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CHAPTER 4: MASTER TEST BANK

ETHICAL AND SOCIAL RESPONSIBILITY IN MARKETING

Test Item Table by Major Section of the Chapter and Bloom’s Level of Learning

Bloom’s Level of Learning (LL)
Level 1 Level 2 Level 3
Major Section Knowledge Comprehension Application
of the Chapter (Knows Basic (Understands (Applies
Terms & Facts) Concepts & Principles)
Principles)
Chapter Opener: 2, 3, 4 1, 5, 6
Anheuser-Busch 186
(pp. 88-89)
Nature and 7, 8, 9, 10 11, 12, 13, 18, 19, 20 14, 15, 16, 17
Significance of 187, 188 189
Marketing Ethics
(pp. 90-91)
Understanding Ethical 25, 26, 27, 30, 35, 21, 22, 23, 24, 28, 29, 31, 32, 33, 34, 41,
Marketing Behavior 38, 39, 40, 43, 44, 36, 37, 53, 54, 62, 65, 42, 55, 56, 57, 58,
(pp. 91-98) 45, 46, 47, 48, 49, 66, 67, 71, 72, 73, 74, 59, 60, 68, 69, 81,
50, 51, 52, 61, 63, 76, 77, 80, 86, 87, 88, 89, 90, 93, 94, 99,
64, 70, 75, 78, 79, 95, 98, 102, 103, 104, 100, 101, 112, 113,
82, 83, 84, 85, 91, 108, 109, 110, 111, 115, 117
92, 96, 97, 105, 116 196
106, 107, 114 190, 192, 193, 194
191, 195
Understanding Social 118, 119, 127, 128, 120, 121, 124, 125, 126, 122, 123, 130, 134,
Responsibility in 131, 132, 136, 137, 129, 133, 145, 155, 156, 135, 138, 139, 146,
Marketing 140, 141, 142, 143, 164, 155, 156, 164, 165, 147, 148, 149, 157,
(pp. 98-103) 144, 150, 151, 152, 168, 169, 170, 173, 175, 158, 159, 160, 161,
153, 154, 163, 166, 176, 177, 178, 179, 180 162, 174
167, 171, 172, 181, 197, 200, 201, 203, 204 198, 199, 202
182
Video Case 4: Toyota 183, 184, 185
(pp. 105-107)

NOTE: Bold numbers indicate short essay questions. Underlined numbers indicate visually enhanced questions.

CHAPTER 4: MASTER TEST BANK

ETHICAL AND SOCIAL RESPONSIBILITY IN MARKETING

Test Item Table by Learning Objective and Bloom’s Level of Learning

Bloom’s Level of Learning (LL)

Learning Objective Level 1 Level 2 Level 3
(LO) Knowledge Comprehension Application
(Knows Basic (Understands Concepts (Applies Principles)
Terms & Facts) & Principles)
LO1 Explain the 7, 8, 9, 10 11, 12, 13, 18, 19, 20 1, 14, 15, 16, 17
differences 187, 188 189
between legal
and ethical
behavior in
marketing.
(pp. 90-91)
LO2 Identify factors 25, 26, 27, 30, 35, 21, 22, 23, 24, 28, 29, 31, 32, 33, 34, 41,
that influence 38, 39, 40, 43, 44, 36, 37, 53, 54, 62, 65, 42, 55, 56, 57, 58,
ethical and 45, 46, 47, 48, 49, 66, 67, 71, 72, 73, 74, 59, 60, 68, 69, 81,
unethical 50, 51, 52, 61, 63, 76, 77, 80, 86, 87, 88, 89, 90, 93, 94, 99,
marketing 64, 70, 75, 78, 79, 95, 98, 102, 103, 104, 100, 101, 112, 113,
decisions. 82, 83, 84, 85, 91, 108, 109, 110, 111, 115, 117
(pp. 91-98) 92, 96, 97, 105, 116 196
106, 107, 114 190, 192, 193, 194
191, 195
LO3 Describe the 118, 119, 127, 128, 2, 3, 4, 120, 121, 124, 5, 6, 122, 123, 130,
different 131, 132, 136, 137, 125, 125, 126, 129, 133, 134, 135, 138, 139,
concepts of 140, 141, 142, 143, 145, 155, 156, 164, 165, 146, 147, 148, 149,
social 144, 150, 151, 152, 168, 169, 170, 173, 183, 157, 158, 159, 160,
responsibility. 153, 154, 163, 166, 184, 185 161, 162, 174
(pp. 98-102) 167, 171, 172 186, 197, 200, 201, 203 198, 199, 202
LO4 Recognize 181, 182 175, 176, 177, 178, 179,
unethical and 180
socially 204
irresponsible
consumer
behavior.
(pp. 102-103)

NOTE: Bold numbers indicate short essay questions. Underlined numbers indicate visually enhanced questions.

CHAPTER 4: MASTER TEST BANK

ETHICAL AND SOCIAL RESPONSIBILITY IN MARKETING

MULTIPLE CHOICE QUESTIONS

4-1 CHAPTER OPENER: ANHEUSER-BUSCH APPLICATION

The Family Talk about Drinking guidebook developed by Anheuser-Busch to help parents
address the topic of underage drinking is an example of
a. consumerism.
b. preemptive marketing.
c. ethical behavior in marketing.
d. the social marketing concept.
e. cause marketing.

Answer: c Page(s): 88-89 LO: 1 AACSB: Ethics QD: Hard
Rationale: The Anheuser-Busch guidebook, Family Talk about Drinking, was developed to help
parents address the topic of underage drinking. It is an example of ethics in marketing since
ethics are the moral principles and values that govern the actions and decisions of an individual or
group that serve as guidelines on how to act rightly when faced with moral dilemmas such as
underage drinking.

4-2 CHAPTER OPENER: ANHEUSER-BUSCH COMPREHENSION

Anheuser-Busch acts on what it views as an ethical obligation to its customers and the general
public with its
a. development of a low-carb beer.
b. annual sponsorship of the Super Bowl.
c. exclusive use of ingredients from American manufacturers and suppliers.
d. alcohol awareness and education programs.
e. commitment to maintaining the lowest prices possible without sacrificing taste.

Answer: d Page(s): 88-89 LO: 3 AACSB: Ethics QD: Medium
Rationale: Anheuser-Busch has worked to convince people not to abuse its products. It acts on
what it views as an ethical obligation to its customers and the general public with its alcohol
awareness and education programs.

4-3 CHAPTER OPENER: ANHEUSER-BUSCH COMPREHENSION

Anheuser-Busch established its Corporate Social Responsibility (CSR) Department to
a. promote the positive aspects of moderate beer consumption.
b. promote responsible drinking and deter underage drinking and alcohol abuse.
c. encourage recycling of both aluminum cans and glass bottles by ultimate consumers and
suppliers.
d. educate employees about the importance of serving as role models by drinking responsibly
themselves.
e. promote Anheuser-Busch as more socially responsible than its competitors.
3

it is attempting to persuade underage children from thinking that drinking beer makes them cool. ABRC. if Anheuser-Busch is not profitable. utilitarianism d. the more taxes they will be able to pay.” The primary reason for its desire to satisfy these needs is consistent with the idea of social responsibility because a. 4-6 CHAPTER OPENER: ANHEUSER-BUSCH APPLICATION Anheuser-Busch is trying to meet the needs of a very diverse group: its customers who drink beer. 4-4 CHAPTER OPENER: ANHEUSER-BUSCH COMPREHENSION By preserving the natural environment. b. moral idealism d. contrary to popular belief. too many people will lose their jobs. utilitarianism b. alcohol can be good for you if consumed in moderation. the more highly thought of by potential consumers. stockholder responsibility b. a. Anheuser-Busch is exhibiting which of the following? a. cause marketing e. d. social responsibility Answer: e Page(s): 88-89 LO: 3 AACSB: Ethics QD: Medium Rationale: Social responsibility is the view that organizations are part of a larger society and are accountable to that society for their actions. profit responsibility c. Answer: a Page(s): 88-89 LO: 3 AACSB: Ethics QD: Hard -4- . the larger Anheuser-Busch’s profits. the higher company’s sales would be. 4-5 CHAPTER OPENER: ANHEUSER-BUSCH APPLICATION Anheuser-Busch’s commitment preserving the natural environment caused Fortune magazine to rank it among the top companies for __________. shareholders. Answer: b Page(s): 88-89 LO: 3 AACSB: Ethics QD: Medium Rationale: Corporate Social Responsibility (CSR) Department was established within Anheuser- Busch to develop and implement programs. and underage children who might think “drinking is cool. c. e. green marketing e. cause marketing Answer: b Page(s): 88-89 LO: 3 AACSB: Ethics QD: Hard Rationale: Anheuser-Busch’s efforts to preserve the environment reflect its broader social responsibility. environmentalists. which was recognized by Fortune magazine. all of these people or groups are its stakeholders. social responsibility c. prevent alcohol abuse. and curb underage drinking before it starts. advertising and partnerships that promote responsible drinking. Anheuser-Busch is appealing to environmentalists through its alcohol abuse awareness initiatives.

4-10 LAWS KNOWLEDGE Society’s values and standards that are enforceable in the courts are referred to as -5- . Rationale: Stakeholders is defined in Chapter 1. e. By preserving the natural environment. written documentation of a prescribed set of attitudes. e. d. societal philosophy. d. Answer: d Page(s): 90 LO: 1 AACSB: Ethics QD: Easy Rationale: Key term definition—ethics. 4-7 ETHICS KNOWLEDGE Ethics refers to the a. and values. 4-8 ETHICS KNOWLEDGE The moral principles and values that govern the actions and decisions of an individual or group are referred to as a. Social responsibility is a key term in Chapter 4—the idea that organizations are part of a larger society and are accountable to that society for their actions. Anheuser-Busch is appealing to the environmentalists. a specific set of behaviors a given society considers ethical. religion. c. e. religious group. And ABRC. b. by its alcohol awareness and education initiatives. or family. The term stakeholder refers to any group or organization that has a stake in the performance of the company. community. community. 4-9 LAWS KNOWLEDGE Laws refer to a. religious tenets of a country or ethnic region that shape its culture. Answer: b Page(s): 90 LO: 1 AACSB: Ethics QD: Easy Rationale: Key term definition—laws. appeals to people who drink beer and those who try to educate children from thinking drinking beer would make them cool. moral principles and values that govern the actions and decisions of an individual or group. or family. d. a code of ethics that defines what may be done in specific business circumstances. Answer: c Page(s): 90 LO: 1 AACSB: Ethics QD: Easy Rationale: Key term definition—ethics. social norms of a nation. beliefs. cultural values. social norms. b. society’s values and standards that are enforceable in the courts. c. ethics. c. b. society’s values and standards that are enforceable in the courts. universal laws of man that go beyond individual or a group’s beliefs of nations or religions. the agreed upon codes of behavior for a given nation.

Ethics deal with religious and moral beliefs while laws deal with social. the Consumer Bill of Rights Answer: d Page(s): 90 LO: 1 AACSB: Ethics QD: Easy Rationale: Key term definition—laws. There is no significant difference between laws and ethics. d. Approximately 700. Answer: e Page(s): 90-91 LO: 1 AACSB: Ethics QD: Medium Rationale: Ethics deal with personal and moral principles while laws are society’s values that are enforceable in the courts. d. Supreme Court ruled that this agreement violated the Sherman Act and represented price fixing. economic. these terms can be used interchangeably. unethical but legal. ethical and legal. e. c. This example illustrates that the physician’s actions were a. a behavior that is outlawed by the Sherman Act. See Figure 4-1 in the textbook. a. cultural norms. e. Answer: a Page(s): 90-91 LO: 1 AACSB: Ethics QD: Medium Rationale: The physicians were acting ethically by trying to keep their fees down.000 Chinese die annually from smoking-related illnesses. U. the U. Ethics deal with personal and moral principles whereas laws are society’s values that are enforceable in the courts. Laws reflect the beliefs of the majority of society while ethics reflect the beliefs of the minority of society. 4-13 ETHICAL/LEGAL FRAMEWORK IN MARKETING COMPREHENSION China is the world’s largest tobacco-producing country and has 300 million smokers. The U.S. China restricts tobacco imports. b. d. however. ethical but illegal. laws. b. c.S. Ethics deal with internal (personal) issues while laws deal with external (social) issues. This figure is expected to rise to more than 2 million by 2025.S. and environmental behaviors. e. situational ethics. altruistic but naïve. industry practices. b. All physicians were required to adhere to this schedule as a condition for membership in the society. Supreme Court ruled they were acting illegally because they were engaged in price fixing. 4-11 ETHICAL/LEGAL FRAMEWORK IN MARKETING COMPREHENSION Which of the following statements accurately distinguishes between laws and ethics? a. trade -6- . c. 4-12 ETHICAL/LEGAL FRAMEWORK IN MARKETING COMPREHENSION More than 70 percent of the physicians in the Maricopa County (Arizona) Medical Society agreed to establish a maximum fee schedule for health services to curb rising medical costs. unethical and illegal.

The U. d. sanctioned by the Business Software Alliance since only one copy is to be transferred. He asked an employee to do something illegal and because of his position as her boss. Answer: d Page(s): 90-91 LO: 1 AACSB: Ethics QD: Hard Rationale: Ethics are the moral principles and values that govern the actions and decisions of an individual or group. illegal but ethical. both legal and ethical. See Figure 4-1 in the textbook. e. e. When software is purchased. tobacco companies from marketing their products in China. unethically but legally. c. thus allowing U. in a socially responsible manner. Laws are society’s values and standards that are enforceable in the courts. Answer: d Page(s): 90-91 LO: 1 AACSB: Ethics QD: Medium Rationale: Smoking has been found to cause cancer and death for many people. ethically but illegally.S. acted a. trade negotiators are acting a. ethically and legally. c. tobacco companies to market their products in China. d. Fastow. ethically but illegally. trade negotiators know this. Answer: c Page(s): 90-91 LO: 1 AACSB: Ethics QD: Hard Rationale: Fastow pleaded guilty to two counts of wire and securities fraud. ethically and legally.S. unethically and illegally. 4-14 ETHICAL/LEGAL FRAMEWORK IN MARKETING APPLICATION An owner of a small publishing company allowed a friend who was starting a machine embroidery business to load the publishing company’s copy of Microsoft Word on her friend’s computer. it is also illegal. c. negotiators advocate free trade. Because the U. unethically but legally. illegal and unethical. thus acting illegally. the illegal request was also unethical. caveat emptor. 4-16 ETHICAL/LEGAL FRAMEWORK IN MARKETING APPLICATION -7- .S. See Figure 4-1 in the textbook. Not only is this behavior unethical. b. b. The Business Software Alliance has repeatedly run ads denouncing software piracy. This activity is a. the user agrees not to share the software with others. unethically and illegally. d.S. e. b. See Figure 4-1 in the textbook. 4-15 ETHICAL/LEGAL FRAMEWORK IN MARKETING APPLICATION Enron’s Chief Financial Officer Andrew Fastow was indicted and then pleaded guilty on a charges of securities fraud in the Enron case and was accused of enriching himself and his family at the company’s expense. in ways that cannot be determined by the information provided. in his tenure with Enron. they are acting unethically. They are acting legally because there is no law preventing U.

d. 4-18 CURRENT PERCEPTIONS OF ETHICAL BEHAVIOR COMPREHENSION Public opinion surveys show that 58 percent of U. typical of businesspeople around the world. There are many examples of companies that have been boycotted on the basis of unfounded rumors. b. above average. All businesses will act unethically unless forced by consumers to act morally.and long-term harm to its stakeholders until the truth became widely known. Ethics are the moral principles and values that govern the actions and decisions of an individual or group. all businesses must occasionally behave unethically. If you are an ethical person. The Research Industry Coalition (RIC) has asked all media to inform viewers or listeners that the validity of such polls is questionable and the results are NOT statistically representative of the population but are just a frequency distribution of those who happen to call. similar to other professions. ethical but illegal. Answer: e Page(s): 90-91 LO: 1 AACSB: Ethics QD: Hard Rationale: The boycott is unethical because it inflicts damage on others needlessly. Many media today use pay-to-vote polls. Boycotting a product without knowing the facts can be viewed as unethical. any bias is implied and need not be directly stated under the caveat emptor doctrine. its business practice would fall into which of the following categories? a. If a television station chooses not to make viewers aware of the shortcomings of a pay-to-vote poll. adults rate the ethical standards of business executives as a. e. outstanding. causing short. you should act according to your instincts.S. See Figure 4-1 in the textbook. Realistically speaking. unethical and illegal. They serve as guidelines on how to act rightly and justly when faced with moral dilemmas. if viewers believe the polls are scientifically valid or statistically representative of the population. c. However. in which respondents use a 900-telephone number to vote “yes” or “no” on a current issue. unethical but legal e. as a means of generating viewer or listener interest. found that 67 percent of North Americans are willing to boycott products on ethical grounds. There is nothing consumers can do to stop unethical business activities. Which of the following statements describes a conclusion that should be drawn from this information? a. Answer: d Page(s): 90-91 LO: 1 AACSB: Ethics QD: Hard Rationale: The use of pay-to-vote polls is legal. This survey did not ask if the person who was acting on ethical grounds would first see if the boycott was based on facts. b. -8- . this practice has become universal. in today’s media age. c. and therefore. b. See Figure 4-1 in the textbook. ethical and legal. unethical. 4-17 ETHICAL/LEGAL FRAMEWORK IN MARKETING APPLICATION A recent poll by Environics International. a public-opinion research firm. c. in order to stay in business. d. d. their use may be misleading.

d. evil Answer: b Page(s): 91-92 LO: 2 AACSB: Ethics QD: Medium Rationale: Figure 4-2 in the textbook shows a framework with three influences that can have an effect on one’s personal moral philosophy and ethical marketing behavior.S. legal professionals c. national and regional legislation d. fair or poor. a growing tendency for business decisions to be judged publicly by groups with different values and interests. business culture and industry practices. c. b. the universal concept of good vs. insurance company professionals b.S. the news media Answer: c Page(s): 91 LO: 1 AACSB: Ethics QD: Medium Rationale: Advertising practitioners are considered to be among the least ethical occupations in the United States. Congress e. 4-19 CURRENT PERCEPTIONS OF ETHICAL BEHAVIOR COMPREHENSION According to public opinion surveys. advertising practitioners d. Answer: e Page(s): 91 LO: 1 AACSB: Ethics QD: Medium Rationale: Public opinion surveys show that 58 percent of U. a. a. __________ are considered to be among the LEAST ethical occupations in the United States. 4-20 CURRENT PERCEPTIONS OF ETHICAL BEHAVIOR COMPREHENSION All of the following are reasons for the state of perceived ethical business conduct EXCEPT: a. an increase in the public’s expectations of ethical business behavior. societal culture and norms c. These include societal -9- . Alternative “e” has not been shown to be the case. and corporate culture and expectations. Answer: e Page(s): 91 LO: 1 AACSB: Ethics QD: Medium Rationale: The current low perception of ethical business behavior can be explained by a number of reasons. businesses are behaving more ethically during these difficult economic times. e. 4-21 ETHICAL MARKETING BEHAVIOR COMPREHENSION Factors influencing personal moral philosophy and ethical behavior include __________. e. members of the U. in fact the reverse may be true. adults rate the ethical standards of business executives as fair or poor. religious beliefs and practices b. universal core values e. ethical business conduct may have declined. the increased pressure on business people to make decisions in a society with diverse value systems.

evil Answer: b Page(s): 91-92 LO: 2 AACSB: Ethics QD: Medium Rationale: Figure 4-2 in the textbook shows a framework with three influences that can have an effect on one’s personal moral philosophy and ethical marketing behavior. business culture and industry practices. culture and norms. These include societal culture and norms. and corporate culture and expectations. corporate culture and expectations c. business culture and industry practices. a nation’s moral philosophy Answer: b Page(s): 91-92 LO: 2 AACSB: Ethics QD: Medium Rationale: Figure 4-2 in the textbook shows a framework with three influences that can have an effect on one’s personal moral philosophy and ethical marketing behavior. national and regional legislation d. the U. Supreme Court e. organizational structures b. legislation c. and __________. 4-23 ETHICAL MARKETING BEHAVIOR COMPREHENSION Which of the following is considered one of the major factors that influences ethical behavior? a.10 - . business culture and industry practices. a.S. religious beliefs and practices b. business culture and industry practices. organizational structures b. 4-22 ETHICAL MARKETING BEHAVIOR COMPREHENSION Which of the following is considered one of the major factors that influences ethical behavior? a. business culture and industry practices. the universal concept of good vs. national and local legislation d. These include societal culture and norms. and corporate culture and expectations. . a nation’s moral philosophy e. These include societal culture and norms. 4-24 ETHICAL MARKETING BEHAVIOR COMPREHENSION Factors influencing personal moral philosophy and ethical behavior include societal culture and norms. and corporate culture and expectations. societal culture and norms c. federal regulatory agencies d. business culture and industry practices Answer: e Page(s): 91-92 LO: 2 AACSB: Ethics QD: Medium Rationale: Figure 4-2 in the textbook shows a framework with three influences that can have an effect on one’s personal moral philosophy and ethical marketing behavior. universal core values e. and corporate culture and expectations.

attitudes.4-25 CULTURE KNOWLEDGE Culture refers to a. c. Supreme Court d. ideas. 4-28 CULTURE COMPREHENSION Which of the following is a socializing force that dictates what is morally right and just? a. c. d. federal. culture . the learned behaviors of a specific racial. ideas. state.S. e. Answer: a Page(s): 91 LO: 2 AACSB: Ethics QD: Easy Rationale: Text term definition—culture. ethnic. that reflects the values of an entire nation.11 - . the set of values. art. dictates what is morally right and just. etc. a. becomes the basis of all legislation—federal. and attitudes that are learned and shared among members of a group is referred to as __________. ethics d. state. 4-26 CULTURE KNOWLEDGE In marketing. ideas. sex. the set of values. d. the U. culture e. and attitudes that are learned and shared among members of a group. e. and attitudes that are learned and shared among members of a group. morals c. or religious group based on commonly shared ethical principles and protected by laws. federal regulatory agencies like the FTC b. Answer: e Page(s): 91 LO: 2 AACSB: Ethics QD: Easy Rationale: Text term definition—culture. and local legislation c. the set of values. b. expresses the diverse backgrounds of a nation’s subcultures. ideals b. is determined by the largest generational group at a given point in time. and local—in societies around the world. and norms of behavior that is learned and shared among the members of an organization. race. b. the combination of beliefs and behaviors accepted as correct regardless of a person’s age. the music. 4-27 CULTURE KNOWLEDGE Culture refers to the set of values. ideas. It also serves as a socializing force that a. reflects the will of the largest or most powerful minority. or religion. diversity Answer: d Page(s): 91 LO: 2 AACSB: Ethics QD: Easy Rationale: Text term definition—culture. theater.

or tax revenue. 4-30 SOCIETAL CULTURE AND NORMS KNOWLEDGE Copyrights. music. b. subject to ISO 14000 requirements. are cyclical so it is important to change with the times. d. d. b. and attitudes that are learned and shared among members of a group. something is either right or wrong Answer: a Page(s): 91-92 LO: 2 AACSB: Ethics QD: Medium Rationale: Moral standards are relative to particular societies. and attitudes that are learned and shared among members of a group and serves as a socializing force that dictates what is morally right and just. e. 4-31 SOCIETAL CULTURE AND NORMS APPLICATION The unauthorized use of intellectual property can severely affect the owners of that property. or distribution of intellectual property is illegal in the United States and most countries. intellectual property. Answer: b Page(s): 92 LO: 2 AACSB: Ethics QD: Easy Rationale: Copyrights. e. as new and improved offerings enter the marketplace. d. limited to books. ideas. e. are fluid and very easy to change. The important thing to remember is that moral standards a. public goods. organizational core values Answer: d Page(s): 91 LO: 2 AACSB: Ethics QD: Medium Rationale: Culture refers to the set of values. royalties. Answer: c Page(s): 92 LO: 2 AACSB: Ethics QD: Hard . and software. ensures that the prices to consumers are minimized as a result of increased competition. has a positive impact on an entire nation’s cultural value system. trademarks. must be universal in order for cross-cultural marketing to be effective. which can create ethical dilemmas. c. are concrete. Unauthorized use. has a negative impact on the economy through the loss of jobs. and patents are a. accelerates innovation in that industry. This practice also a. c. These standards often reflect the laws and regulations that affect social and economic behavior. wages. levels the playing ground for developing nations by eliminating years of research time. ideas. 4-29 CULTURE COMPREHENSION Culture refers to the set of values. Culture also serves as a socializing force that dictates what is morally right and just. b. and patents are intellectual property. rights granted to individuals or organizations by the WTO for a period of five years. e. are relative to particular societies. c. trademarks. reproduction.12 - .

a. $20. societal culture and norms d. and tax revenue. For example.13 - .S. Opt- in means customers must ask to be involved in data collection and marketing while opt-out companies automatically include customers in data collection unless the customer specifically asks not to be included. industry practices b. there must be as easy an exchange of ideas and information as possible between countries. Annual lost sales from the theft of intellectual property amounts to $12. One important issue is opt-in versus opt-out. reproduction. corporate expectations e. typically .. are relative to particular societies. societal culture and norms Answer: e Page(s): 91-92 LO: 2 AACSB: Ethics QD: Hard Rationale: Differences in societal culture and norms affect the view of ethical behavior held in both the U. Even when sanctions are applied. result in lost jobs. 4-33 SOCIETAL CULTURE AND NORMS APPLICATION As the use of the Internet grows around the world. business culture b. like the right to privacy. or patent. and in China.5 billion in the music industry. In the U. These are viewed as intellectual property. Rationale: Differences in societal culture and norms affect the view of ethical behavior. What ethical factor is illustrated by this example? a. trademark. In general. European websites have opt-in policies while U. The difference between the two countries shows that __________ affect(s) the view of ethica1 behavior held in each country. unauthorized use. Culture also serves as a socializing force that dictates what is morally right and just. Americans are not nearly as protective of their right to privacy. industry practices c. royalties. 4-32 SOCIETAL CULTURE AND NORMS APPLICATION Consider the copying of another’s copyright.. and $51. and other international brands is pervasive in China because laws protecting intellectual property are unclear and sporadically enforced.5 billion in the movie industry. copying enjoys a long tradition and does not carry a stigma. organizational culture and expectations Answer: c Page(s): 91-92 LO: 2 AACSB: Ethics QD: Hard Rationale: Culture refers to the set of values. or distribution of intellectual property is illegal. wages. 4-34 SOCIETAL CULTURE AND NORMS APPLICATION Making counterfeit copies of Gucci purses. sanctions are minimal. where infringing on intellectual property is illegal. corporate culture d. This means that moral standards. Europeans believe it is unethical to invade someone’s privacy. where it is legal. websites have opt-out policies. Lost sales. in turn. copying a masterpiece was historically considered an art form in its own right. Yet in China. social legislation c. ideas. and attitudes that are learned and shared among members of a group.S.0 billion in the software industry.S. changes it international law e. Tommy Hilfiger sportswear.

the seller making a profit at the expense of the buyer. a warning. the effective rules of the game. the boundaries between competitive and unethical behavior. the buyer getting the product for the best price at the expense of the seller. perception of ethical behavior as viewed by employers of business firms. b. the boundaries between competitive and unethical behavior. accountability of buyers and sellers to federal and state regulators. a public apology. corporate values. service. e. b. competitive behavior among sellers. A business introducing a product into China needs to know that its __________ may lead to trademark infringements. societal norms. counterfeiting is viewed as a profitable way of doing business. 4-36 BUSINESS CULTURE COMPREHENSION Business culture affects ethical conduct both in the exchange relationship between sellers and buyers and in the a. societal culture and norms e. and the codes of conduct in business dealings. business cultures. moral idealism d. c. c. d. Moreover. b. Business culture affects ethical conduct both in the exchange relationship between sellers and buyers and in the competitive behavior among sellers. 4-37 ETHICS OF EXCHANGE COMPREHENSION Ethical exchanges between sellers and buyers should result in a. and the codes of conduct in business dealings are referred to as a. purchase behavior among buyers. not nonprofit organizations. religious precepts b. a. 4-35 BUSINESS CULTURE KNOWLEDGE In marketing. consisting of confiscation. Answer: c Page(s): 92 LO: 2 AACSB: Ethics QD: Easy Rationale: Text term definition—business cultures.14 - . Answer: a Page(s): 92 LO: 2 AACSB: Ethics QD: Medium Rationale: Business cultures comprise the effective rules of the game. societal mores. e. antecedent states c. copying enjoys a long tradition in China and does not carry a stigma. utilitarianism Answer: d Page(s): 91-92 LO: 2 AACSB: Ethics QD: Hard Rationale: In China. and product responsibility to the ultimate consumer. fair trade practices. . price. An international company doing business there must be vigilant in understanding China’s societal culture and norms. and perhaps a fine. d.

Answer: c Page(s): 92 LO: 2 AACSB: Ethics QD: Medium Rationale: The exchange process is central to the marketing concept. a. the buyer forming a strategic alliance with the seller. 4-38 CAVEAT EMPTOR KNOWLEDGE The Latin phrase caveat emptor is a legal concept that means a. e. 4-39 CAVEAT EMPTOR KNOWLEDGE The legal concept of “let the buyer beware. “Let the buyer beware.” an attitude that was held by most marketers prior to the 1990s.” Answer: b Page(s): 93 LO: 2 AACSB: Ethics QD: Easy Rationale: Key term definition—caveat emptor. is referred to as __________. c. Answer: a Page(s): 93 LO: 2 AACSB: Ethics QD: Easy . c. d. “Cash on delivery.15 - . The marketing concept of “be first or be last. cest la vie e. The legal concept of “such is life. quid pro quo d. e. “Don’t take any wooden nickels.” d. “Such is life. especially during a period of recession.” which was a charge placed upon many firms during the period after WWII when products failed to meet their marketing claims.” implying that the first company to the marketplace wins.” e. b. the seller offering buyers its products and services at cost. “Let’s make a deal. Ethical exchanges between sellers and buyers should result in both parties being better off after a transaction.” b.” which created many illegal as well as legal but unethical business practices during the 1980s. d. both parties to the exchange being better off after a transaction. The Latin phrase meaning “empty promises. The legal concept of “let the buyer beware. mea culpa c. The Latin term meaning that “all is fair in love and war. ad nauseum b.” which was pervasive in the American business culture prior to the 1960s.” c. caveat emptor Answer: e Page(s): 93 LO: 2 AACSB: Ethics QD: Easy Rationale: Key term definition—caveat emptor. 4-40 CAVEAT EMPTOR KNOWLEDGE Caveat emptor refers to a.” which was pervasive in the American business culture prior to the 1960s.

Yet. caveat emptor c. to be informed. Neither the government nor any other organization guarantees the suitability of or the positive returns on buyers’ investments. It behooves investors to do research on the company.” It is up to investors to do the research on a company. in the end. and to be heard. E Pluribus Unum c. 4-44 CONSUMER BILL OF RIGHTS (1962) KNOWLEDGE . de facto marketing d. modus operandi b. Neither the government nor any other organization guarantees the suitability of or the positive returns on their investments. Caveat Emptor Decree d. 4-43 CONSUMER BILL OF RIGHTS (1962) KNOWLEDGE A law that codified the ethics of exchange between buyers and sellers. Customer Consent Decree Answer: d Page(s): 93 LO: 2 AACSB: Ethics QD: Easy Rationale: Key term definition—Consumer Bill of Rights. the principle of __________ is in effect. is referred to as the a. Lanham Act b. Rationale: Key term definition—caveat emptor.16 - . cest la vie e. including the rights to safety. It is up to investors to do the research on a company. de facto marketing d. it is up to investors to research the companies in which they want to invest because __________ is the norm when investing in the stock market. anguis in herba Answer: b Page(s): 93 LO: 2 AACSB: Ethics QD: Hard Rationale: Caveat emptor means let the buyer beware. 4-41 CAVEAT EMPTOR APPLICATION Investors should understand that when purchasing stock. modus operandi b. Fair Practices Act c. 4-42 CAVEAT EMPTOR APPLICATION The Securities and Exchange Commission (SEC) works hard to prevent unscrupulous companies from “cooking” their books to paint investors and regulators a better financial picture than they really have. so they will make a wise purchase. a. a. Consumer Bill of Rights e. caveat emptor Answer: e Page(s): 93 LO: 2 AACSB: Ethics QD: Hard Rationale: Caveat emptor means “let the buyer beware. to choose. cest la vie e.

e. and collaborative decision making. fair pay. (2) to be informed. (3) to choose. (3) to choose.17 - . to safety Answer: e Page(s): 93 LO: 2 AACSB: Ethics QD: Easy Rationale: In 1962. d. 2003. Bush. Answer: a Page(s): 93 LO: 2 AACSB: Ethics QD: Easy Rationale: The Consumer Bill of Rights was the law that codified the ethics of exchange between buyers and sellers including the rights to safety. distributors. e. to privacy b. President John F. to be compensated for product defects c. c. and to be heard. be treated without prejudice e. President John F. President John Kennedy. a. codified the ethics of exchange between manufacturers. Answer: c Page(s): 93 LO: 2 AACSB: Ethics QD: Easy Rationale: Key term definition—Consumer Bill of Rights. to choose. 4-47 CONSUMER BILL OF RIGHTS (1962) KNOWLEDGE . President George W. 1962. including the rights to safe working conditions. Clinton. guaranteed consumers the right to be compensated through replacement. repair. to choose. Kennedy outlined a Consumer Bill of Rights that codified the ethics of exchange between buyers and sellers. President Ronald Reagan. codified the ethics of exchange between manufacturers. and suppliers. including the rights to safety. 1996. The Consumer Bill of Rights refers to a law that a. to be informed. It was outlined by __________ in __________. 1983. distributors. b. Kennedy outlined a Consumer Bill of Rights that codified the ethics of exchange between buyers and sellers. to be treated with respect d. These were the right: (1) to safety. 4-45 CONSUMER BILL OF RIGHTS (1962) KNOWLEDGE The Consumer Bill of Rights codified the ethics of exchange between buyers and sellers. Constitution. (2) to be informed. 4-46 CONSUMER BILL OF RIGHTS (1962) KNOWLEDGE In 1962. d. including the right to be paid. President William H. These were the right: (1) __________. 2009. and (4) to be heard. to be informed. guaranteed consumers the rights that are enumerated in the First Amendment to the U. President John Kennedy outlined it in 1962.S. a. or reimbursement for products that fail to perform as promised by the manufacturer. codified the ethics of exchange between buyers and sellers. c. and to be heard. and (4) to be heard. and suppliers. b. President Barack Obama.

(2) to be informed. to privacy b. (3) to choose. to receive fair prices for both products and services Answer: b Page(s): 93 LO: 2 AACSB: Ethics QD: Easy Rationale: In 1962. (2) __________. and (4) to be heard. These were the right: (1) to safety. and (4) to be heard. Kennedy outlined a Consumer Bill of Rights that codified the ethics of exchange between buyers and sellers. Kennedy outlined a Consumer Bill of Rights that codified the ethics of exchange between buyers and sellers. to be treated without prejudice e. a. to be compensated for product defects e. President John F. and (4) to be heard. (2) to be informed. Kennedy outlined a Consumer Bill of Rights that codified the ethics of exchange between buyers and sellers. Kennedy outlined a Consumer Bill of Rights that codified the ethics of exchange between buyers and sellers. to receive fair prices for both products and services d. President John F. Kennedy outlined a Consumer Bill of Rights that codified the ethics of exchange between buyers and sellers. to be compensated for product defects Answer: c Page(s): 93 LO: 2 AACSB: Ethics QD: Easy Rationale: In 1962. (2) to be informed. In 1962.18 - . These were the right: (1) to safety. and (4) to be heard. a. a. 4-49 CONSUMER BILL OF RIGHTS (1962) KNOWLEDGE In 1962. These were the right: (1) to safety. (3) to choose. President John F. (3) to choose. to choose d. (3) __________. These were the right: (1) to safety. Kennedy outlined a Consumer Bill of Rights that codified the ethics of exchange between buyers and sellers. (3) to choose. to demand “rain checks” if advertised goods are out of stock e. to be heard Answer: e Page(s): 93 LO: 2 AACSB: Ethics QD: Easy Rationale: In 1962. (2) to be informed. President John F. to be informed c. (3) to choose. to have legal representation in a court of law b. to be treated with respect d. President John F. and (4) to be heard. and (4) __________. These were the right: (1) to safety. to have legal representation in a court of law b. These were the right: (1) to safety. 4-48 CONSUMER BILL OF RIGHTS (1962) KNOWLEDGE In 1962. to exchange or return products within a reasonable period of time c. President John F. to exchange or return products and services within a reasonable period of time c. 4-50 ETHICS OF EXCHANGE KNOWLEDGE . (2) to be informed.

4-52 ETHICS OF EXCHANGE KNOWLEDGE A current practice whereby retailers may demand cash or free goods in exchange for shelf space to stock new products is referred to as a. many supermarket chains demand “slotting allowances” from manufacturers in the form of cash or free goods to stock new products. Yet. Over 92 percent of websites collect personal information. economic espionage. $300 billion d. industrial bribes. personal claims and property damage from consumer product safety incidents cost companies more than $700 billion annually. The Consumer Product Safety Commission monitors over 15. telephone numbers. Answer: a Page(s): 93 LO: 2 AACSB: Ethics QD: Easy Rationale: Relating to the right to choose. one-quarter b. slotting allowances. two-thirds e. yet only about __________ make their customers aware of how that information is being used. b. 4-51 ETHICS OF EXCHANGE KNOWLEDGE The FTC is concerned about the amount of personal information that is collected through websites because the consumer is not made aware of how this information is being used.19 - . three-quarters Answer: d Page(s): 93 LO: 2 AACSB: Ethics QD: Easy Rationale: An FTC survey of websites indicated that 92% collect personal information such as consumer e-mail addresses.S. e. tying arrangements. only two-thirds of websites inform consumers of what is done with this information once obtained. a. $900 million c.000 consumer products. $700 billion Answer: e Page(s): 93 LO: 2 AACSB: Ethics QD: Easy Rationale: The right to safety manifests itself in industry and federal safety standards for most products sold in the U. 4-53 ETHICS OF EXCHANGE COMPREHENSION . d. a. $100 million b. Companies need to be vigilant in product quality testing not simply from an ethical perspective but from a financial one as well. one-third c. $500 billion e. kickbacks. Personal claims and property damage from consumer product safety incidents cost companies more than __________ annually. However. and financial data. shopping habits. one-half d. c.

choose. happiness. the U. choose. Since the doll was unsafe. d. a play chair. be informed. despite extensive testing. the doll was found to “eat” the child’s hair and was subsequently recalled and discontinued. the world’s largest children’s products company. d.S. e. be heard. developed a high chair that could be used as an infant feeding seat. be informed. c. consumers should have access to public policy makers regarding new product ideas. d. Answer: d Page(s): 93 LO: 2 AACSB: Ethics QD: Hard Rationale: Consumers’ right to safety ensures safe products. 4-55 ETHICS OF EXCHANGE APPLICATION Mattel’s Cabbage Patch Snacktime Kids doll was designed to eat plastic toys that were drawn into the doll’s motorized mouth. c. be treated courteously. . 4-56 ETHICS OF EXCHANGE APPLICATION Recently. a youth chair. b. e. safety. it was removed from production and the marketplace. Answer: b Page(s): 93 LO: 2 AACSB: Ethics QD: Medium Rationale: The consumer right to be informed has spawned much federal legislation such as the Children’s Online Privacy Protection Act (1998) and self-regulation initiatives restricting the disclosure of personal information. Answer: c Page(s): 93 LO: 2 AACSB: Ethics QD: Medium Rationale: The right to be heard means that consumers should have access to public policy makers regarding complaints about products and services. a booster chair. Department of Commerce has the right to hear consumer complaints. the American Marketing Association has the right to discipline marketers based on customer complaints. 4-54 ETHICS OF EXCHANGE COMPREHENSION The right to be heard means that a. However. be treated courteously.20 - . Mattel discontinued the item because of consumers’ right to a. c. a project team for Cosco. safety. e. b. b. The Children's Online Privacy Protection Act (1998) is a law designed to protect consumers’ right to a. companies should have access to public policy makers regarding complaints about fraudulent consumer practices. consumers should have access to public policy makers regarding complaints about products and services.

Subscribers to America Online (AOL) were upset when AOL proposed giving . Consumer Product Safety Commission fined Cosco $1. The marketing manager. certain toys that were manufactured in China were found to have unsafe levels of lead in the paint and were recalled. Answer: d Page(s): 93 LO: 2 AACSB: Ethics QD: Hard Rationale: The chair was unsafe. choose. in consultation with other middle managers.3 million for its misconduct vis-à-vis the chair. and they resolved this by recalling the toys. 4-59 ETHICS OF EXCHANGE APPLICATION When shopping on the Internet. be informed. d. d. safety. c. so Dell recalled them. e. d. be informed. Answer: a Page(s): 93 LO: 2 AACSB: Ethics QD: Hard Rationale: These toys would be harmful to children so the companies who sold them violated consumers’ right to safety. be treated courteously.7 million batteries and gave consumers a replacement before any personal injuries resulted. learned that the lithium-ion batteries in its notebook computers posed a fire hazard to consumers. safety. happiness. Answer: c Page(s): 93 LO: 2 AACSB: Ethics QD: Hard Rationale: The batteries posed a safety hazard. happiness. b. c. This action protected consumers’ right to a. several children were injured and some died as a result of using the chair. choose. Dell was most likely concerned with consumers’ right to a.21 - . 4-57 ETHICS OF EXCHANGE APPLICATION Dell Inc. and when reclined. choose. e. b. be informed. safety. c. decided to have the prototypes checked out by Cosco employees who had small children. so Cosco violated the right to safety. most consumers assume the personal information they give out is confidential. be heard. an infant bed. be treated courteously. The U.S. e. Before Cosco pulled the unsafe chair from the market. Its design could be made and sold for $49. be heard. 4-58 ETHICS OF EXCHANGE APPLICATION Recently. Cosco was charged with being unconcerned about consumers’ right to a. b. The company recalled 2. This was the only product testing performed on the product.

22 - . Answer: b Page(s): 93 LO: 2 AACSB: Ethics QD: Hard Rationale: The consumers’ right to be informed was lost when Toysmart threatened to use their private information in a way not consistent with how it had been gathered. $500 b. 4-62 ETHICS OF COMPETITION COMPREHENSION . a telemarketer can be fined up to __________ for each call made to a telephone number posted on the registry. This is related most directly to consumers’ right to a. happiness.250 d. Today. People who had purchased products from Toysmart and were a part of its database were upset when they learned their private information was being treated as property that was for sale. be heard. be treated courteously. be heard. In other words. a telemarketer can be fined up to $16. happiness. $16. b. Answer: e Page(s): 93 LO: 2 AACSB: Ethics QD: Hard Rationale: By giving out information about consumers without the knowledge of the consumers.000 Answer: e Page(s): 93 LO: 2 AACSB: Ethics QD: Easy Rationale: The FTC established to Do Not Call Registry in 2003 for consumers who do not want to receive unsolicited telemarketing calls. it listed its customer database as one of its assets even though it had assured its customers it would never disclose their information to any third party.com filed for bankruptcy in June 2000. $750 c. safety. d.750 e. e. These customers believed that according to the Consumer Bill of Rights. e. be informed. d. their right to be informed about what AOL was planning on doing with their personal information is denied. be informed. a. c. $1. $8. 4-61 DO NOT CALL REGISTRY KNOWLEDGE The FTC established the Do Not Call Registry in 2003 for consumers who do not want to receive unsolicited telemarketing calls.000 for each call made to a telephone number posted on the registry. 4-60 ETHICS OF EXCHANGE APPLICATION When Toysmart. member information to partners without telling them. b. safety. Today. Toysmart’s former customers had a right to a. c. choose. they should know how their private information would be used.

a. Two kinds of unethical behavior are most common: a. price fixing and copyright infringement. b. economic espionage b.6. Answer: e Page(s): 93-94 LO: 2 AACSB: Ethics QD: Easy Rationale: Key term definition—economic espionage. bribery . misrepresentation c. by a gift of money or other inducement. d.8 New Oxford American Dictionary. c. the destruction of a competitor’s products or services through physical damage of property or damage to their reputation. persuading someone to act in one’s favor. the clandestine collection of trade secrets or proprietary information about a company’s competitors. See Mac OS X 10. e. Two kinds of unethical behavior are most common: (1) economic espionage and (2) bribery. 4-65 ECONOMIC ESPIONAGE COMPREHENSION All of the following are examples of economic espionage EXCEPT: a. c. marketplace espionage d. d. price fixing and economic espionage. industrial espionage c. 4-63 ECONOMIC ESPIONAGE KNOWLEDGE Economic espionage refers to a. Business culture affects ethical behavior in competition.23 - . typically illegally or dishonestly. industrial surveillance e. the clandestine collection of trade secrets from foreign countries. Alternative “b” is the definition of a bribe and alternative “c” is the definition of a kickback. b. wiretapping b. patent infringement Answer: a Page(s): 93-94 LO: 2 AACSB: Ethics QD: Easy Rationale: Key term definition—economic espionage. e. 4-64 ECONOMIC ESPIONAGE KNOWLEDGE The clandestine collection of trade secrets or proprietary information about a company’s competitors is referred to as __________. economic espionage and bribery. Answer: a Page(s): 93 LO: 2 AACSB: Ethics QD: Medium Rationale: Business culture also affects ethical behavior in competition. an illicit payment made to someone who has facilitated a transaction or appointment. economic espionage and antitrust infractions. bribery and extortion.

clandestine trade secrets. wiretapping. based in Skokie. fashion design and textiles b. entertainment c. who had developed his own secret recipe. a. 4-66 ECONOMIC ESPIONAGE COMPREHENSION Economic espionage includes such activities as _________. and pharmaceuticals. employment contract violations Answer: c Page(s): 93-94 LO: 2 AACSB: Ethics QD: Medium Rationale: Economic espionage is the clandestine collection of trade secrets or proprietary information about a company's competitors and includes illegal trespassing. got a call from his supplier. Inc. specialty chemicals. beverage industry (alcoholic and nonalcoholic) Answer: c Page(s): 93-94 LO: 2 AACSB: Ethics QD: Medium Rationale: Economic espionage is most prevalent in high-technology industries. Giving and receiving bribes and kickbacks are another form of unethical competitive business behavior. hiring people who ever worked in an executive capacity at a competitor’s firm. especially if they didn’t have a noncompete clause c. Smolensky.24 - . fraud.. “Michael. such as electronics. industrial equipment. corporate shadowing. marrying someone who works for a competitor in an executive position Answer: d Page(s): 93-94 LO: 2 AACSB: Ethics QD: Medium Rationale: Key term definition—economic espionage. “dumpster diving” or searching a competitor’s trash. 4-67 ECONOMIC ESPIONAGE COMPREHENSION Economic espionage is most likely to occur in which type of industries? a. offering to accept all competitors’ coupons. d. saying. known only to Smolensky and the supplier. misrepresentation. someone is trying to steal your secrets. IL. high-tech electronics and aerospace d. the search of a competitor’s trash. aerospace. . intellectual property (print) e. making their effectiveness as a promotional tool negligible d. The company sells kefir. c. a cultured milk product popular in Smolensky’s native Russia. b. Recently. and violations of written and implicit employment agreements with noncompete clauses. This is an example of a. economic espionage.” Smolensky discovered later that a prospective rival had called to ask the supplier for certain ingredients by their secret codes. theft. The rival had picked them out of Lifeway’s refuse. two firms hiring the same musician to write their company jingle b. e. 4-68 ECONOMIC ESPIONAGE APPLICATION Michael Smolensky is CEO of Lifeway Foods. searching through a competitor’s trash e. where technical know-how and trade secrets separate industry leaders from followers.

a. which includes the search of a competitor’s trash. In this case. industrial sleuthing. and violations of written and implicit employment agreements with noncompete clauses.25 - . wiretapping. Bloom was notified immediately through a web-based news monitoring service. Whether Pet Assure’s response is ethical or unethical is debatable. theft. not primary data collection. When a West Coast provider of catastrophic pet coverage “preannounced” the addition of a wellness component (Pet Assure’s specialty) in an interview with a tiny community newsweekly six months prior to launching it. recently took advantage of a rival’s naïveté. This not only gave him time to add catastrophic benefits to one of his own wellness products. not economic espionage. the use of kickbacks d. Espionage activities include illegal trespassing. the search of a competitor’s trash. This is a legal form of secondary. but also enabled him to get his offering to the market first. competitive surveillance. fraud.J. misrepresentation. Pet Assure found out about its competitor’s activities by reading a news story in a local paper.. corporate piracy e. d. Answer: b Page(s): 93-94 LO: 2 AACSB: Ethics QD: Hard Rationale: Economic espionage is the clandestine collection of trade secrets or proprietary information about a company’s competitors. economic espionage c. e. Jay Bloom relied on __________ to keep him abreast of his competitors’ activities. 4-69 ECONOMIC ESPIONAGE APPLICATION Jay Bloom’s Pet Assure. Coke-Pepsi Photo . a national pet health-care provider network based in Dover. primary market research Answer: a Page(s): 93-94 LO: 2 AACSB: Ethics QD: Hard Rationale: Economic espionage is the clandestine collection of trade secrets or proprietary information about a company’s competitors. legal environmental scanning b. N.

e. e. 36 c. c. d. were afraid the media would find out. d. Answer: c Page(s): 94 LO: 2 AACSB: Ethics QD: Medium Rationale: The Pepsi employee should immediately report the incident to Coca-Cola who will take the appropriate steps such as contacting the FBI to investigate the situation. Most said that they a. Suppose you are a senior executive at Pepsi-Cola and a Coca-Cola employee offers to sell you the marketing plan and sample for a new Coke product at a modest price. 89 Answer: d Page(s): 94 LO: 2 AACSB: Ethics QD: Easy Rationale: When this question was posed in an online survey of marketing and advertising executives. An employee of Coca-Cola attempted to share its marketing plan with an employee of Pepsi for a modest price. 67 percent said they would buy the plan and product sample if there were no repercussions. 4-72 MAKING RESPONSIBLE DECISIONS COMPREHENSION Consider the Coke-Pepsi photo above. Immediately report the offer to the Better Business Bureau. Thirty three percent of Pepsi’s marketing and advertising executives say they would decline an offer to buy one of Coke’s marketing plans and samples. 4-71 MAKING RESPONSIBLE DECISIONS COMPREHENSION Consider the Coke-Pepsi photo above. What should the Pepsi employee do? a. Immediately contact Coca-Cola to advise them of the plot to sell the marketing plan. 67 e. Ignore the offer to buy the marketing plan and hope the ethical dilemma would go away. 15 b. would prefer competing ethically so they could sleep at night.26 - . c. thought they might go to work for Coke one day and didn’t want to spoil their employment chances. Answer: b Page(s): 94 LO: 2 AACSB: Ethics QD: Medium . __________ percent of marketing and advertising executives said they would buy the plan and product sample if there were no repercussions. b. a. didn’t want to disappoint their children. 52 d. knew they would get fired. Advise the Coca-Cola employee that it would be ethical to buy the plan if it was offered for free. b. When asked this question in an online survey. Buy the marketing plan if assured there would be no legal or ethical repercussions.4-70 MAKING RESPONSIBLE DECISIONS KNOWLEDGE Consider the Coke-Pepsi photo above.

They didn’t want to disappoint their children. The employee was fired and no other legal action was taken since the practice is unfortunately too commonplace. Economic espionage (alternative “c”) is most prevalent in high-technology industries. c. c. The employee was sentenced to eight years in prison and ordered to pay $40. They were afraid the media would find out.27 - . What was the consequence to the Coca-Cola employee who tried to sell classified information to Pepsi? a.000 fine. industries experience intense competition. the country has reached a high level of economic development. industries operate in an oligarchic competitive environment. d. but had to undergo personal psychiatric counseling and attend a seminar on ethical behavior. Answer: e Page(s): 94 LO: 2 AACSB: Ethics QD: Easy Rationale: Bribery is most evident in industries experiencing intense competition and in countries in earlier stages of economic development. industries experience little competition. Answer: a Page(s): 94 LO: 2 AACSB: Ethics QD: Medium Rationale: Most of the 33 percent of respondents in the online survey say they would decline the offer because they would prefer competing ethically so they could sleep at night. 4-75 BRIBERY KNOWLEDGE Bribery is most likely to occur when a. Answer: d Page(s): 94 LO: 2 AACSB: Ethics QD: Medium Rationale: The consequence to the Coca-Cola employee who tried to sell Pepsi information was an eight-year prison sentence and a $40. They thought they might go to work for Coke one day and didn’t want to spoil their employment chances. They would prefer competing ethically so they could sleep at night. e. 4-73 MAKING RESPONSIBLE DECISIONS COMPREHENSION Consider the Coke-Pepsi photo above. The employee was arrested for bribery and sentenced to five years house arrest.000 in restitution. b. The employee was permitted to keep her original job (minus any bonuses). 4-74 MAKING RESPONSIBLE DECISIONS COMPREHENSION Why did 33 percent of Pepsi’s marketing and advertising executives say they would decline an offer to buy one of Coke’s marketing plans and samples? a. e. They knew they would get fired. b. Rationale: Most of the 33 percent of respondents in the online survey say they would decline the offer because they would prefer competing ethically so they could sleep at night. The employee was given the choice of quitting or being demoted to a minimum wage job. b. c. d. . e. The other accomplices were sentenced to five years in prison. d. industries are high-tech in nature.

Economic Espionage Act and Foreign Corrupt Practices Act. Transparency International Act and Dumpster Diving Act. b. ideas. and local governments in the United States abide by the Consumer Bill of Rights. state. the set of accepted standards and practices within a given industry. d.4-76 GOING ONLINE COMPREHENSION Transparency International is an organization that a. monitors how developed nations deal with developing nations. address these practices in the United States.28 - . Global Rights Protection Act and Foreign Corrupt Practices Act. e. and attitudes that is learned and shared among the members of an organization. c. 4-78 CORPORATE CULTURE KNOWLEDGE Corporate culture refers to a. e. creates an acceptable international code of ethics. c. the formal statement of ethical principles and rules of conduct adopted by an organization. Consumer Bill of Rights Act and Economic Espionage Act. a formalized method for controlling the marketing environment. c. and enduring principles of an organization that guide its conduct over time. Answer: a Page(s): 94-95 LO: 2 AACSB: Ethics QD: Medium Rationale: The prevalence of economic espionage and bribery in international marketing has prompted laws to curb these practices. e. the fundamental. d. a set of values. d. 4-79 CORPORATE CULTURE KNOWLEDGE . passionate. Fair Trade Practices Act and Bribery Protection Act. makes sure federal. monitors and ranks nations worldwide according to their perceived use of bribery. b. the Economic Espionage Act (1996) and the Foreign Corrupt Practices Act (1977). establishes procedures for ethical international business based on the ISO 7000 Code of Conduct. 4-77 ETHICS OF COMPETITION COMPREHENSION Two laws specifically intended to curb economic espionage and bribery in international marketing are a. Answer: d Page(s): 95 LO: 2 AACSB: Ethics QD: Easy Rationale: Text term definition—corporate culture. b. Two significant laws. Answer: c Page(s): 95 LO: 2 AACSB: Ethics QD: Medium Rationale: Transparency International polls employees and political analysts and ranks countries on the basis of their perceived level of bribery to win or retain business.

contracts and agreements between members of the same industry. Culture is also apparent in the expectations for ethical behavior present in formal codes of ethics and the ethical actions of top management and co-workers. corporate culture Answer: e Page(s): 95 LO: 2 AACSB: Ethics QD: Easy Rationale: Text term definition—corporate culture. the involvement of shareholders with an organization’s day-to-day marketing decisions. ideas. socialization process. Answer: c Page(s): 95 LO: 2 AACSB: Ethics QD: Medium Rationale: Corporate culture is a set of values. The set of values. ideas. the socialization process d. and sayings of its employees. The culture of a company demonstrates itself in the dress. the socially responsible behaviors of its customers. ideas. d. and a. Answer: e Page(s): 95 LO: 2 AACSB: Ethics QD: Hard Rationale: A corporate culture is a set of values. it would be next to impossible to tell the company owners from its lowest ranking employee. a code of ethics and conduct e.com is an Internet company that helps other organizations implement marketing strategies that they hope will let them dominate their industry. sayings. the dress codes. mission or vision. and attitudes that is learned and shared among the members of an organization is referred to as __________. a mission statement b. and manner of work (team efforts) of employees.” The company is composed of eighteen bright young Internet experts. a. and attitudes that is learned and shared among the members of an organization. such as treating everyone equally and providing a relaxed atmosphere at work. expectations for ethical behavior present in formal codes of ethics. business definition. and attitudes that is learned and shared among the members of an organization. state and local laws regarding ethical business behavior. and a meditation center. a pool table. modus operandi. e. This best describes the Internet company’s a. c. and we let no obstacle stand in your company’s way—no matter how bold or impossible your idea may seem. If you were to walk into the office. states. 4-80 CORPORATE CULTURE COMPREHENSION Corporate culture manifests itself in many different ways: the ethical behavior of top management. 4-82 CODE OF ETHICS KNOWLEDGE . e.29 - . “We ignore the rules. c. They work in one large room. b. core values c. corporate culture. manner of work. which also contains dartboards. d. b. Lava’s advertising. 4-81 CORPORATE CULTURE APPLICATION Lava.

core value pronouncement. a formal statement of ethical principles and rules of conduct. e. 4-85 CODE OF ETHICS KNOWLEDGE A code of ethics refers to a. core values. b. e. d. b. legal restrictions. b. 4-84 CODE OF ETHICS KNOWLEDGE A formal statement of ethical principles and rules of conduct is referred to as a(n) a. ethical mission. 4-83 CODE OF ETHICS KNOWLEDGE A code of ethics is a formal statement of rules of conduct and a. Answer: b Page(s): 95 LO: 2 AACSB: Ethics QD: Easy Rationale: Key term definition—code of ethics. rules of conduct. a formal statement of moral and ethical business attitudes. cultural values. Answer: e Page(s): 95 LO: 2 AACSB: Ethics QD: Easy Rationale: Key term definition—code of ethics. e. a firm’s itemized list of business activities that are and are not consistent with the company’s mission statement. legal restrictions. e. moral laws. code of ethics. Answer: c Page(s): 95 LO: 2 AACSB: Ethics QD: Easy Rationale: Key term definition—code of ethics. an informal guide of ethical principles and moral conduct. . code of conduct. moral code. c. d. ethical principles. Answer: b Page(s): 95 LO: 2 AACSB: Ethics QD: Easy Rationale: Key term definition—code of ethics. core values. b. c. moral laws. c.30 - . d. c. A code of ethics is a formal statement of ethical principles and a. cultural values d. the written document stating the beliefs and values of each employee in a firm.

the dress. There are very few violations in firms with written codes of ethics. A second reason rests in the perceived behavior of top management and co-workers.31 - . Employees must often judge whether a specific behavior is really unethical. contributions to political parties and government officials. d. and work manner of employees are part of a corporate culture and not a code of ethics. d. fear of disciplinary action e. family influence c. insurance coverages.4-86 CODE OF ETHICS COMPREHENSION All of the following are addressed by an organization’s code of ethics EXCEPT: a. Most companies overlook infractions if the action is unethical but legal. sayings. and three trade references. b. 4-89 CODE OF ETHICS APPLICATION HomeWorRx Referral Network profiles home service companies for homeowners looking for a contractor or handyman. lack of specificity Answer: e Page(s): 95 LO: 2 AACSB: Ethics QD: Medium Rationale: The lack of specificity is one of the major reasons for the violation of ethics codes. c. 4-87 CODE OF ETHICS COMPREHENSION Which of the following statements describes one of the major reasons codes of ethics are violated? a. accurate recordkeeping. There is often a discrepancy between the written code of ethics of a firm and the personal and moral beliefs of individual employees. Most companies do not have a formal code of ethics. conflicts of interest. sayings. 4-88 CODE OF ETHICS COMPREHENSION Which of the following is a major reason for the violation of ethics codes? a. government regulation b. To ensure that companies they recommend are reliable. customer and supplier relationships. HomeWorRx checks the business licenses. e. and work manner of employees. The recommended home service company also has to agree to a(n) __________. Many codes of ethics lack specificity. Answer: c Page(s): 95 LO: 2 AACSB: Ethics QD: Medium Rationale: The lack of specificity is one of the major reasons for the violation of ethics codes. Answer: a Page(s): 95 LO: 2 AACSB: Ethics QD: Medium Rationale: The dress. b. lack of religious beliefs d. . e. Better Business Bureau records. which includes maintaining professionalism and guaranteeing the quality of its work. c.

a. the absence of whistle-blowers d. a mission statement that is too broad b. champion new legislation that protects ethical business firms and punish those who abuse consumer trust d. 4-91 AMA STATEMENT OF ETHICS KNOWLEDGE The American Marketing Association Statement of Ethics is centered on three general norms: marketers must: (1) do no harm. a. initiate fair and honest dialogues in developing markets b. communicate. and practice the fundamental ethical values that will improve consumer confidence in the integrity of the marketing exchange system c. were arrested for the illegal smuggling of undocumented foreign workers into the U. one could conclude that Tyson’s violations are the result of __________. statement of values and beliefs c. In this case. contract due diligence Answer: d Page(s): 95 LO: 2 AACSB: Ethics QD: Hard Rationale: A code of ethics is a formal statement of ethical principles and rules of conduct. the absence of a stakeholder code of ethics Answer: d Page(s): 95-96 LO: 2 AACSB: Ethics QD: Hard Rationale: Employees often gauge how serious a company is about ethical behavior by looking at the actions of upper management. (2) foster trust in the marketing system. 4-90 CODE OF ETHICS APPLICATION In 2001. support governmental agencies in their quest to identify and prosecute those who break the laws of ethical marketing e. embrace. industry endorsement d. the absence of a written core values statement c. one of the world’s largest poultry. 4-92 AMA STATEMENT OF ETHICS KNOWLEDGE .S. and (3) __________. rules of conduct include maintaining professionalism and guaranteeing the quality of work. six executives of Tyson Foods. a.32 - . and pork processors. to work at Tyson plants. one of the major reasons why some company employees engage in ethical behavior. Based on this information. beef. code of ethics e. top management’s behavior e. See Figure 4-3 in the textbook. contribute to society’s well-being through charitable contributions and cause-related marketing efforts Answer: b Page(s): 95-97 LO: 2 AACSB: Ethics QD: Easy Rationale: American Marketing Association Statement of Ethics—General Norms. statement of cultural values b.

honesty b. the employee (from president to members of the cleaning staff) who had the best idea for improving the center is honored and given a $25.00 gift certificate plus a T-shirt that reads. respect d. perseverance e. diversity b. 4-93 AMA STATEMENT OF ETHICS APPLICATION A health club wishes to follow the American Marketing Association Statement of Ethics and decides to offer a modified workout class at a very low price for senior citizens who otherwise might not be able to afford their services. responsibility.” At the end of the meal. fairness c. responsibility c. See Figure 4- 3 in the textbook. These include: _________. See Figure 4-3 in the textbook. and co-workers. employees. a. honesty b. openness Answer: d Page(s): 95-97 LO: 2 AACSB: Ethics QD: Hard Rationale: “We will appropriately acknowledge the contributions of others. openness.” This action exhibits which key AMA ethical value? a. and others who may be substantially disadvantaged. fairness. such as consultants. charity Answer: c Page(s): 95-97 LO: 2 AACSB: Ethics QD: Easy Rationale: American Marketing Association Statement of Ethics—Ethical Values.” American Marketing Association Statement of Ethics—Ethical Values: Respect (bullet #4). the owner of a LAN center wants to follow the American Marketing Association Statement of Ethics. See Figure 4-3 in the textbook.” American Marketing Association Statement of Ethics—Ethical Values: Responsibility (bullet #4). The American Marketing Association Statement of Ethics identifies six key aspirational ethical values. fairness d. 4-94 AMA STATEMENT OF ETHICS APPLICATION Even though his business is very small. the elderly. to our marketing endeavors. This action exhibits which key AMA ethical value? a. integrity c. and citizenship. respect. honesty d. “Great Minds Think Like Me.33 - . openness e. responsibility Answer: e Page(s): 95-97 LO: 2 AACSB: Ethics QD: Hard Rationale: “We will recognize our special commitments to economically vulnerable segments of the market such as children. Every month there is a “company cookout. respect e. 4-95 BUSINESS ETHICS STUDY COMPREHENSION .

62% Answer: d Page(s): 96 LO: 2 AACSB: Ethics QD: Medium Rationale: A study of business executives reported that 40% had been implicitly or explicitly rewarded for engaging in ethically troubling behavior. d. employees who blackmail or extort money from their employers. c. a. scabs. 12% c. b. scab. d. Answer: e Page(s): 96 LO: 2 AACSB: Ethics QD: Easy Rationale: Key term definition—whistle-blowers. corporate snitch. corporate snitches. A recent study of business executives reported that __________ had been implicitly or explicitly rewarded for engaging in ethically troubling behavior. 4-98 WHISTLE-BLOWERS COMPREHENSION An employee who reports illegal accounting procedures is an example of a(n) a. 25% d. whistle-blower. crony. Answer: c Page(s): 96 LO: 2 AACSB: Ethics QD: Medium . b. e. d. cronies. b. e. 4-97 WHISTLE-BLOWERS KNOWLEDGE Whistle-blowers refer to a.34 - . ombudsman. 40% e. employees who report unethical or illegal actions of their employers. employees who are coerced by their employers to participate in illegal or unethical activities. c. employees who are simultaneously employed by competing firms and who trade company secrets. e. whistle-blowers. ombudsman. Answer: a Page(s): 96 LO: 2 AACSB: Ethics QD: Easy Rationale: Key term definition—whistle-blowers. c. customers who report unethical or illegal actions of the firms that market the offerings they bought. 7% b. 4-96 WHISTLE-BLOWERS KNOWLEDGE Employees who report unethical or illegal actions of their employers are referred to as a.

e. These two people are . 4-101 WHISTLE-BLOWERS APPLICATION Two former sales representatives of Amgen. The Consumer Product Safety Commission investigated the fires and ordered a recall to repair all of the 10 million units that had been sold. a treatment for psoriasis. Rationale: Whistle-blowers are employees who report unethical or illegal actions of their employers. An employee is unhappy because his company is downsizing. b. Mattel employees were sorry that 150 of the 10 million Power Wheels cars and trucks the company sold had caught on fire. 4-99 WHISTLE-BLOWERS APPLICATION Which of the following statements best describes a whistle-blower? a. alleged the company strongly encouraged its sales force to search confidential medical records in physician’s offices in an attempt to find names of patients that would benefit from the use of Amgen’s drug Enbrel. c. the falsification of a safety document.35 - . Answer: b Page(s): 96 LO: 2 AACSB: Ethics QD: Hard Rationale: Whistle-blowers are employees who report unethical or illegal actions of their employers—in this case. An employee loses his/her retirement fund due to a downturn in the stock market. he or she would have been a whistle-blower. Answer: e Page(s): 96 LO: 2 AACSB: Ethics QD: Hard Rationale: Whistle-blowers are employees who report unethical or illegal actions of their employers. 4-100 WHISTLE-BLOWERS APPLICATION Which of the following statements best describes the activities of a whistle-blower? a. claiming they did not go along with the scheme because they objected to it as being unethical. After reporting this practice. An employee spends the afternoon studying at work for her test rather than counting inventory as she was supposed to be doing. Mattel research engineers proved that the spate of fires in the company’s Power Wheels cars and trucks was the result of consumers’ tinkering with the engine. c. d. A former Mattel employee owned one of the Mattel Power Wheel cars that caught on fire and slightly burned its rider. An employee tells the Consumer Product Safety Commission his company falsified safety reports on a child’s car seat. b. A Mattel employee reported to the Consumer Product Safety Commission that Mattel knowingly manufactured an electrical system for Power Wheels that would catch on fire after long use. these two people sued Amgen. a biotech company. one of the reps was fired and the other resigned after receiving a poor performance review. e. Soon after. A salesperson for a hardware wholesaler tries to sell insurance to his regular customers in order to earn some extra income. d. If an employee of Mattel had reported to the CPSC that Mattel was knowingly manufacturing an electrical system for Power Wheels that would catch on fire after long use.

Moral philosophy is learned through the process of socialization with friends. c. d. business culture and industry practices. Moral philosophy is influenced by the societal culture he/she is in. Answer: c Page(s): 96-97 LO: 2 AACSB: Ethics QD: Medium Rationale: Two prominent personal moral philosophies—moral idealism and utilitarianism— have direct bearing on marketing practice. scabs. contrarians. social responsibility and personal ethics. chance and opportunity. b. 4-102 PERSONAL MORAL PHILOSOPHY COMPREHENSION Ultimately. b. the personal moral philosophy of the decision maker. Moral philosophy cannot be learned through formal education. e. Answer: a Page(s): 96-97 LO: 2 AACSB: Ethics QD: Medium Rationale: Ultimately. cronies. laws enacted by Congress and regulations by federal and state governments. a. and corporate culture in which a person finds himself/herself. whistle-blowers. c. b. ombudsmen. societal culture and norms. ethical choices are based on the personal moral philosophy of the decision maker. e. 4-104 PERSONAL MORAL PHILOSOPHY COMPREHENSION Two prominent personal moral philosophies that have direct bearing on marketing practice are a. d. existentialism and pragmatism. b. c. business. Answer: a Page(s): 96-97 LO: 2 AACSB: Ethics QD: Medium Rationale: Moral philosophy is learned through the process of socialization with friends and family and by formal education. ethical choices are based on a.36 - . Two moral philosophies are moral idealism and utilitarianism. d. d. Moral philosophy is learned through the process of socialization with family. Moral philosophy is influenced by the corporate culture he/she is in. e. moral behaviorism and secular ethics. 4-103 PERSONAL MORAL PHILOSOPHY COMPREHENSION All of the following statements about a person’s moral philosophy are true EXCEPT: a. moral idealism and utilitarianism. c. e. pragmatism and idealism. . It is also influenced by the societal. Answer: c Page(s): 96 LO: 2 AACSB: Ethics QD: Hard Rationale: Whistle-blowers are employees who report unethical or illegal actions of their employers.

a formal statement of ethical principles and rules of conduct. moral idealism c. believes in “the greatest good for the greatest number. b. social responsibility . regardless of the outcome. 4-106 MORAL IDEALISM KNOWLEDGE Moral idealism refers to a personal moral philosophy that a. 4-108 MORAL IDEALISM COMPREHENSION A moral philosophy that exists in the Consumer Bill of Rights and is favored by moral philosophers and consumer interest groups is referred to as __________. a personal moral philosophy that considers individual rights or duties as universal. c. all human beings are basically good. 4-107 MORAL IDEALISM KNOWLEDGE Moral idealism refers to a.S. is referred to as __________. a democratic consensus of moral principles and laws that govern the behavior of individuals based on legislation adopted at the federal. a societal moral philosophy based on the Golden Rule of the Judeo-Christian ethic embodied in the U.” c.” Answer: d Page(s): 97-98 LO: 2 AACSB: Ethics QD: Easy Rationale: Key term definition—moral idealism.4-105 MORAL IDEALISM KNOWLEDGE A personal moral philosophy that considers individual rights or duties as universal.” which is “One should treat others as one would like others to treat oneself. considers individual rights or duties as universal. Constitution’s Bill of Rights. social responsibility b.37 - . a. d. e. a personal moral philosophy that focuses on the greatest good for the greatest number by assessing the costs and benefits of the consequences of ethical behavior. follows the “Golden Rule. utilitarianism d. a. state. e. hedonism e. Answer: e Page(s): 97-98 LO: 2 AACSB: Ethics QD: Easy Rationale: Key term definition—moral idealism. regardless of the outcome. b. d. regardless of the outcome. religion Answer: b Page(s): 97-98 LO: 2 AACSB: Ethics QD: Easy Rationale: Key term definition—moral idealism. believes that goodwill always triumph over evil. and local levels.

38 - . b. New advances in fabric manufacturing. c. This is an example of a. moral idealism c. c. the Golden Rule Answer: b Page(s): 97-98 LO: 2 AACSB: Ethics QD: Medium Rationale: Moral idealism is a personal moral philosophy that considers certain individual rights or duties as universal. However. 4-109 MORAL IDEALISM COMPREHENSION Why did 3M stop production of Scotchgard fabric protector? a. regardless of the outcome. New governmental legislation banned the production of one of the product’s component chemicals. socialism. utilitarianism d. d. 4-110 MORAL IDEALISM COMPREHENSION The 3M company stopped production of a chemical it had made for over 40 years when tests showed the chemical could be harmful in large doses. b. 3M developed a new product that didn’t contain this chemical and which cost less to produce. e. b. utilitarianism. made the need for the product obsolete. so the product was voluntarily halted. Answer: d Page(s): 97-98 LO: 2 AACSB: Ethics QD: Medium Rationale: Moral idealism is a personal moral philosophy that considers certain individual rights or duties as universal (in this case consumer safety). existentialism. Traces of the potentially harmful chemical were found in humans. Believing that the substance could be possibly harmful in large doses. . This philosophy exists in the Consumer Bill of Rights and is favored by moral philosophers and consumer interest groups. such as dirt repellant fibers. resulting in a significantly higher profit margin. individualism. regardless of the outcome. This is an example of moral idealism. e. d. Answer: c Page(s): 97-98 LO: 2 AACSB: Ethics QD: Medium Rationale: 3M’s popular Scotchgard fabric protector had no known harmful health or environmental effect. the company discovered that a chemical used in the product appeared in miniscule amounts in the tissues of humans and animals. even though the products in which it was used had no known harmful health or environmental effect. resulting in a $200 million loss in annual sales of the product. 3M voluntarily stopped its production. hedonism e. moral idealism. The product accidentally violated patent rights of a competitor.

the company discovered that a chemical used in the product appeared in miniscule amounts in the tissues of humans and animals. utilitarianism c. stringent laws e. 4-112 MORAL IDEALISM APPLICATION Western Digital. But. cause marketing Answer: a Page(s): 97-98 LO: 2 AACSB: Ethics QD: Medium Rationale: 3M’s popular Scotchgard fabric protector had no known harmful health or environmental effect. instead of taking the less expensive route of remaining quiet about the problem. moral idealism .000 of its hard drives because of a faulty internal chip. This action is an example of ________. a. utilitarianism c. 3M Scotchgard Photo 4-111 MORAL IDEALISM COMPREHENSION Consider the 3M Scotchgard photo above. This is an example of moral idealism. resulting in a $200 million loss in annual sales of the product. 3M voluntarily stopped its production. a. recalled about 400. The chip will not affect the disk drive motor until after six to twelve months of use. moral idealism b. green marketing d. The personal moral philosophy 3M used when it voluntarily stopped the production of its popular 3M Scotchgard was because of a minute chemical used in its manufacture was found in the tissues of both animals and humans was an example of ___________. Believing that the substance could be possibly harmful in large doses. However. the Irvine. Western Digital chose to offer replacement disk drives for all the disk drives that had the faulty chip. hedonism b. This delay in the problem’s appearance means that many consumers would not think to blame the disk drive manufacturer.39 - . California-based maker of disk drives.

. utilitarianism c.40 - . utilitarianism b. c. adhere to the belief that the company should not harm the environment in any way but actually improve it. altruism. Inc. then the behavior is unethical. d. socialism Answer: a Page(s): 98 LO: 2 AACSB: Ethics QD: Easy Rationale: Key term definition—utilitarianism. This is an example of _________. socialism Answer: b Page(s): 98 LO: 2 AACSB: Ethics QD: Medium Rationale: Utilitarianism assesses the costs and benefits of the consequences of a behavior. moral idealism e. the behavior is ethical. then the behavior is ethical. existentialism e. hedonism c. regardless of the outcome. a. If not. d. 4-115 UTILITARIANISM COMPREHENSION According to the personal moral philosophy of __________. a. 4-113 MORAL IDEALISM APPLICATION The owners of Ben & Jerry’s Homemade. e. a product that works as promised). Answer: d Page(s): 97-98 LO: 2 AACSB: Ethics QD: Hard Rationale: The philosophy of moral idealism is a personal moral philosophy that considers certain individual rights or duties as universal. socialism Answer: c Page(s): 97-98 LO: 2 AACSB: Ethics QD: Hard Rationale: Moral idealism is a personal moral philosophy that considers certain individual rights or duties as universal (in this case. a. b. existentialism d. if the benefits exceed the costs. If the benefits exceed the costs. hedonism b. regardless of the outcome. utilitarianism. existentialism. 4-114 UTILITARIANISM KNOWLEDGE A personal moral philosophy that focuses on “the greatest good for the greatest number” by assessing the costs and benefits of the consequences of ethical behavior is referred to as __________. existentialism d. socialism. moral idealism e. moral idealism.

moral idealism. Cosco denied culpability. c.4-116 UTILITARIANISM COMPREHENSION The personal moral philosophy of utilitarianism underlies the economic tenets of a. developed a high chair that could be used as an infant feeding seat. When some children were injured as a result of this chair.41 - . Cosco saw the low-priced. Cosco’s actions exemplify which of the following philosophies? a. 4-117 UTILITARIANISM APPLICATION Recently. Cosco rushed the chair into production to beat its competition before it was properly safety-tested. c. b. e. Answer: b Page(s): 98 LO: 3 AACSB: Ethics QD: Easy Rationale: Key term definition—social responsibility. moral idealism. The firm said that only a few consumers had had any trouble with the chair—and probably didn’t assemble them correctly. Its design could be made and sold for $49. moral idealism c. communism d. existentialism. d. a youth chair. capitalism. social responsibility. socialism e. utilitarianism Answer: e Page(s): 98 LO: 2 AACSB: Ethics QD: Hard Rationale: Utilitarianism is a personal moral philosophy that focuses on the greatest good for the greatest number by assessing the costs and benefits of the consequences of ethical behavior. . a project team for Cosco. Most consumers. utilitarianism. stakeholder responsibility. b. a booster chair. socialism. existentialism b. communism. profit responsibility. were very satisfied with the chair and had no problems with it. 4-118 SOCIAL RESPONSIBILITY KNOWLEDGE The idea that organizations are part of a larger society and are accountable to that society for their actions is referred to as a. This philosophy underlies the economic tenets of capitalism and is embraced by many business executives and students. Answer: e Page(s): 98 LO: 2 AACSB: Ethics QD: Medium Rationale: Utilitarianism is a personal moral philosophy that focuses on the greatest good for the greatest number by assessing the costs and benefits of the consequences of ethical behavior. however. d. a play chair. the world’s largest children’s products company. than costs to recall and redesign them. and when reclined. multiple-use chair as offering more benefits to consumers as a group. e. an infant bed.

b. c. societal responsibility. (2) stakeholder responsibility. d. c. Answer: d Page(s): 98 LO: 3 AACSB: Ethics QD: Easy Rationale: Key term definition—social responsibility. Constitution’s Bill of Rights. a personal moral philosophy that focuses on the greatest good for the greatest number by assessing the costs and benefits of the consequences of ethical behavior. and local levels. The duty of an organization is most easily understood at the societal responsibility level. d. Organizations are part of a larger society and are accountable to that society for their actions. it is an innate outgrowth of a person’s moral and ethical belief system. and stakeholder responsibility are three concepts of a.S.42 - . internal social responsibility. e. Answer: b Page(s): 98 LO: 3 AACSB: Ethics QD: Medium Rationale: The three concepts of social responsibility are profit responsibility. e. The simplest form of social responsibility is profit responsibility: maximize profits for the company owners or stockholders. b. a personal moral philosophy that considers individual rights or duties as universal. c. Alternative “c” is the definition of stakeholder responsibility. Social responsibility cannot be taught. suppliers. Social responsibility means that organizations are part . and external social responsibility. cause marketing. social responsibility. and distributors. regardless of the outcome. and societal responsibility. green marketing. state. d. 4-120 SOCIAL RESPONSIBILITY COMPREHENSION Profit responsibility. 4-121 SOCIAL RESPONSIBILITY COMPREHENSION Which of the following statements about social responsibility is most accurate? a. employees. moral idealism.4-119 SOCIAL RESPONSIBILITY KNOWLEDGE Social responsibility refers to a. b. stakeholder responsibility. Societal responsibility focuses on the obligations an organization has to its customers. utilitarianism. a societal moral philosophy based on the Golden Rule of the Judeo-Christian ethic found in the U. the view that organizations are part of a larger society and are accountable to that society for their actions. The three concepts of social responsibility are economic responsibility. Answer: c Page(s): 98 LO: 3 AACSB: Ethics QD: Medium Rationale: Figure 4-4 in the textbook shows three concepts of social responsibility: (1) profit responsibility. a democratic consensus of moral principles and laws that govern the behavior of individuals based on legislation adopted at the federal. e. and (3) societal responsibility.

b. e. Gap Inc. of a larger society and are accountable to that society for their actions. as well as other organizations. green marketing. profit responsibility. 4-123 SOCIAL RESPONSIBILITY APPLICATION The residents of Alaska and people throughout the world were outraged when the Exxon Valdez crashed into a shoal and dumped millions of gallons of crude oil into the pristine waters of Prince William Sound. People were upset with Exxon’s response to the disaster. In response to these events. profit responsibility. This is an example of a. Exxon did not demonstrate a. the Gap created a large team whose purpose is to travel worldwide to ensure compliance with its Code of Vendor Conduct. Exxon was criticized for acting in a manner that would benefit the organization but not society. cause marketing. Exxon acted. exist as part of a larger society and are accountable to that society for their actions.43 - . social responsibility. Answer: a Page(s): 98 LO: 3 AACSB: Ethics QD: Hard Rationale: Social responsibility means that marketing firms. b. See Figure 4-4 in the textbook. ended its relationship with 23 foreign production facilities due to code violations. . Several closings occurred because of the use of child labor. Answer: e Page(s): 98 LO: 3 AACSB: Ethics QD: Hard Rationale: Social responsibility is the view that organizations are part of a larger society and are accountable to that society for their actions. at least initially. value consciousness. c. moral idealism. e. c. 4-122 SOCIAL RESPONSIBILITY APPLICATION In 2007. The company was slow to admit its mistake and even slower to implement cleanup activities. utilitarianism. cause marketing. d. d. with only the organization’s interests in mind. social responsibility. In short.

According to Figure 4-4 above. customer e. Stakeholder responsibility includes suppliers and distributors. According to Figure 4-4 above. each of which relates to particular constituencies. profit d. and the general public. customer e. societal b. stakeholder c. and consumers.44 - . and the general public. a. “A” represents __________ responsibility. There is often conflict in satisfying all constituencies at the same time. Profit responsibility includes owners and stockholders. ecological environment. Societal responsibility includes public interest groups. each of which relates to particular constituencies. societal b. seller Answer: a Page(s): 98-99 LO: 3 AACSB: Ethics QD: Medium Rationale: There are three concepts of social responsibility. 4-125 SOCIAL RESPONSIBILITY COMPREHENSION There are three concepts of social responsibility. Stakeholder responsibility includes suppliers and distributors. each relating to particular constituencies. employees. Figure 4-4 4-124 SOCIAL RESPONSIBILITY COMPREHENSION There are three concepts of social responsibility. employees. a. See Figure 4-4 in the textbook. each relating to particular constituencies. seller Answer: b Page(s): 98-99 LO: 3 AACSB: Ethics QD: Medium Rationale: There are three concepts of social responsibility. profit d. ecological environment. Societal responsibility includes public interest groups. “B” represents __________ responsibility. . stakeholder c.

ecological environment. Stakeholder responsibility includes suppliers and distributors. societal b. and the general public. Societal responsibility includes public interest groups. See Figure 4-4 in the textbook. a. the idea that organizations are part of a larger society and are accountable to that society for their actions. seller Answer: c Page(s): 98-99 LO: 3 AACSB: Ethics QD: Medium Rationale: There are three concepts of social responsibility. the view that an organization has an obligation to those who can affect the achievement of its objectives. value consciousness c. b. 4-127 PROFIT RESPONSIBILITY KNOWLEDGE Profit responsibility refers to a. . Answer: e Page(s): 98-99 LO: 3 AACSB: Ethics QD: Easy Rationale: Text term definition—profit responsibility.45 - . social responsibility b. customer e. the obligation of a firm to price its products or services at a level whereby the consumer is treated fairly and the firm is still able to make a profit. each relating to particular constituencies. 4-126 SOCIAL RESPONSIBILITY COMPREHENSION There are three concepts of social responsibility. employees. a. Profit responsibility includes owners and stockholders. the concept that no expansion or additional research and development will occur until a company is making a profit. profit responsibility e. According to Figure 4-4 above. There is often conflict in satisfying all constituencies at the same time. and consumers. profit d. each of which relates to particular constituencies. and consumers. the duty of a firm to maximize profits for its owners or stockholders. “C” represents __________ responsibility. There is often conflict in satisfying all constituencies at the same time. See Figure 4-4 in the textbook. stakeholder responsibility Answer: d Page(s): 98-99 LO: 3 AACSB: Ethics QD: Easy Rationale: Text term definition—profit responsibility. benefit marketing d. 4-128 PROFIT RESPONSIBILITY KNOWLEDGE The duty of a firm to maximize profits for its owners or stockholders is referred to as _________. d. Profit responsibility includes owners and stockholders. e. c. stakeholder c.

the general public. moral idealism. Important considerations here are (1) how companies can recover costs of their research and development if they give away their discoveries and/or (2) how they can compensate their stakeholders if they sell their products at a loss. the duty of a firm to maximize profits for its owners or stockholders. Answer: a Page(s): 99-100 LO: 3 AACSB: Ethics QD: Easy Rationale: Text term definition—stakeholder responsibility. d. b. Companies practicing societal responsibility primarily have obligations to the preservation of the ecological environment and to the general public. suppliers. social responsibility. the idea that organizations are part of a larger society and are accountable to that society for their actions. the view that an organization has an obligation to those who can affect the achievement of its objectives. and stockholders. utopian responsibility. consumers. c. and the environment. The firm charges each patient $6.4-129 PROFIT RESPONSIBILITY COMPREHENSION The groups primarily served by a firm exhibiting profit responsibility include a. See Figure 4-4 in the textbook. cause marketing strategy. c.46 - . This is an example of the manufacturer adhering to its a. which is a drug to treat persons afflicted with AIDS. profit responsibility. and stockholders.500 annually—more than many AIDS patients can afford. d. d. 4-130 PROFIT RESPONSIBILITY APPLICATION Burroughs Wellcome is the developer and maker of AZT. public interest groups. government. and employees. . b. owners. Answer: e Page(s): 98-99 LO: 3 AACSB: Ethics QD: Hard Rationale: Profit responsibility holds that companies have a simple duty: to maximize profits for their owners or stockholders. Answer: c Page(s): 98-99 LO: 3 AACSB: Ethics QD: Medium Rationale: Companies practicing profit responsibility serve owners and stockholders. the general public. 4-131 STAKEHOLDER RESPONSIBILITY KNOWLEDGE Stakeholder responsibility refers to a. c. e. the concept that no expansion or additional research and development will occur until a company is making a profit. and supplier/distributors. Companies practicing stakeholder responsibility primarily serve consumers. employees. owners and stockholders. b. the obligation of a firm to price its products or services at a level whereby the consumer is treated fairly and the firm is still able to make a profit. e. distributors. e. owners.

and stockholders. 4-134 STAKEHOLDER RESPONSIBILITY APPLICATION Source Perrier S. employees. moral idealism b. as minimal as it might be. Even though the chemical was not harmful to humans. and the profit from $40 million in lost sales. c. profit responsibility Answer: d Page(s): 99-100 LO: 3 AACSB: Ethics QD: Easy Rationale: Text term definition—stakeholder responsibility. and supplier/distributors. utilitarianism c. exercised __________ when it recalled 160 million bottles of water in 120 countries after traces of a toxic chemical was found in 13 bottles. owners. Companies practicing societal responsibility primarily have obligations to the preservation of the ecological environment and to the general public. owners.” a. Companies practicing stakeholder responsibility primarily serve consumers. suppliers. the general public. b. and the environment. cause marketing d. consumers. d. and employees. distributors. government. public interest groups. stakeholder responsibility e. the supplier of Perrier bottled water. profit responsibility e. stakeholder responsibility Answer: e Page(s): 99-100 LO: 3 AACSB: Ethics QD: Hard Rationale: Stakeholder focuses on the obligations an organization has to those who can affect achievement of its objectives. social responsibility b.A. Source Perrier was protecting its customers. The recall cost the company $35 million. the president of the company believed it was his duty to remove “the least doubt. Answer: b Page(s): 99-100 LO: 3 AACSB: Ethics QD: Medium Rationale: Companies practicing profit responsibility serve owners and stockholders. benefit marketing d.. 4-133 STAKEHOLDER RESPONSIBILITY COMPREHENSION The groups primarily served by a firm exhibiting stakeholder responsibility include a. See Figure 4-4 in the textbook.47 - . 4-135 STAKEHOLDER RESPONSIBILITY APPLICATION . e. a. owners and stockholders. and stockholders.4-132 STAKEHOLDER RESPONSIBILITY KNOWLEDGE The view that an organization has an obligation to those who can affect the achievement of its objectives is referred to as _________. value consciousness c. to weigh on the image of the quality and purity of our product. the general public.

4-136 SOCIETAL RESPONSIBILITY KNOWLEDGE Societal responsibility refers to a. suppliers. benefit marketing d. stakeholder responsibility c. the view that an organization has an obligation to those who can affect the achievement of its objectives. After the recall. Toyota sales fell. stakeholder responsibility c. e. and distributors. Answer: a Page(s): 100 LO: 3 AACSB: Ethics QD: Easy Rationale: Text term definition—societal responsibility. utilitarianism d. social responsibility b. d. the idea that organizations are part of a larger society and are accountable to that society for their actions. a. Toyota Motor Corporation executives were widely criticized for their failure in practicing __________ when selected Toyota brands had been linked to sticky gas pedals. moral idealism b. the obligation of a firm to price its products or services at a level whereby the consumer is treated fairly and the firm is still able to make a profit. 4-137 SOCIETAL RESPONSIBILITY KNOWLEDGE The obligation organizations have to (1) the preservation of ecological environment and (2) the general public is referred to as _________. shareholders. a. The company recalled over 9 million cars worldwide under pressure from the National Highway Traffic Safety Administration and thousands of consumer complaints. which affected Toyota employees. 4-138 SOCIETAL RESPONSIBILITY APPLICATION . the duty of a firm to maximize profits for its owners or stockholders. profit responsibility Answer: d Page(s): 100 LO: 3 AACSB: Ethics QD: Easy Rationale: Text term definition—societal responsibility. cause marketing e. c. profit responsibility Answer: b Page(s): 99-100 LO: 3 AACSB: Ethics QD: Hard Rationale: Stakeholder focuses on the obligations an organization has to those who can affect achievement of its objectives. societal responsibility e.48 - . which can lead to sudden acceleration problems. the obligation that organizations have to (1) the preservation of ecological environment and (2) the general public. Toyota was criticized for not responding quickly to stakeholder (particularly customer) concerns. b.

Most paint is neither biodegradable nor friendly to the environment because it is made with
petroleum solvents. A builder who decided to build a subdivision with 500 homes and paint each
with an environmentally friendly, soy-based paint (even though it costs more) would be practicing
a. profit responsibility.
b. cause marketing.
c. stakeholder responsibility.
d. mass marketing.
e. societal responsibility.

Answer: e Page(s): 100 LO: 3 AACSB: Ethics QD: Hard
Rationale: Societal responsibility is the view that organizations have obligations to the general
public and to the preservation of the ecological environment. Many more people besides those
who live in the subdivision will benefit from the use of environmentally friendly paint.

4-139 SOCIETAL RESPONSIBILITY APPLICATION

The maker of Wrigley chewing gum funded a $10 million ad campaign aimed at getting African
Americans to use doctors for regular health care maintenance instead of only when they are sick.
This is an example of
a. profit responsibility.
b. cause marketing.
c. stakeholder responsibility.
d. societal responsibility.
e. mass marketing.

Answer: d Page(s): 100 LO: 3 AACSB: Ethics QD: Hard
Rationale: Societal responsibility is the view that organizations have obligations to the general
public and to the preservation of the ecological environment. Wrigley is taking responsibility for
the general public by trying to help people who are not necessarily its stakeholders.

4-140 TRIPLE-BOTTOM LINE KNOWLEDGE

The recognition of the need for organizations to improve the state of people, the planet, and profit
simultaneously if they are to achieve sustainable, long-term growth is referred to as
a. social responsibility.
b. the triple-bottom line.
c. the marketing concept.
d. sustainability.
e. social entrepreneurship.

Answer: b Page(s): 100 LO: 3 AACSB: Ethics QD: Easy
Rationale: Key term definition—triple-bottom line.

4-141 TRIPLE-BOTTOM LINE KNOWLEDGE

Triple-bottom line refers to
a. the recognition of the need for organizations to improve the state of people, the planet, and
profit simultaneously if they are to achieve sustainable, long-term growth.

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b. the obligations an organization has to those who can affect achievement of its sales, profit,
and market share objectives simultaneously.
c. the recognition of the need for organizations to be responsible simultaneously to
shareholders, employees, and customers.
d. the obligations an organization has to practice profit, stakeholder, and societal responsibility
simultaneously.
e. three different financial statements prepared in three different formats: one for governmental
regulators, one for shareholders, and one for internal use.

Answer: a Page(s): 100 LO: 3 AACSB: Ethics QD: Easy
Rationale: Key term definition—triple-bottom line.

4-142 TRIPLE-BOTTOM LINE KNOWLEDGE

All of the following are the result of an interest in the triple-bottom line EXCEPT:
a. sustainable development.
b. cause marketing.
c. ISO 9000.
d. green marketing.
e. social audits.

Answer: c Page(s): 100 LO: 3 AACSB: Ethics QD: Easy
Rationale: Green marketing, cause marketing, social audits, and sustainable development reflects
the growing interest in the concept of the triple-bottom line, which is the recognition of the need
for organizations to improve the state of people, the planet, and profit simultaneously if they are
to achieve sustainable, long-term growth. Alternative “c” (ISO 9000) consists of standards for
the registration and certification of a manufacturer’s quality management and assurance system
based on an on-site audit of practices and procedures developed by the International Standards
Organization (ISO).

4-143 GREEN MARKETING KNOWLEDGE

Marketing efforts to produce, promote, and reclaim environmentally sensitive products are
referred to as
a. green marketing.
b. recycle marketing.
c. cause marketing.
d. environmental marketing.
e. recycling.

Answer: a Page(s): 100 LO: 3 AACSB: Ethics QD: Easy
Rationale: Key term definition—green marketing.

4-144 GREEN MARKETING KNOWLEDGE

Green marketing refers to
a. the purchasing of products from producers whose farming practices are Fair Trade certified.
b. the marketing efforts taken by new and smaller companies that lack both the experience and
resources of their major competitors.

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c. the marketing efforts to produce, promote, and reclaim environmentally sensitive products.
d. the marketing of products that have in no way been altered or reprocessed by artificial means.
e. the marketing of those products made exclusively from recycled materials.

Answer: c Page(s): 100 LO: 3 AACSB: Ethics QD: Easy
Rationale: Key term definition—green marketing.

4-145 GREEN MARKETING COMPREHENSION

At 3M, the “Pollution Prevention Pays” program has generated over 8,000 ideas that eliminated
more than 3 billion pounds of air, water, and solid-waste pollutants from the environment. This is
an example of
a. proactive marketing.
b. green marketing.
c. consumerism.
d. an ecological code of ethics.
e. cause marketing.

Answer: b Page(s): 100 LO: 3 AACSB: Ethics QD: Medium
Rationale: Green marketing is defined as marketing efforts designed to produce, promote, and
reclaim environmentally sensitive products. The 3M program has reduced the amount of
pollutants in the environment.

4-146 GREEN MARKETING APPLICATION

Which of the following is an example of green marketing?
a. McDonald’s adding apple snacks to its Happy Meals targeted at children.
b. Lowe’s and Home Depot discontinuing the sale of lumber and other wood products.
c. Levi-Strauss marketing prewashed jeans.
d. Joe’s Lawn Service offering a special spring cleanup promotion.
e. Walmart implementing buying practices that encourage it suppliers to use containers and
packing made from corn, not oil-based resins.

Answer: e Page(s): 100 LO: 3 AACSB: Ethics QD: Hard
Rationale: Green marketing is defined as marketing efforts designed to produce, promote, and
reclaim environmentally sensitive products.

4-147 GREEN MARKETING APPLICATION

Chrysler recycles thousands of tons of wooden pallets, cardboard, and paper annually. Chrysler
cars are 75 percent recyclable. Chrysler’s recycling programs are examples of
a. recycle marketing.
b. cause marketing.
c. green marketing.
d. environmental marketing.
e. triple-top line marketing.

Answer: c Page(s): 100 LO: 3 AACSB: Ethics QD: Hard

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Using recycled paper reduces the amount of solid waste sent to landfills. c. and reclaim environmentally sensitive products. Rationale: Green marketing is defined as marketing efforts to produce. International Sustainable Offerings. 4-150 ISO 14000 KNOWLEDGE ISO stands for a. d. preemptive compliance. c. e. b. and bags. Integrated Standards Organization. Rather. green marketing. McDonald’s. triple-top line marketing. these firms wrap their burgers in recycled paper wrappers. cause marketing. triple-top line marketing. Answer: c Page(s): 100 LO: 3 AACSB: Ethics QD: Easy Rationale: Text term definition—ISO 14000. e. no longer use STYROFOAM™ containers (which do not degrade as quickly as paper in a landfill) for packaging their products. promote. demarketing. International Service Organizations. and reclaim environmentally sensitive products. green marketing. including Burger King. d. and reclaim environmentally sensitive products. b. c.52 - . 4-148 GREEN MARKETING APPLICATION Many fast food restaurants. which can cut fuel costs by half and lower fuel emissions by 90 percent. e. These fast-food restaurants are practicing a. consumerism. promote. and Wendy’s. This is an example of a. Answer: b Page(s): 100 LO: 3 AACSB: Ethics QD: Hard Rationale: Green marketing is defined as marketing efforts designed to produce. International Standards Organization. d. Integrated Solutions Organization. an ecological code of ethics. Answer: d Page(s): 100 LO: 3 AACSB: Ethics QD: Hard Rationale: Green marketing is defined as marketing efforts designed to produce. containers. STYROFOAM™ does not degrade as quickly as paper in a landfill. b. cause marketing. 4-149 GREEN MARKETING APPLICATION FedEx and UPS are converting their delivery trucks with standard diesel engines to more fuel- efficient and cleaner hybrid-electric vehicles. promote. 4-151 ISO 14000 KNOWLEDGE .

c. Answer: e Page(s): 100 LO: 3 AACSB: Ethics QD: Easy Rationale: Key term definition—cause marketing. b. d. and profit simultaneously if they are to achieve sustainable. b. the recognition of the need for organizations to improve the state of people. . when the charitable contributions of a firm are tied directly to the customer revenues produced through the promotion of one of its products. the name of the agreement that created the North American Free Trade Association (NAFTA). an initiative for organizations to support the International Special Olympics Committee and its athletes without endangering its nonprofit status. transactional marketing. e. promote. a set of standards for registration and certification of a manufacturer’s quality management and assurance system based on an on-site audit of practices and procedures developed by the International Standards Organization (ISO). Answer: a Page(s): 100 LO: 3 AACSB: Ethics QD: Easy Rationale: Text term definition—ISO 14000. this marketing practice is referred to as a. long-term growth. b. Kyoto Protocol. ISO 14000 initiative. c. marketing services provided at little or no cost for the purpose of promoting or supporting a worthy cause. d. b. cause marketing. e. relationship marketing. ISO 14000 refers to a. ISO 9000 initiative. the planet. d. 4-152 ISO 14000 KNOWLEDGE A global undertaking to further green marketing efforts is the a. e. 4-153 CAUSE MARKETING KNOWLEDGE When the charitable contributions of a firm are tied directly to the customer revenues produced through the promotion of one of its products. and reclaim environmentally sensitive products. c. marketing allegiance. c. a plan to encourage the purchase of “Made in America” products. d. marketing efforts to produce. a global plan to further green marketing. marketing philanthropy. Green World (GW) initiative. ISO Trans-Global initiative. 4-154 CAUSE MARKETING KNOWLEDGE Cause marketing refers to a. Answer: b Page(s): 100 LO: 3 AACSB: Ethics QD: Easy Rationale: Text term definition—ISO 14000.53 - .

Answer: b Page(s): 100 LO: 3 AACSB: Ethics QD: Medium Rationale: Socially responsible efforts on behalf of the general public are becoming more common. 4-157 CAUSE MARKETING APPLICATION Procter & Gamble raises funds for the Special Olympics when consumers purchase selected company products. satisfying customer needs. charitable donations are contributed at the sole discretion of the firm. societal promotions. and a. e. d. c. but a firm is limited to the number of cause marketing efforts it can make during a fiscal year. green marketing. This is an example of a. Answer: a Page(s): 100 LO: 3 AACSB: Ethics QD: Easy Rationale: Key term definition—cause marketing. Charitable contributions are outright donations. public relations. c. d. a charitable contribution provides an organization with a lower tax deduction. Answer: c Page(s): 100 LO: 3 AACSB: Ethics QD: Medium Rationale: Cause marketing occurs when the charitable contributions of a firm are tied directly to the customer revenue produced through the promotion of one of its products. there is essentially no difference between a charitable contribution and cause marketing. philanthropic marketing. when marketing actions that took place actually caused more harm than good. 4-156 CAUSE MARKETING COMPREHENSION Cause marketing programs incorporate all three concepts of social responsibility by addressing public concerns. enhancing corporate sales and profits. e. b. fulfilling societal objectives. Answer: a Page(s): 100 LO: 3 AACSB: Ethics QD: Hard . 4-155 CAUSE MARKETING COMPREHENSION A key difference between cause marketing and a charitable contribution is a. cause marketing.54 - . b. e. d. e. following industry-specific codes of ethics. b. Cause marketing programs incorporate all three concepts of social responsibility by addressing public concerns. satisfying customer needs. protecting the environment. cause marketing is generally linked to public causes and concerns while straight charitable contributions are generally given to private institutions. demonstrating ethical behavior. and enhancing corporate sales and profits. cause marketing is the amount is directly affected by consumers’ purchases. c. there is no limit to the amount of charitable deductions a firm can make.

e.55 - . This is an example of a. 4-159 CAUSE MARKETING APPLICATION Spiegel Inc. green marketing. c. This is an example of a. c. philanthropic marketing. sold Christmas cards on page two of its holiday retail catalog. cause marketing. philanthropic marketing. b. Answer: e Page(s): 100 LO: 3 AACSB: Ethics QD: Hard Rationale: Cause marketing occurs when the charitable contributions of a firm are tied directly to the customer revenue produced through the promotion of one of its products. Proceeds from the sales of the Christmas cards purchased through the catalog went to benefit the Starlight Children’s Foundation and the National Center for Missing and Exploited Children. corporate altruism. Avon has already donated millions toward breast cancer research. corporate altruism. Spiegel designed and printed the cards. the marketing concept. b. Avon Ad 4-158 CAUSE MARKETING APPLICATION Consider the Avon ad above. . One contributing factor was the sale of a bag designed by Marimekko ® exclusively for the Avon Breast Cancer Crusade. d. cause marketing. One hundred percent of net profits were donated to the crusade. Rationale: Cause marketing occurs when the charitable contributions of a firm are tied directly to the customer revenue produced through the promotion of one of its products. The amount of money received by the Special Olympics is directly related to how many P&G products are purchased by customers.

e.10 to the organization. Canada. d. This is an example of how a small business can engage in a. How much Spiegel donates to the two nonprofit organizations is based on how many cards it sells. For every coupon found on a box of any of the Post brands redeemed. the marketing concept. This is an example of a. The amount donated by the car dealership was directly related to how many Toyotas it sold. d. e. c. The biggest-ever shipment of bicycles to Ghana—5. philanthropic marketing. c. World Vision Ghana. philanthropic marketing. d. b. cause marketing. donated $50 to the Make-A-Wish Foundation of Canada for each Toyota purchased during a particular month. Post promises to donate $0. b. Answer: c Page(s): 100 LO: 3 AACSB: Ethics QD: Hard Rationale: Cause marketing occurs when the charitable contributions of a firm are tied directly to the customer revenue produced through the promotion of one of its products. societal marketing. Cadbury worked with its lead partner. The amount of money received by the Boys & Girls Clubs is directly related to how many coupons Post consumers redeem. Each entry represented one bicycle part and 100 parts “built” one bike. societal marketing. Cadbury Canada launched a program that encouraged consumers to enter the bar codes of their candy and chocolate bars online. goodwill marketing. Answer: b Page(s): 100 LO: 3 AACSB: Ethics QD: Hard Rationale: Cause marketing occurs when the charitable contributions of a firm are tied directly to the customer revenue produced through the promotion of one of its products. to identify every child in cocoa- farming villages who had to walk at least three kilometers or more each way to school.56 - . Answer: a Page(s): 100 LO: 3 AACSB: Ethics QD: Hard Rationale: Cause marketing occurs when the charitable contributions of a firm are tied directly to the customer revenue produced through the promotion of one of its products. cause marketing. societal marketing. 4-161 CAUSE MARKETING APPLICATION Post supports the Boys & Girls Clubs. public relations marketing. public relations marketing. 4-160 CAUSE MARKETING APPLICATION A Toyota dealership in British Columbia. 4-162 CAUSE MARKETING APPLICATION Cadbury Canada recognized that education is crucial to lifting Ghanaian children out of poverty. marketing altruism.000 in total—is . e. In the spring of 2009.

7 million for the renovation. Carnegie Hall. 4-165 MARKETING MATTERS COMPREHENSION Which of the following statements concerning cause marketing is MOST accurate? a. b. and a. became the only credit card accepted for admission to the sight. the Statue of Liberty. public relations marketing. attracted new cardholders. it raised $1. Liberty Hall. c. cause marketing. Answer: d Page(s): 100-101 LO: 3 AACSB: Ethics QD: Easy Rationale: American Express Company pioneered cause marketing when it sponsored the renovation of the Statue of Liberty. decreased outstanding debt on previously unpaid credit cards. e. received a tax credit that more than paid for the original campaign. 4-163 MARKETING MATTERS KNOWLEDGE American Express Company pioneered cause marketing when it sponsored the renovation of a. was able to raise interest rates without facing customer complaints. d. This effort raised $1. societal marketing.7 million for the renovation.57 - . Answer: b Page(s): 100 LO: 3 AACSB: Ethics QD: Hard Rationale: Cause marketing occurs when the charitable contributions of a firm are tied directly to the customer revenue produced through the promotion of one of its products. increased usage among cardholders. The vast majority of consumers say they will switch to a brand that supports a good cause provided the price and quality of the brands are equal. e. the Lincoln Memorial. transactional marketing. and attracted new cardholders. d. e. The is an example of a. increased card usage among cardholders. increased card usage among cardholders. c. helping thousands of kids get to school and get a head start on a brighter future. philanthropic marketing. Cadbury’s sales of candy and chocolate products were directly tied to the number of bicycles given to Ghanaian children. 4-164 MARKETING MATTERS COMPREHENSION When American Express pioneered cause marketing.7 million to renovate a national icon. Madison Square Garden. This effort raised $1. b. and attracted new cardholders. c. b. . Answer: e Page(s): 100-101 LO: 3 AACSB: Ethics QD: Medium Rationale: American Express Company pioneered cause marketing when it sponsored the renovation of the Statue of Liberty. In this case. d.

a business mission. the strategic marketing process. e. b. Women are much more suspicious about the sincerity of cause marketing programs than men. and performance in terms of social responsibility is referred to as a. c. Answer: a Page(s): 100-101 LO: 3 AACSB: Ethics QD: Medium Rationale: Cause marketing benefits companies as well as causes. 80 percent of consumers say they will switch to a brand or retailer that supports a good cause if the price and quality of brands or retailers are equal. The profits generated by cause marketing are usually paid in “goodwill” rather than actual revenue. d. The positive effects of cause marketing are significant during the promotion. 4-168 SOCIAL AUDIT COMPREHENSION . but they lose their benefit almost immediately after the promotion runs its course. a systematic assessment of a firm’s objectives. strategies. d. their contributions are significantly less. conducting business in a way that protects the natural environment while making economic progress. Also.58 - . b. d. e. c. 4-167 SOCIAL AUDIT KNOWLEDGE A social audit refers to a. e. the ability to understand one’s own emotions and the emotions of people with whom one interacts on a daily basis.S. a company-wide assessment of employees at all levels to determine the compliance to the organization’s code of ethics. a systematic assessment of a firm’s compliance to fair hiring practices and commitment to diversity. b. Answer: d Page(s): 101 LO: 3 AACSB: Ethics QD: Easy Rationale: Key term definition—social audit. Research indicates that 85 percent of U. a social audit. consumers say they have a more favorable opinion of companies that support causes they care about. an accountability analysis. Cause marketing rarely creates a point of difference for the firm that engages in this marketing practice. and performance in terms of social responsibility. a SWOT analysis. 4-166 SOCIAL AUDIT KNOWLEDGE A systematic assessment of a firm’s objectives. strategies. Answer: d Page(s): 101 LO: 3 AACSB: Ethics QD: Easy Rationale: Key term definition—social audit. c. therefore.

and performance in terms of social responsibility. evaluation of possible benefits both tangible and intangible to the firm’s triple-bottom line. financial audit c. 4-169 SOCIAL AUDIT COMPREHENSION The first step in any social audit is to a. The five steps of the audit are: (1) recognition of a firm’s social expectations and the rationale for engaging in social responsibility endeavors. for marketing cohesiveness. c. strategies. tactical plan. identification of environmental forces that could interfere with the firm’s plans. implement. c. (2) identification of social responsibility causes or programs consistent with the company’s mission. identify social responsibility causes consistent with the company’s mission. and evaluate their social responsibility efforts by means of a(n) a. selection of a team leader and assignment of tasks and task deadlines for team members. the first of which is the recognition of a firm’s social expectations and the rationale for engaging in social responsibility endeavors. Answer: a Page(s): 101 LO: 3 AACSB: Ethics QD: Medium Rationale: Many companies develop. b. and performance in terms of social responsibility. determine the amount of money that can be allocated for societal marketing programs. creation or selection of a theme. etc. evaluation of social responsibility programs and activities undertaken and assessment of future involvement. e. Answer: c Page(s): 101 LO: 3 AACSB: Ethics QD: Medium Rationale: A social audit consists of five steps. (3) determination of organizational objectives and priorities for programs and activities it will . (4) specification of the type and amount of resources necessary to achieve social responsibility objectives. spokesperson. Answer: c Page(s): 101 LO: 3 AACSB: Ethics QD: Medium Rationale: A social audit is a systematic assessment of a firm’s objectives. and (5) a. (3) determination of organizational objectives and priorities for programs and activities it will undertake. and performance in terms of social responsibility. d. strategies. (2) identification of social responsibility causes or programs consistent with the company’s mission. b. evaluate current social responsibility programs. determine the types of resources needed to achieve social responsibility objectives. recognize a firm’s social expectations and the rationale for engaging in social responsibility endeavors. Converting socially responsible ideas into actions involves careful planning and monitoring of programs. Many companies develop. strategies.59 - . and evaluate their social responsibility efforts by means of a social audit. The five steps of the audit are: (1) recognition of a firm’s social expectations and the rationale for engaging in social responsibility endeavors. which is a systematic assessment of a firm’s objectives. action plan. social audit. 4-170 SOCIAL AUDIT COMPREHENSION A social audit is a systematic assessment of a firm’s objectives. d. b. research plan. d. implement. e. e. slogan.

4-172 SUSTAINABLE DEVELOPMENT KNOWLEDGE Sustainable development refers to a. undertake. adhering to worldwide standards for environmental quality and green marketing practices. and (5) evaluation of social responsibility programs and activities undertaken and assessment of future involvement. e. d. At this point in time. b. green marketing. only a small number of consumers care whether a company practices sustainable development. global economies that are slowly moving from an agrarian-base to an industrial base. d. and reclaim environmentally sensitive products. 4-173 SUSTAINABLE DEVELOPMENT COMPREHENSION Which of the following statements about sustainable development is most accurate? a. stakeholder responsibility. sustainable development is a luxury that only large international companies can achieve. (4) specification of the type and amount of resources necessary to achieve social responsibility objectives. A company that uses overseas child laborers to manufacturer its products to reduce costs does not practice sustainable development. Sustainable development involves conducting business in a way that protects the natural environment while making economic progress. A company that always makes its furniture from rare tropical woods is practicing sustainable development. d. marketing efforts to produce. Unfortunately. placing restraints on a company’s growth until all ancillary support services are in place to ensure a new venture’s success. . e. b. sustainable development. the marketing concept. e. c. Answer: d Page(s): 102 LO: 3 AACSB: Ethics QD: Medium Rationale: Over 90 percent of Americans surveyed are concerned with working conditions under which products are made.60 - . 4-171 SUSTAINABLE DEVELOPMENT KNOWLEDGE Conducting business in a way that protects the natural environment while making economic progress is referred to as a. environmental marketing. b. conducting business in a way that protects the natural environment while making economic progress. Answer: e Page(s): 102 LO: 3 AACSB: Ethics QD: Easy Rationale: Key term definition—sustainable development. Answer: a Page(s): 102 LO: 3 AACSB: Ethics QD: Easy Rationale: Key term definition—sustainable development. promote. Sustainable development is achieved when a firm’s sales growth rate increases an average of 1-2% per year for a period of at least five years. c. c.

Unfortunately. costs to be passed along to shareholders as a part of doing business. misredeeming coupons. unethical practices by consumers. sustainable development b. b. support cause marketing efforts c. c. . Answer: b Page(s): 102 LO: 4 AACSB: Ethics QD: Medium Rationale: Consumers also have an obligation to act ethically and responsibly in the exchange process and in the use and disposition of products. which involves conducting business in a way that protects the natural environment while making economic progress. and making the bottle more flexible for easier recycling. e. 4-176 CONSUMER ETHICS COMPREHENSION Practices that include filing warranty claims after the claim period.4-174 SUSTAINABLE DEVELOPMENT APPLICATION Arrowhead® Brand Mountain Spring Water recently changed its bottle by reducing the size of its label by one-third. d. reveal any and all pertinent personal information d. 4-175 CONSUMER ETHICS COMPREHENSION Consumers have an obligation to __________ in the exchange process and in the use and disposition of products. These efforts are part of the company’s goal to engage in __________. ISO 9000 compliance d. The examples cited are examples of unethical consumer practices. violations of the Consumer Bill of Rights. act ethically and responsibly e. get as much as they can for their money b. and making fraudulent returns of merchandise are examples of a. environmental downsizing Answer: a Page(s): 102 LO: 3 AACSB: Ethics QD: Hard Rationale: Arrowhead’s bottle changes are an example of sustainable development. market development c. consumer behavior is spotty on both counts. seek products without ISO 14000 Answer: d Page(s): 102 LO: 4 AACSB: Ethics QD: Medium Rationale: Consumers have an obligation to act ethically and responsibly in the exchange process and in the use and disposition of products. a. cause marketing e. a. using 30% less plastic.61 - . all of which have a cost to marketers in terms of lost sales revenue and prevention expenses. normal and reasonable consumer behavior. acceptable consumer code of ethics.

b. Answer: b Page(s): 102 LO: 4 AACSB: Ethics QD: Medium . At some point. lack the knowledge to make informed decisions dealing with the purchase. use.” Answer: b Page(s): 102-103 LO: 4 AACSB: Ethics QD: Medium Rationale: Research on unethical consumer behavior indicates that these acts are rarely motivated by economic need. b. ultimately. to retailers. If “everyone else does it. Answer: a Page(s): 102 LO: 4 AACSB: Ethics QD: Medium Rationale: Consumer complaints about online auction fraud outnumber all reports of online crime. e.” then that becomes the norm so. believe that ecological issues are still a matter of opinion even within the scientific community itself. indicating that they are of lesser quality. believe that public sentiment toward ecological issues has now reached a consensus—in today’s economic downturn. c. The cost to marketers of unethical consumer behavior is negligible in terms of lost sales. Most consumers’ unethical acts are motivated by economic need. be unable to make an ecologically sound purchase because eco-friendly products are significantly less expensive. Consumer complaints about online auction fraud outnumber all reports of online crime. it is worth it. jobs are more important than environmental issues. 4-178 CONSUMER ETHICS COMPREHENSION Which of the following statements about consumer ethics is most accurate? a. Most consumers who shoplift do so because a salesperson has been insulting or rude. The potential cost to marketers of unethical consumer behavior is dramatically reduced by investing in loss prevention training. They may (1) be unwilling to sacrifice convenience and pay higher prices to protect the environment. The cost to marketers of unethical consumer behavior is huge in terms of lost sales and prevention expenses. Few customers behave unethically toward smaller. Retailers lose about $1 million dollars a day from shoplifting.62 - . believe that protecting the environment in one area actually can create disruptions in another areas. independently owned businesses. Retailers lose about $30 billion yearly from shoplifting. every person shoplifts or participates in an unethical exchange.4-177 CONSUMER ETHICS COMPREHENSION Which of the following statements about consumer ethics is most accurate? a. b. This behavior appears to be influenced by (1) a belief that a consumer can get away with the act and it is worth doing and (2) the rationalization that the act is justified or driven by forces outside the individual because “everybody does it. d. c. they may not be willing to purchase a given product or service solely on the basis of its environmental claims. d. and disposition of products.” 4-179 CONSUMER ETHICS COMPREHENSION Although research shows consumers are sensitive to ecological issues. d. e. Most unethical consumer behavior is against “big business. Some consumers believe that if they can get away with unethical behavior. c. there is no such thing as unethical consumer behavior. and (2) a. it is simply the cost of doing business. e.

greenwashing b. marketing efforts to produce. b. acceptable provided the merchant providing the service has not violated the Consumer Bill of Rights. service. lack of knowledge. Rationale: Inconvenience. Answer: d Page(s): 102-103 LO: 4 AACSB: Ethics QD: Medium Rationale: Consumers also have an obligation to act ethically and responsibly in the exchange process and in the use and disposition of products. environmental slander d. e. d. or company practice. service. technology. the recognition of the need for organizations to improve the state of people. d. the practice of deliberately concealing the mistakes that polluters make regarding the environmental disasters they perpetrated. 4-181 GREENWASHING KNOWLEDGE Making an unsubstantiated or misleading claim about the environmental benefits of a product. and profit simultaneously if they are to achieve sustainable. misredeeming coupons. technology. not acceptable because consumers also have an obligation to act ethically and responsibly. e. higher prices. whitewashing c. or company practice is referred to as ___________. c. and reclaim environmentally sensitive products. 4-182 GREENWASHING KNOWLEDGE Greenwashing refers to a. long-term growth. which have a cost to marketers in terms of lost sales revenue and prevention expenses. and confusion influence consumers’ disposition toward environmentally sensitive products. c. the planet. not acceptable unless the participants are nonprofit organizations or charities. are a. demarketing Answer: a Page(s): 103 LO: 4 AACSB: Ethics QD: Easy Rationale: Text term definition—greenwashing. acceptable provided the salesperson doesn’t mind.63 - . making fraudulent returns of merchandise. conducting business in a way that protects the natural environment while making economic progress. 4-180 CONSUMER ETHICS COMPREHENSION Practices such as filing warranty claims after the claim period. Answer: c Page(s): 103 LO: 4 AACSB: Ethics QD: Easy Rationale: Text term definition—greenwashing. . green gouging e. etc. promote. occasionally permitted when two different firms are competing for a customer’s business and both are using equally less than ethical practices. b. the practice of making an unsubstantiated or misleading claim about the environmental benefits of a product. a.

federal government.4-183 VIDEO CASE 4: TOYOTA COMPREHENSION Toyota employs all of the following business practices as part of “The Toyota Way” EXCEPT: a. Toyota Prius gas-electric hybrid car e. to maximize individual and team performance.” 4-184 VIDEO CASE 4: TOYOTA COMPREHENSION One of Toyota’s top goals has been to develop advanced vehicle technologies to complement existing ones. followed by individuals. which eventually led to the production of which of the following vehicles? a. b. Toyota Camry hydrogen fuel cell hybrid car Answer: d Page(s): 106 LO: 3 AACSB: Ethics QD: Medium Rationale: Implementation of Toyota’s G21 vision led to the development and deployment of the Toyota Prius gas-electric hybrid car.64 - . c. to build trust and take responsibility. Scion iQ micro-subcompact compressed natural gas car d. Answer: e Page(s): 105 LO: 3 AACSB: Ethics QD: Medium Rationale: Alternative “e” is Toyota’s core principle or value that forms “The Toyota Way. consumers were asked the following question: “Who should take the lead in addressing environmental issues?” The results suggest that businesses should. the federal government b. d. the state government Answer: b Page(s): 107 LO: 3 AACSB: Ethics QD: Medium Rationale: In a recent survey. and environmental groups. consumers were asked the following question: “Who should take the lead in addressing environmental issues?” The results suggest that __________ should. environmental groups e. individuals d. Toyota Tundra gas-electric hybrid truck c. to continuously improve business operations. 4-185 VIDEO CASE 4: TOYOTA COMPREHENSION In a recent survey. Lexus 450 all-electric car b. state government. See Figure 1 in the textbook . a. to contribute to society and the economy by producing high-quality products and services. The G21 vision arose out of this goal. businesses c. to always go to the source to find the facts and make correct decisions. e. always striving for innovation and evolution.

Page(s): 90 LO: 1 AACSB: Ethics QD: Medium 4-188 ETHICAL/LEGAL FRAMEWORK IN MARKETING COMPREHENSION Explain the four ways to classify marketing decisions according to ethical and legal relationships. its newly renamed Corporate Social Responsibility Department. the brewer launched its “Responsibility Matters” campaign that implemented effective education and awareness programs to promote responsibility and responsible behaviors. laws are society’s values and standards that are enforceable in the courts. Answer: Societal responsibility refers to obligations that organizations have (1) to the preservation of the ecological environment and (2) to the general public. CHAPTER 4: MASTER TEST BANK ETHICAL AND SOCIAL RESPONSIBILITY IN MARKETING SHORT ESSAY QUESTIONS 4-186 CHAPTER OPENER: ANHEUSER-BUSCH COMPREHENSION Explain how Anheuser-Busch acts with societal responsibility. Anheuser-Busch. The four combinations are: (1) ethical and legal. Anheuser-Busch has been an advocate for responsible drinking for nearly three decades through its “Know When to Say When” campaign in 1982. Page(s): 89 LO: 3 AACSB: Ethics QD: Medium 4-187 ETHICAL/LEGAL FRAMEWORK IN MARKETING COMPREHENSION Describe the difference between ethics and laws Answer: Ethics are the moral principles and values that govern the actions and decisions of an individual or group. In addition. and (4) unethical and illegal. Answer: The four ways can be determined by placing ethicality (vertical) and legality (horizontal) as the axes of a two-by-two dimensional grid. which was established in 1989.65 - . They serve as guidelines on how to act rightly and justly when faced with moral dilemmas. Page(s): 90-91 LO: 1 AACSB: Ethics QD: Medium 4-189 ETHICAL/LEGAL FRAMEWORK IN MARKETING APPLICATION . annually recycles over 27 billion aluminum cans. See Figure 4-1 in the textbook. (2) ethical but illegal. In 2004. through its ABRC subsidiary. While ethics deal with personal moral principles and values. and its Family Talk about Drinking guidebook distributed free to parents and educators. (3) unethical but legal.

ethical but illegal. Provide concrete examples for the four classifications marketing decisions according to ethical and legal relationships. and the codes of conduct in business dealings. Culture is the set of values. Corporate culture is a set of values. such as those cited in the textbook. “B” business culture and industry practices. and “C” corporate culture and expectations.66 - . ideas. Business cultures are made up of the effective rules of the game. Answer: The three major factors affecting business ethics are “A” societal culture and norms. Page(s): 90-91 LO: 1 AACSB: Ethics QD: Hard 4-190 UNDERSTANDING ETHICAL MARKETING BEHAVIOR COMPREHENSION Figure 4-2 Identify and briefly describe each of the three factors identified in Figure 4-2 above that influence one’s personal moral philosophy and ethical behavior. unethical but legal. ideas. and attitudes that are learned and shared among members of a group. Culture also serves as a socializing force that dictates what is morally right and just. See Figure 4-1 in the textbook. Answer: Answers will vary. the boundaries between competitive and unethical behavior. unethical and illegal. but they should include examples of behaviors that are ethical and legal. Page(s): 91-95 LO: 2 AACSB: Ethics QD: Medium 4-191 BUSINESS CULTURE AND INDUSTRY PRACTICES KNOWLEDGE . and attitudes that is learned and shared among the members of an organization. This means that moral standards are relative to particular societies.

to choose. wiretapping. Answer: Societal culture provides a foundation for understanding moral behavior in business activities. Explain the difference between societal culture and business culture. Page(s): 92 LO: 2 AACSB: Ethics QD: Easy 4-192 CONSUMER BILL OF RIGHTS (1962) COMPREHENSION How did President John F. Kennedy change the concept of American business culture away from caveat emptor in the 1960s? Answer: Before the 1960s. Page(s): 92-93 LO: 2 AACSB: Ethics QD: Medium 4-193 ESPIONAGE AND BRIBERY COMPREHENSION Business culture affects ethical behavior in competition. This practice is illegal and unethical and carries serious criminal penalties for the offending individual or business. consultant fees. bribery is most evident in industries experiencing intense competition and in countries in the earlier stages of economic development. In answering. The Consumer Bill of Rights includes the rights to safety. The second form of unethical competitive behavior is giving and receiving bribes and kickbacks. This practice is more common in business-to-business and government marketing than in consumer marketing. and favors. provide concrete examples for both. Page(s): 93-94 LO: 2 AACSB: Ethics QD: Medium 4-194 PERSONAL MORAL PHILOSOPHY COMPREHENSION Identify and describe the two types of personal moral philosophy. fraud. In 1962. President Kennedy codified a Consumer Bill of Rights that was intended to regulate the ethics of exchange between buyers and sellers. Bribes and kickbacks are often disguised as gifts. theft. . Economic espionage is the clandestine collection of trade secrets or proprietary information about a company’s competitors. to be informed. [and] the codes of conduct in business dealings. Espionage activities include illegal trespassing. the search of a competitor’s trash. the boundaries between competitive and unethical behavior. and to be heard. Ethical exchanges between buyers and sellers should result in both parties being better off after a transaction. misrepresentation. Answer: The two kinds of unethical behavior that are most common are: (1) economic espionage and (2) bribery.” Business culture affects ethical conduct both in the exchange relationship between sellers and buyers and in the competitive behavior among sellers. In general. and violations of written and implicit employment agreements with noncompete clauses. Briefly discuss the two most common kinds of unethical competitive behavior.67 - . Business cultures “comprise the effective rules of the game. the legal concept of caveat emptor (let the buyer beware) was pervasive in American business culture.

regardless of the outcome.” Use this quote to explain why ethics is such a difficult concept to understand. Answer: This example makes it obvious why ethics is such a difficult topic. This philosophy underlies the economic tenets of capitalism and is embraced by many business executives and students. Students should realize that they must weigh their personal philosophy of moral idealism—the way the remains of a loved one should be treated respectfully—with a more utilitarian philosophy. then the behavior is ethical. If the benefits exceed the costs. which focuses on how much can be learned from research on body parts. Blood has become one of the most valuable commodities on Earth. Utilitarianism is a personal moral philosophy that focuses on “the greatest good for the greatest number” by assessing the costs and benefits of the consequences of ethical behavior. It exists in the Consumer Bill of Rights and is favored by moral philosophers and consumer interest groups. Page(s): 98 LO: 2 AACSB: Ethics QD: Easy 4-196 MORAL IDEALISM/UTILITARIANISM APPLICATION Body Bazaar: The Market for Human Tissue in the Biotechnology Age is a book by Lori Andrews and Dorothy Nelkin. and therapies. and corporate culture in which a person finds him. Two prominent personal moral philosophies have direct bearing on marketing practice: (1) moral idealism and (2) utilitarianism. It is included to demonstrate that subjects can be made to appear to be an ethical issue when they are not. diagnostics. Answer: Ultimately.000.68 - . It is also influenced by the societal. then the behavior is unethical. business. “Body parts are bought and sold for medical research. Page(s): 96-98 LO: 2 AACSB: Ethics QD: Medium 4-195 UTILITARIANISM KNOWLEDGE Define the moral philosophy of utilitarianism and explain its relationship to capitalism. ethical choices are based on the personal moral philosophy of the decision maker. Page(s): 97-98 LO: 2 AACSB: Ethics QD: Hard .or herself. While petroleum sells for $100 a barrel. And pieces of people are increasingly being used as raw materials for products-from placenta- enriched shampoos to experimental DNA-run computers. Moral idealism and utilitarianism are two types of moral philosophy. an equivalent quantity of blood products is worth $67. If not. If benefits exceed the costs. if not. This philosophy underlies the economic tenets of capitalism and is embraced by many business executives and students. Answer: Utilitarianism is a personal moral philosophy that focuses on “the greatest good for the greatest number” by assessing the costs and benefits of the consequences of ethical behavior. then the behavior is considered ethical. They are marketed to museums and personal collectors. According to the book. Moral philosophy is learned through the process of socialization with friends and family and by formal education. It is not really an ethical issue. Moral idealism is a personal moral philosophy that considers certain individual rights or duties as universal. then the behavior is considered unethical. The cost of the blood is a supply and demand issue—just like the price of rocks compared to the price of diamonds.

Answer: The three concepts of social responsibility include profit responsibility.” Are turkey growers who allow their birds to access the out-of-doors only moments before they are killed acting socially responsible? Answer: To answer this question. Would these Internet-based companies benefit from acting more socially responsible? Explain your answer. and societal responsibility. stakeholder responsibility.” Consumers typically pay $1 more per pound for free-range turkeys. while 55 percent said they didn’t have time to think about these issues. which are thought to have lived more humane lives—and as a result. then it is taking profit responsibility—this is one of the concepts of social responsibility. See Figure 4-4 in the textbook. Page(s): 98-100 LO: 3 AACSB: Ethics QD: Medium 4-198 SOCIAL RESPONSIBILITY APPLICATION An increasing percentage of turkeys are now being marketed as “free range. Answer: Social responsibility encompasses profit responsibility.4-197 SOCIAL RESPONSIBILITY COMPREHENSION Describe the three major concepts of social responsibility. The USDA defines a free-range bird as one that has been allowed “access to the out-of-doors. Societal responsibility refers to obligations that organizations have (1) to the preservation of the ecological environment and (2) to the general public. Societal responsibility refers to obligations that organizations have to the preservation of the ecological environment and to the general public. Customers who actually desire a more humanely treated animal are being deceived. There is nothing to indicate that the grower is taking any societal responsibility. It is not acting socially responsible if it believes in stakeholder responsibility. students will need to consider the three concepts of social responsibility. suppliers. If the turkey grower feels that its responsibility is to maximize profits for its owners and stockholders. to taste better than conventionally-raised turkeys. and societal responsibility. A formal practice of giving service to the general public is referred to as cause marketing. and distributors. including customers. Page(s): 98-100 LO: 3 AACSB: Ethics QD: Hard 4-199 SOCIAL RESPONSIBILITY APPLICATION A recent survey found that 79 percent of Internet and e-commerce companies take absolutely no social responsibility. employees. Profit responsibility holds that companies have a simple duty to maximize profits for their owners or stockholders. stakeholder responsibility.69 - . and 50 percent said they didn’t have the expertise to address them. Stakeholder responsibility focuses on the obligations organizations have to those who can affect achievement of their objectives. Even more worrying is the finding that 75 percent of these Internet companies justify this omission on the grounds that they don’t have any environmental or social impacts. which occurs when the charitable contributions of a firm are tied directly to the customer revenues produced through the .

70 - . child abuse. promotion of one of its products. promote. cause marketing. and profit simultaneously if they are to achieve sustainable. satisfying customer needs. Page(s): 100 LO: 3 AACSB: Ethics QD: Medium 4-202 CAUSE MARKETING APPLICATION MasterCard International links usage of its card with fund raising for institutions that combat cancer. social audits. Cause marketing occurs when the charitable contributions of a firm are tied directly to the customer revenues produced through the promotion of a specific product. and performance in terms of social responsibility. may think of other equally appropriate examples. which occurs when the charitable contributions of a firm are tied directly to the customer revenues produced through the promotion of its products. Cause marketing programs incorporate all three concepts of social responsibility by addressing public concerns. A social audit is a systematic assessment of a firm’s objectives. Answer: Green marketing refers to a company’s marketing efforts to produce. and reclaim environmentally sensitive products. long-term growth. Page(s): 100 LO: 3 AACSB: Ethics QD: Medium 4-201 CAUSE MARKETING COMPREHENSION What is the difference between standard charitable contributions and cause marketing? Answer: A firm’s standard charitable contributions are outright donations. and enhancing corporate sales and profits. promote. Ecologically responsible initiatives such as green marketing represent one such initiative. the planet. marketing and social responsibility programs are often integrated. and sustainable development reflect this recognition. MasterCard gives a modest percentage of charges from its credit card charges to the institutions. strategies. and reclaim environmentally sensitive products. What is this called and how does it affect cardholders’ behavior? Answer: This practice is called cause marketing. emphasis is placed on what is termed the triple-bottom line—recognition of the need for organizations to improve the state of people. Examples from the textbook include 3M’s “Pollution Prevention Pays” program and Xerox’s “Design for the Environment” program. of course. and muscular dystrophy. Sustainable development involves conducting business in a way that protects the natural environment while making economic progress. Page(s): 98-102 LO: 3 AACSB: Ethics QD: Hard 4-200 GREEN MARKETING COMPREHENSION Define green marketing and provide an example of it. It may . They can also enhance corporate sales and profits. Green marketing—marketing efforts to produce. Cause marketing programs incorporate all three concepts of social responsibility by addressing public concerns and satisfying customer needs. heart disease. Students. Growing interest in green marketing. Today. Frequently.

and (5) Evaluation of social responsibility programs and activities undertaken and assessment of future involvement. (4) Specification of the type and amount of resources necessary to achieve social responsibility objectives. such as fraudulent automobile insurance claims or unauthorized downloading of music.71 - . indicates that these acts are rarely motivated by economic need. What influences these behaviors? Answer: These behaviors appear to be influenced by (1) a belief that a consumer can get away with the act and it is worth doing and (2) the rationalization that the act is justified or driven by forces outside the individual—“everybody does it. movies.” Page(s): 103 LO: 4 AACSB: Ethics QD: Medium . (3) Determination of organizational objectives and priorities for programs and activities it will undertake. Page(s): 100 LO: 3 AACSB: Ethics QD: Hard 4-203 SOCIAL AUDIT COMPREHENSION What are the five steps in a social audit? Answer: A social audit consists of the following steps: (1) Recognition of a firm’s social expectations and the rationale for engaging in social responsibility endeavors. have the effect of encouraging the cardholders to charge more on their MasterCards (rather than Visa or American Express)—especially if they believe in the charity receiving the contribution. and software. (2) Identification of social responsibility causes or programs consistent with the company’s mission. Page(s): 101 LO: 3 AACSB: Ethics QD: Medium 4-204 CONSUMER ETHICS AND SOCIAL RESPONSIBILITY COMPREHENSION Research on unethical consumer behavior.