal C. philanthropic D. economic

A. ethical Ethical responsibilities relate to doing what is right, just, and fair, as well as avoiding harm. (3.4B)

Samantha and Bethany are purchasing their first home and reviewing the terms of a 15-year mortgage with their lender, Jim, at First Union Bank. Jim reviews the amount of the loan, the interest rate, the total amount of interest they will pay over the course of their loan, and the total amount of money that will be paid over time. Jim is required to provide this information, as it is federally mandated as part of the Truth in Lending Act that was passed in 1968 to protect consumers. Jim is doing what is _______ right by providing this information to Samantha and Bethany. A. legally B. voluntarily C. morally D. socially

A. legally Jim is complying with a federal law. Laws are created by governments and enforced through their authority. (3.1)

CASE ACTIVITY: MEDICAL DEPOT Malik understands that his decision to pull the defective syringes may impact Medical Depot's bottom line, but he feels the company will benefit in the long run. If Malik explains to the hospital why he is not able to ship their full order, they will trust that Medical Depot has the patients' and hospital's best interests in mind. Malik is operating at which level of morality? A. Ethical morality B. Post-conventional morality C. Conventional morality D. Pre-conventional morality

B. Post-conventional morality Post-conventional morality is the most mature level of morality and considers, "What is good in the long run?" (3.3)

Chili's, the popular restaurant chain, supports St. Jude Children's Hospital annually by inviting its guests to color a pepper and make a $1 contribution to St. Jude. Chili's has partnered with St. Jude for almost two decades and recently committed to a multi-year pledge to raise $30 million to fund St. Jude's School Program, which ensures that children receiving medical care in the hospital can stay up-to-date with their school assignments. This is an example of _______ marketing. A. sustainability B. cause-related C. social D. green

B. cause-related Cause-related marketing is the cooperative efforts of a for-profit firm and a nonprofit organization for mutual benefit. (3.6)

San Diego Zoo Global works with more than 300 conservation partners in 70 countries to save wildlife from extinction. The zoo generates revenue for the Global Fund through a variety of initiatives such as on-site movie filming, featured animals in commercials, and ticket sales. The zoo's efforts to save wildlife around the globe through its Global program are an example of _______ marketing. A. environmental B. cause-related C. green D. sustainability

B. cause-related Cause-related marketing refers to the cooperative efforts of a for-profit firm and a nonprofit organization for mutual benefit. (3.6)

Vector Marketing, manufacturers of Cutco knives, has supported the American Heart Association with its Go Red campaign to highlight heart disease in women and to raise awareness about symptoms and risk factors. Cutco offers a red-handled knife in conjunction with the campaign. Purple-handled knives support the Alzheimer Association, and pink-handled knives support the Komen Foundation. A portion of every customer's purchase of these special, color-handled knives supports the linked organization. Cutco's partnership with these nonprofit organizations is an example of _______ marketing. A. environmental B. cause-related C. sustainability D. green

B. cause-related Cause-related marketing refers to the cooperative efforts of a for-profit firm and a nonprofit organization for mutual benefit. (3.6)

CASE ACTIVITY: MEDICAL DEPOT Considering stakeholder theory, the hospital _______. A. has a financial stake in Medical Depot in the form of stock B. expects quality goods and services from Medical Depot in a timely manner C. expects Medical Depot to carry them through difficult times D. depends on Medical Depot for success and survival

B. expects quality goods and services from Medical Depot in a timely manner The hospital is a customer of Medical Depot and expects quality goods and services from Medical Depot in a timely manner. (3.4)

Carlos is an account executive for a paint company. He typically meets with home builders and contractors to discuss wall finishes in their new or remodeled homes. One builder, Robbie, confidentially mentions that he has just received a contract from a developer to build five homes in a new subdivision. Carlos is surprised to hear this since another client of his, Alba, had expected to receive the contract. After meeting with Robbie, Carlos sends Alba a text message with the news about Robbie receiving the contract. Which of the following best explains this interchange between Carlos, Robbie, and Alba? A. Carlos has enhanced his relationship with both Robbie and Alba. B. Carlos has committed an illegal act. C. Carlos has committed an ethical violation. D. Carlos has deceived Alba by providing information about Robbie's business. Assessment question

C. Carlos has committed an ethical violation. Carlos has committed an ethical violation. Ethics consist of unwritten rules developed to guide interactions with others, such as sharing resources or honoring contracts. (3.2)

Aisha is an account representative with Southern Spirits, a distributor of wine, beer, and other alcoholic beverages. She has thousands of brands and varieties of products to offer retailers, restaurants, convenience stores, and other business buyers in her territory. However, some of her wines are in very limited supply. For example, the warehouse that serves her geographic territory may only get one or two cases of some wines. Thus, Aisha must decide how to best allocate these limited varieties. Aisha provides the most time and attention to her high-volume customers since their purchases contribute the most to her salary. As part of her service to the largest accounts, she has decided to give them first choice in purchasing the limited wines. Which ethical theory best characterizes Aisha's decision? A. Casuist B. Utilitarianism C. Deontology D. Virtue ethics

C. Deontology Deontological theory states that people should adhere to their obligations and duties when analyzing an ethical dilemma. Aisha's belief in obligation and duty is to serve her largest clients. (3.2A)

Latosha is a pricing analyst with Staples who enjoys participating in company-sponsored events that contribute to the community. Recently she participated in a one-day event with other employees from the corporate headquarters to pack food for the Meals on Wheels organization. Which of the following is a benefit to companies that participate in socially responsible programs? A. Increase in advertising expenditures B. Increase in employee training costs C. Increase in employee satisfaction D. Increase in government regulations

C. Increase in employee satisfaction There are many benefits to companies that pursue socially responsible programs, including an increase in employee satisfaction, which leads to improved customer service. (3.5)

Paul owns a company specializing in fertilizer and pesticide application in agricultural production, and he typically uses his fleet of airplanes to spray the fields. Recently, his sprayer malfunctioned, and pesticide was dumped in a local reservoir that provides drinking water to residents. Paul notified the water company, which posted a boil order for residents. In addition, Paul was fined for polluting the water. What stakeholders were most affected by the malfunctioning equipment incident? A. Employees B. Suppliers C. Local community D. Management

C. Local community The local community that depends on the water supply was most affected as a stakeholder in this example. (3.4)

Many companies have been fined for violating regulations or laws such as those against insider trading. A company can encourage ethical behavior by offering a code of ethics as a guideline to help employees make better decisions. Which statement is true regarding the advantages of a company code of ethics? A. Discourages communication about what is right and wrong B. Increases firm profitability C. Provides an effective internal control of behavior D. Provides an effective external control of behavior

C. Provides an effective internal control of behavior One advantage of a company code of ethics is that it provides an effective internal control of behavior, which is more desirable than external controls. (3.3C)

CASE ACTIVITY: MEDICAL DEPOT Malik determines that he must pull the impacted syringes from the shipment. He simply cannot risk having even one patient be harmed by a faulty product, because that would not only hurt the patients, but would ultimately come back to hurt the company as well. Malik is employing which ethical theory? A. Virtue ethics B. Casuist ethical theory C. Utilitarian ethical theory D. Moral relativism

C. Utilitarian ethical theory Utilitarian ethical theory says that when people are faced with an ethical dilemma, their actions should be based on making sure the least amount of harm is done to all concerned. (3.2)

Pedro Rodriguez is the CEO of a major hospital. He believes in the importance of transparency, honesty, cultivating trust through collaboration, and that all members of the hospital must act in ways that demonstrate caring and compassion to patients. It is well known that medical errors occur in the hospital setting, but no laws require that patients be informed if an error has occurred. However, Pedro has established a hospital policy that all medical errors must be disclosed as soon as possible to patients and/or their families. Which ethical theory best describes the CEO's decision to disclose medical errors? A. Moral relativism B. Social compact C. Virtue ethics D. Deontology

C. Virtue ethics The CEO is following a virtuous or "good" trait by disclosing medical errors to patients. (3.2A)

Companies producing solar panels for roof installations in residential or commercial application have benefited from government assistance in the form of grants to encourage owners to invest in solar technology. Unfortunately, one of the early entrants to solar roof panels went bankrupt and was unable to emerge from bankruptcy proceedings. According to the pyramid of corporate social responsibility, the company failed to meet its _______ responsibilities. A. ethical B. philanthropic C. economic D. legal

C. economic The economic responsibilities on the corporate social responsibility pyramid include being profitable, as profit is the foundation upon which all other responsibilities rest. (3.4B)

Rosario is a sales trainer with Canon Business Solutions, and she is working with new account executives to discuss the company's standards for creating mutually beneficial, win-win relationships with customers. She emphasizes that the goal is to identify consumers' needs and to match the right product or service to each customer. Thus, sales will occur when customers receive benefits from products or services that meet their individual needs. Further, Rosario tells the new sales associates that they should walk away from a sale if the product or service is not in the customer's best interests. Rosario is emphasizing the company's _______. A. contractual policies B. laws C. ethical principles D. social expectations

C. ethical principles Ethics are the moral principles or values that generally govern the conduct of an individual or group. (3.1)

Recent advertisements by McDonald's feature a young employee who graduates high school and is accepted to college. It also shows her receiving an educational grant from the company to support her education. Based on the pyramid of corporate social responsibility, McDonald's is fulfilling its _______ responsibilities. A. ethical B. legal C. philanthropic D. economic

C. philanthropic Philanthropic responsibilities are to be a good corporate citizen by contributing resources to the community and improving quality of life. (3.4B)

CASE ACTIVITY: COURTYARD BY MARRIOTT Considering stakeholder theory, the manager of the Courtyard by Marriott risked the company's relationships with _______ who expect good citizenship, and with _______ who have a financial stake in the company in the form of stock. A. management; customers B. employees; owners C. the local community; owners D. customers; suppliers

C. the local community; owners The local community expects good citizenship, while owners have a financial stake in the company in the form of stock. (3.4)

CASE ACTIVITY: COURTYARD BY MARRIOTT Suppose that managers at the Courtyard by Marriott near JFK Airport had considered a previous case from several years earlier in which a Hilton hotel had been fined for illegally hiking room rates during an ice storm. Which ethical theory would the managers from Courtyard by Marriott be employing? A. Deontological theory B. Moral relativism C. Utilitarian ethical theory D. Casuist ethical theory

D. Casuist ethical theory The casuist ethical theory uses previous examples of ethical dilemmas and applies those rules to a current ethical dilemma. (3.2)

Misty is an account manager for a marketing firm that provides creative services to business clients. Projects are typically billed on an hourly basis. Misty coordinates with creative team members, media schedulers, and researchers to address her clients' needs. At a previous firm, Misty believed that many employees over-billed their services and did not accurately bill for their time. However, she can now trust all employees to submit accurate time statements and has not heard of anyone violating this practice. Which factor influencing ethical decision making is demonstrated in this example? A. Number of people to be affected B. Probability of a harmful outcome C. Top management's actions on ethics D. Extent of ethical problems within the organization

D. Extent of ethical problems within the organization This is an example of the extent of ethical problems within an organization. The healthier the ethical environment of a company, the more likely it is that marketers will take a strong stand against questionable practices. (3.3B)

The American Medical Association and the American Bar Association discourage their members from using advertising to promote their businesses. Listings of services on a web page are acceptable. However, television, radio, or the use of other media to advertise services is frowned upon. What mode of social control does this represent? A. Media B. Laws C. Active civil society D. Formal groups

D. Formal groups Formal and informal groups include businesses and professional organizations that have codes of conduct prescribing acceptable and desired behaviors of their members. (3.1)

The Environmental Protection Agency (EPA) has recently repealed some of the regulations that govern the oil industry, such as those regulating the proper disposal of wastewater. The president of Oklahoma-based Williams Oil is mandating even stricter guidelines than the EPA imposes. She believes that protecting the groundwater and ensuring clean drinking water for everyone is critically important. Which factor influencing ethical decision making is this company's president using? A. Number of people affected B. Length of time between the decision and the onset of consequences C. Social consensus D. Top management's actions

D. Top management's actions Top managers can influence the behavior of marketing professionals by encouraging ethical behavior and discouraging unethical behavior. (3.3B)

Khalid was recently hired as an intern in a marketing company. He was given a copy of the company's employee handbook, which identified the expectations for employees and the standards of proper or acceptable behavior, including the standard of dress, the amount of time given for breaks and lunch, guidelines for using company materials such as the copy machine, and the importance of being courteous and civil to all. The employee handbook provides guidance about the _______ of the company. A. laws B. social expectations C. social contract D. behavioral norms

D. behavioral norms Behavioral norms are standards of proper or acceptable behavior. (3.1)

CASE ACTIVITY: COURTYARD BY MARRIOTT Considering the pyramid of corporate social responsibility, the highest level that the Courtyard by Marriott has achieved is _______. A. ethical responsibilities B. philanthropic responsibilities C. legal responsibilities D. economic responsibilities

D. economic responsibilities The Courtyard by Marriott is profitable and therefore meets its economic responsibilities. It is not acting legally. (3.4)

France is widely known for producing great wines. One of the leading French wineries, Château du Beaune, has invested in a winery in India through a joint venture. The winemaker and various specialists in horticulture are working with the local team in India to ensure proper use of pesticides and conservation of natural resources such as rainwater. In addition, the joint venture has installed solar panels on the roofs of the company's buildings so it can produce its own electricity. As a B Corp, the India-based winery is demonstrating its commitment to _______ sustainability. A. economic B. social C. moral D. environmental

D. environmental Environmental sustainability is concerned with the physical environment and the elimination of environmental threats. (3.5B)

Starbucks serves thousands of customers daily and continues to experience growth in customer spending, with revenues up by 3 percent annually. Starbucks has committed to phasing out plastic straws from its 29,000 stores worldwide by 2020. This will eliminate more than one billion straws per year. Plastic straws will be replaced with a lightweight, recyclable, straw-less lid with paper or alternative material straws available for blended beverages, and plastic straws upon request for Starbucks customers who need one. The company's effort to reduce single-use plastic is known as _______ marketing. A. social B. consumer C. philanthropic D. green

D. green Green marketing is the development and marketing of products designed to minimize negative effects on the physical environment or to improve the environment. (3.5C)

Raymond Plumbing is a small, independently owned business providing plumbing services to residential and commercial customers. The company recently received B Corp certification. It also funds a scholarship at the local trade union for students to complete their educational requirements to become plumbers. Raymond Plumbing's commitment to education in its local community is an example of _______ sustainability. A. financial B. economic C. environmental D. social

D. social Social sustainability means developing processes and structures that not only meet the needs of the current community but benefit future generations as well. (3.5)

Obesity in the United States has been described as an epidemic since a high proportion of citizens are 15 or more pounds overweight. A convenience store chain has decided to respond to this issue by reducing the size of the soda fountain drinks it sells in its stores. The company now only offers fountain drinks in 16- and 32-ounce sizes, eliminating its "super-sized" 50-ounce beverage option. This decision reflects _______. A. the beverage company's policy B. a policy of green marketing C. federal laws D. the convenience store chain's morals

D. the convenience store chain's morals Morals are the rules people develop as a result of cultural values and norms. (3.3)