Chapter 4

Short-term profit decisions can cause firms to lose customers in the long run.

Marketing has been singled out as the root cause of a host of ethical problems in business.

Marketers are frequently singled out for criticism related to trust, in part because they interact directly with people.

Advertising executives are rated as having higher ethical standards than lawyers according to recent Gallup poll data.

The process of creating a strong ethical business climate begins with the front-line employees who interact directly with customers.

Each individual's ethical standards are a product of culture and upbringing.

Merck and Co., having learned from the Johnson and Johnson Tylenol incident, was quick to respond when the first reports of problems with Vioxx arose.

A survey of marketing officers reported that the most frequently observed type of unethical behavior was false or misleading advertising.

Firms with strong ethical climates tend to be more socially responsible.

Ethical issues are likely to arise at each stage of the strategic marketing planning process.

If a U.S. clothing brand buys from overseas suppliers who manufacture clothing using child labor, this is the supplier's problem, and the U.S. company has no reason to be concerned.

A roofing company agreed to complete a job in one week and collected a 50 percent deposit, but never showed up to do the job. The same roofing company then donated $6,000 to a local children's hospital. The roofing company could be considered socially responsible.

BlendMate, a firm that manufactures high-end blenders, donates $10 per blender sold to a local food bank. This is a form of corporate social responsibility.

Ethos Water donates 2 percent of its profits to children in need of clean water. This action demonstrates that Ethos Water is a firm with a strong ethical climate.

Corporate social responsibility refers to the coordinated actions of government organizations to address the ethical, social, and environmental impacts of business operations.

The idea that corporate social responsibility is unnecessary because the goal of any corporation is simply to make a profit has been thoroughly discredited and is no longer supported by economists or business people.

Stakeholders typically include the firm's employees and retired employees, suppliers, the government, customer groups, stockholders, and members of the community in which the firm operates.

Brainstorming in the Ethical Decision-Making Framework occurs immediately following the identification of issues.

Badger Hardware was planning to raise the pay of its managers but not its front-line employees. To determine the potential ethical issues, it should first identify the issues involved so that it can gather facts related to those issues.

Marketers can introduce ethics at the beginning of the planning phase of the strategic marketing planning process by including ethical statements in the firm's mission or vision statements.

Tipco Computer Company decided to market its tablet computers to preschoolers, even though the tablets were better suited for much older children. This potentially unethical activity takes place during the control phase of the strategic marketing planning process.

Once the marketing strategy is implemented, controls must be in place to be certain that the firm has actually done what it has set out to do.

An example in the text describes a campaign by Molson Brewery that involved a Facebook campaign targeted toward college students. It was criticized for encouraging underage drinking. This occurred during the implementation phase of the strategic marketing planning process.

Ronald McDonald Houses are a form of environmental social responsibility.

Pepsi has cooperated with America on the Move to improve many of its products and their labels, such as reducing the saturated fat in its Frito-Lay's Ruffles. This form of social responsibility most directly affects shareholders.

Deceptive advertising and promotion of inferior products are examples of __________ ethical issues. A. accounting B. marketing C. social D. finance E. economic

Unlike other business functions like accounting or finance, people in marketing are often singled out as the root cause of ethical concerns because A. they are trained in the art of effective persuasive communication. B. they are not considered to be as quantitatively skilled as accounting and finance people. C. they interact directly with consumers. D. the problems that occurred at Enron, Tyco, and WorldCom were caused by marketers. E. doing a good job of marketing requires some degree of unethical behavior.

The sale of products that may damage the environment, the use of sweatshop labor, and the marketing of dangerous products are examples of A. internal, controllable marketing issues. B. issues that don't even need to be discussed in ethical firms. C. marketing issues but not ethical issues. D. marketing ethical issues. E. ethical issues but not marketing issues.

In a recent Gallup survey, which of the following professions was rated lowest in ethical standards? A. car salespeople B. lawyers C. senators D. real estate agents E. medical doctors

Janice was disturbed to find that the real estate company she had just started working for did not have a(n) __________, the starting point for creating a strong ethical climate. A. ethical behavior seminar B. set of ethical values C. employment contract D. social responsibility program E. ethical activity bonus

The Johnson and Johnson Credo acknowledges the company's responsibility to A. users of its products, its employees, the community, and its stockholders. B. its stockholders first, its managers, its employees, and its suppliers and vendors. C. domestic markets, other countries in the developed world, and finally countries in the developing world. D. users of its products, the researchers who develop the products, regulators, and its stockholders. E. doctors, nurses, insurance companies, and users of its products.

The Johnson and Johnson Credo A. was a response to the Tylenol incident. B. proved ineffective when the company needed to act in the Tylenol crisis, which was a clear lesson to other companies to update similar documents. C. was copied by all other pharmaceutical companies. D. offers an extremely detailed description of potential problems for the company. E. has guided the firm since it was written in the 1940s.

When Johnson and Johnson removed all Tylenol from the shelves after some containers were tampered with, poisoning and killing seven people, the company A. sacrificed short-term profits for long-term credibility. B. was forced to do so following extensive consumer outcry. C. was ordered to do so by the Food and Drug Administration. D. felt that nothing could stop Tylenol from losing most of its customers. E. developed plans to sell the returned Tylenol bottles in less developed countries.

Jacqueline was pleased to read a paraphrasing of the Golden Rule, "Do unto our customers as you would have them do unto you," as part of her new employer's mission statement. Next, Jacqueline expects to find in the firm's employee handbook A. a summary of recent Supreme Court business ethics cases. B. a statement that she needs to decide how the Golden Rule applies to her job on her own, without any influence from her employer. C. explicit rules governing all the firm's transactions. D. a list of employee concerns. E. a list of benefits offered to employees.

New real estate disclosure regulations require sellers and their agents to tell prospective buyers about any existing problems. Previously, they were only expected to answer buyers' questions. The new regulation addressed the marketing ethical problem of A. high-pressure sales techniques. B. deceptive pricing tactics. C. misrepresentation of company data. D. misleading advertising. E. withholding information.

When making decisions, managers often have to decide between doing what is beneficial for them (and possibly the firm) in the short run, and doing what is right and beneficial for the firm and for society in the long run. To address this conflict, a firm A. must evaluate its quarterly profit statement from an ethics standpoint. B. must state its long-term goals in general terms, so as to not interfere with managers' short-term goals. C. must always put society's needs ahead of the firm's needs. D. must ensure that long-term goals of the firm are aligned with the short-term goals of each individual within the firm. E. should adhere rigidly to legal standards in its industry.

Compared to the average company, firms with strong ethical climates tend to A. employ more business development consultants. B. offer more goods and services. C. be more socially responsible. D. invest more in sales training software. E. have higher turnover.

Many executives and corporate boards of directors do not perceive social responsibility as part of their mission or responsibility. These business leaders consider corporate social responsibility to be A. a basic requirement of any business. B. the equivalent of the AMA ethical value, "Do no harm." C. the key to operational effectiveness. D. a component of basic business ethics. E. beyond the norms of corporate ethical behavior.

Being socially responsible is generally considered A. a good thing to do only if a company is profitable. B. inappropriate for most firms in today's challenging markets. C. beyond the norms of corporate ethical behavior. D. a necessary part of every firm's strategy. E. the responsibility of corporate-sponsored foundations that can effectively concentrate a firm's good deeds.

Ironically, while the leaders of Enron Corporation were manipulating the company's finances for their personal benefit, the company was a major donor to Houston area charities. Enron had unethical business practices, but was also A. practicing marketing ethics. B. falsifying the company's finances through charitable donations. C. creating a local ethical business climate. D. demonstrating corporate social responsibility. E. manipulating the public sentiment for its own benefit.

The Ethical Decision-Making Framework includes all of the following steps EXCEPT A. identify issues. B. promote the firm's corporate social responsibility efforts. C. gather information and identify stakeholders. D. brainstorm and evaluate alternatives. E. choose a course of action.

Garrett has just purchased a beer distributorship. He wants to increase the visibility of his firm in local markets, but he knows there are a number of regulations and socially accepted practices associated with promoting alcoholic beverages. According to the Framework for Ethical Decision Making, the first thing Garrett should do is to A. identify issues that need to be addressed. B. promote the firm's corporate social responsibility efforts. C. gather information and identify stakeholders. D. brainstorm and evaluate alternatives. E. choose a course of action.

Hisaoki picks up the local newspaper and reads a stinging letter to the editor criticizing his beverage company for supporting a sporting event for handicapped children. The letter writer is critical of a banner displayed at the event, with the logos of alcoholic beverages and Hisaoki's company name. Hisaoki never considered that this problem might arise. In the Framework for Ethical Decision Making, Hisaoki's company failed to A. identify issues. B. promote the firm's corporate social responsibility efforts. C. analyze the needs of the industry. D. brainstorm and evaluate alternatives. E. choose a course of action.

Many corporations are shifting from defined benefit to defined contribution retirement programs. When considering changes to retirement programs, the primary stakeholders are the A. shareholders. B. employees. C. customers. D. marketing managers. E. competition.

When Bernie Ebbers, WorldCom's CEO, was convicted of financial crimes, WorldCom was forced to merge with MCI. One of the ramifications of this merger was the loss of WorldCom's sponsorship of the Sea Pines Heritage PGA golf tournament. The tournament funds the Heritage Foundation, a major community charity. This example illustrates A. the need to identify issues. B. that the impact of unethical actions can reach far beyond the corporation. C. that unethical firms cannot be socially responsible. D. the lack of information needed to make ethical decisions. E. the questionable advantage of social responsibility.

When auditing expenses claimed by the university president, the auditors found extravagant spending on $1,000 per night hotels, banquets, and gourmet restaurants. The president was fired, alumni donations declined, and staff members—who were disturbed by the extravagance while staff salaries were frozen—quit their jobs. This example illustrates A. that universities are more corrupt than companies. B. that the extravagant spending should have been kept quiet to minimize damage to the university. C. that the impact of unethical actions can affect the organization in unanticipated ways. D. the need to identify issues. E. the lack of information needed to make ethical decisions.

The Harvest County School Board is concerned about deteriorating school facilities, combined with a shrinking budget. The board began by studying the issue, and then identified parents, children, teachers, staff, and taxpayers as groups who have a vested interest in the problem. The school board has listened to each group's concerns. In the Ethical Decision-Making Framework, its next action should be to A. identify issues of concern to lawmakers. B. assess impact of its actions beyond the classroom. C. engage in brainstorming and evaluate alternatives. D. choose a course of action.

After a firm has identified the various stakeholders and their issues and gathered available data related to an ethical decision-making situation, __________ should engage in brainstorming and evaluation of alternatives. A. the senior managers most involved B. key customers C. elected officials D. all parties relevant to the decision E. any individuals with competing interests

After a firm has identified the various stakeholders and their issues and gathered available data related to an ethical decision-making situation, all parties relevant to the decision should engage in A. legal discourse. B. a vote, with the majority deciding the best course of action. C. reidentification of issues. D. choosing a course of action. E. brainstorming and evaluation of alternatives.

After a firm has identified the various stakeholders and their issues and gathered the available data, all parties relevant to the decision should engage in brainstorming and evaluation of alternatives. __________ then review and refine these alternatives, and choose a course of action. A. Managers B. The firm's lawyers C. Key customers D. Community leaders E. All stakeholders

Darwin's company is facing a difficult ethical issue. The firm has identified the various stakeholders and their issues and gathered the available data. Everyone with an interest in the issue has engaged in brainstorming and evaluation of alternatives. Management reviewed and refined the alternatives. It should now choose the course of action that A. maximizes profits. B. creates the least possible publicity. C. involves the fewest employees. D. minimizes costs. E. seems best after weighing the concerns of all stakeholders.

Rock-Bend Company is considering buying out a competing firm and closing most of the competitor's factories. The firm has identified the various stakeholders and their issues and gathered the available data. Everyone with an interest in the issue has engaged in brainstorming and evaluation of alternatives. Management reviewed and refined the alternatives, and then chose a course of action. If the managers are not confident about the decision, they should A. lower their offering price for the competing firm. B. reexamine their alternatives. C. consult customers. D. trust their instincts and move forward. E. choose the least risky option.

When looking at ethical issues associated with the strategic marketing planning process, questions A. should only be addressed during the evaluation stage. B. should never be asked; only managers should deliberate marketing ethical issues. C. vary at each stage of the process. D. are never asked during the implementation stage. E. always follow a standard format.

Denny is considering the question, "Did our actions have a negative impact on any stakeholder group?" Denny is addressing marketing ethical issues in the __________ phase of the strategic marketing planning process. A. planning B. control C. implementation D. brainstorming E. situation analysis

Every year, General Mills issues a report discussing how the firm has performed against its own standards of ethical conduct. This report is part of General Mills' __________ phase of its strategic marketing planning process. A. planning B. implementation C. control D. evolution E. marketing mix

Charges that firms are using sweatshop labor to produce their products are likely to occur during the __________ phase of the strategic marketing planning process. A. planning B. implementation C. control D. evolution E. marketing mix

Multinational corporations are recognizing their responsibility to the people who make their products A. when public attention might embarrass the corporation. B. if the local government suggests that the company pay bribes to officials. C. even if they aren't their employees. D. unless another firm actually employs the workers. E. when it suits them financially.

During the __________ phase of the strategic marketing planning process, marketers use systems to check whether each potential ethical issue raised in earlier phases was addressed. A. implementation B. control C. planning D. assessment E. social responsibility

Alicia has been asked to approve a marketing campaign that, although it is not illegal, promotes food products to children. She is concerned that the food products are not particularly nutritious, although they are not as bad for children as some others sold by competitors. She reviews the tests in the Ethical Decision-Making Metric, and she decides her best course of action is to A. ignore the metric as unworkable, since the campaign might pass some of the tests and fail others. B. consider the profit potential first; then explore the vague tests in the metric. C. not worry about the children; their parents are likely to make the buying decision, and they should be able to decide for themselves. D. put the campaign on hold while she explores with the staff how they approached the ethical issues. E. consult the firm's code of ethics for guidance and leave personal ethical considerations out of the decision-making process.

The Henry Ford Health System (a health care provider) has set strict limits for pharmaceutical representatives, and will no longer allow doctors in its system to accept free lunches, gifts, or other perks from the pharmaceutical representatives. The Henry Ford Health System probably established this policy because A. it reduces the possibility that the Henry Ford Health System might make unethical purchasing decisions. B. it ensures that the Henry Ford Health System is both ethical and socially responsible. C. it increases the Henry Ford Health System's socially responsible behavior. D. it ensures that the Henry Ford Health System is socially responsible, but not necessarily ethical. E. it was trying to save money.

When Toyota owners began to report problems with sticking accelerator pedals and non-functioning brakes, Toyota at first ignored or rejected the claims. Eventually, the company evaluated the issue and did a recall. Which of the four steps of the Ethical Decision-Making Framework was Toyota performing when it recalled several of its 2007-2010 models? A. assess risk B. identify issues C. gather information and identify stakeholders D. brainstorm and evaluate alternatives E. choose a course of action

For every consumer who purchases a pair of TOMS shoes for $55.00, the company promises that a needy child will receive a pair of shoes. TOMS shoes is actively engaging in A. corporate social responsibility. B. business ethics. C. marketing ethics. D. environmental marketing. E. overpricing its products.

If Melissa decides to sell the best ice cream on earth, and intends to establish a strong ethical climate in her organization, during which phase of the strategic marketing planning process should she introduce ethical considerations? A. Planning B. Implementation C. Control D. Experience E. Ethics

Anupam's company manufactures industrial ladders. He is concerned that consumers who do not understand ladder safety will purchase these extra-tall ladders and injure themselves. During which phase of the strategic marketing planning process should this issue be addressed? A. control B. planning C. implementation D. design E. ethics

A meat packing company discovers that six months ago it unknowingly distributed meat from a cloned cow. The firm is unaware of any specific risks to humans consuming the meat; however, some scientists have raised questions, and some consumers are afraid of possible future problems. The meat company has to decide whether to make this matter public. How should it begin the process of making an ethical decision? A. Brainstorm the available alternatives. B. Ask its managers to vote for or against public disclosure. C. Let the board of directors decide what to do. D. Identify the issues raised by the situation. E. Find out who purchased the meat, and offer them refunds in return for their silence.

Elena is the CEO of a small manufacturing firm. She is concerned with meeting the investment objectives of the firm's shareholders, and sees no value in corporate social responsibility. Elena's attitude is A. insupportable in the 21st century. B. consistent with the views of other critics of corporate social responsibility. C. typical of nearly all manufacturers. D. a reaction to regulatory directives of the U.S. government. E. unethical.

How might a technology company like Apple ensure that it behaves in a socially responsible way toward its employees? A. By paying at least minimum wage when the law requires it. B. By adhering to government-mandated safety standards in the workplace. C. By ensuring that pay practices are fair at all levels of the company. D. By ensuring that its packaging materials are recyclable. E. Social responsibility isn't relevant where employees are concerned; they are paid for their work and that's enough.

How might a technology company like Apple ensure that it behaves in a socially responsible way toward its customers? A. By protecting the privacy of personal information collected on its website. B. By adhering to government-mandated safety standards in its stores. C. By ensuring that it pays its employees fairly. D. By ensuring that its packaging materials are recyclable. E. Social responsibility isn't relevant where customers are concerned; it has to do with serving society as a whole.

How might Starbucks ensure that it behaves in a socially responsible way toward members of its supply chain? A. By paying its employees minimum wage as required by law. B. By using cups made from recycled paper. C. By offering healthy drinks and snacks in its stores. D. By purchasing coffee beans from suppliers who pay coffee growers a fair price. E. Social responsibility isn't relevant where channel partners are concerned; it has to do with serving society as a whole.

All of the following terms are generally associated with the definition of corporate social responsibility EXCEPT A. voluntary. B. stakeholders. C. social impact. D. environmental impact. E. profit.

A recent poll conducted by Time magazine found that 38 percent of U.S. consumers A. actively tried to purchase from companies they considered responsible. B. didn't care if a company acted responsibly. C. were concerned with social responsibility, but not the ethical behavior of a company. D. purchased from companies they perceived to be ethical or not ethical equally. E. had no idea if the companies they purchased from were responsible.

The chapter opening case on the fishing industry focused on what ethical dilemma? A. Fisheries are overcharging distributors for fish, which is being passed on to consumers. B. Fisheries and restaurants are substituting a less popular fish for a more popular one without the consumer's knowledge. C. Restaurants are selling more fish than ever in spite of overfishing. D. Restaurants are selling fish that are legally banned in the U.S. E. The U.S. fishing industry is selling more fish overseas in spite of increased U.S. demand.

________ refers to the moral or ethical dilemmas that might arise in a business setting. A. Marketing ethics B. Business ethics C. Social irresponsibility D. Corporate responsibility E. Institutional ethics

How did Johnson and Johnson recently respond to new limits on acetaminophen dosages? A. It changed the dosages to significantly lower levels. B. It didn't do anything and waited to see if there would be a problem with its products. C. It reminded people not to take more than the recommended dosage. D. It pulled all Tylenol products off the shelf until it could be sure it wasn't causing problems for consumers. E. It changed its packaging to reflect the new standards.

Policing potential violations of human rights and child labor laws is an important component of A. planning. B. implementation. C. the mission statement. D. control. E. social responsibility.