BUS 308 Exam 3 MC

A.

Well-being

After a set of toy jewelry is found to contain lead, the Consumer Product Safety Commission issues a recall and bans the sale of the product in the United States. This situation is an example of which ethical concept regarding marketing?

D.

Personal selling

How are most sales transactions completed?

B.

Deception involves false or misleading claims, while manipulation shapes perceptions.

What is a key difference between deception and manipulation?

A.

price-fixing.

Fun Toys 4 U and Castle Toys are competitors. The CEOs of both companies meet and agree to sell their products in different areas of the country to avoid competition. This situation is an example of

C.

price gouging.

When there is a temporary shortage of goods, such as water or lumber before a hurricane, there is a higher risk of

D.

with planned obsolescence.

Apple has been accused of designing the iPhone

D.

Collecting information unrelated to the study’s purpose

To test a new soft drink’s appeal, Janice runs a series of focus groups with various demographics. As part of the study, Janice asks each participant to complete an extensive questionnaire that includes questions about their current health and medical history. What is a potential ethical issue with Janice’s market research?

D.

They were both deceptive ads.

What is a key similarity between the Anacin and the L’Oreal ads described in the text?

B.

It relies on the ignorance of consumers.

An energy drink is high in caffeine and sodium but is low in calories. Ads promote it as a healthy drink for overweight Americans. Why would the Federal Trade Commission argue this is a deceptive ad?

B.

They both interfere with free choice.

What is a key similarity between subliminal messages and product placement in movies?

D.

It may limit personal freedom of choice.

What is the main concern of philosophers with advertising?

C.

marketing orientation.

Before going out with her friends, Lauranne spends a great deal of time applying make-up and practicing jokes. She wants to come off as popular and attractive, essentially selling herself to others. This situation is an example of

B.

They both were designed for a racial minority.

What was a key similarity between Uptown cigarettes and PowerMaster malt liquor?

B.

It can mislead users about the source of the information provided.

What is a main ethical concern with native advertising online?

B.

social advertising.

A wildlife refuge advertises its mission during the local news, hoping to generate more donations to support the animals. This situation is an example of

C.

personal sales.

Ethical issues with the sale of consumer financial products largely arise from the fact that the industry is based on

C.

deception.

Desmond, a stockbroker for a large firm, sells shares in a mutual fund by describing the large returns earned when the fund was investing in a different mix of companies. He omits this information and also does not discuss the potential risks of investing in the fund. This situation is an example of

C.

churning.

April is a broker for a large investment firm. She knows that one of her clients does not pay close attention to his statements, so she conducts excessive trades in his account in order to increase her commission. This situation is an example of

D.

unsuitability.

Although bonds are a better match for her client’s investment strategy, Francesca convinces the client to buy stocks. This situation is an example of

D.

efficiency and fairness.

The goal of market regulation is to attain a balance between

A.

Fraud is misrepresentation of facts, while manipulation alters appearances.

What is a key distinction between fraud and manipulation?

B.

Vulnerability

Steve agrees to buy stock in a newly formed technology company. He is informed that he has 21 days to cancel the transaction. This clause is designed to help counteract which factor of unequal bargaining power?

D.

The motive of those involved

One ethical issue with derivatives involves their use for speculation rather than protecting parties from potential changes in the market. What is a key factor in distinguishing speculation from legitimate hedging?

B.

The trading is based on non-public information.

What distinguishes insider trading from other types of trading?

C.

insider trading as fraud

In the United States, attempts to define ________ have resulted in theories focused on fairness and property rights for information.

B.

fairness.

In the United States, ProTech Computer executives find out some privileged information about a competitor’s release of a new and innovative product. They buy stocks in that company and make a great deal of money. The scandal is discovered and the executives are charged with having an advantage over the public. This situation is an example of how insider trading violates the principle of

A.

Who owns the information in question?

What key question defines the property rights theory regarding insider trading?

D.

hostile takeovers.

Acquisitions that are opposed by the management of the purchased company are known as

D.

Golden parachute

When Aydin agrees to be the CEO of Happy Soft Drinks, his contract includes a clause that if he is removed from the position, he will receive $10 million in compensation. This situation is an example of which defensive tactic against hostile takeovers?

D.

Greenmail

For the past several years, Martin has been buying up stock in Veggieland Groceries. He is now the majority stockholder and is primed to lead the way for a hostile takeover. Veggieland Groceries offers to buy back Martin’s stocks for more than he paid, thus giving him a large profit. This situation is an example of which defensive tactic to prevent hostile takeovers?

A.

They claim it is unrelated to the primary goal of making profits.

Why are many critics skeptical of corporate social responsibility (CSR)?

C.

Carroll argued that CSR is a continuum of responsibilities to society, while Sethi argued that CSR is a relative concept that changes over time.

What is a key difference between Archie B. Carroll’s and S. Prakash Sethi’s perspectives on corporate social responsibility (CSR)?

B.

Process

Crazy Coffee Corporation decides to survey all of its employees on whether they feel they are making a livable wage. This situation is an example of which element of corporate social performance?

C.

Classical

The idea that corporations exist primarily for economic purposes is a key tenet of the ________ view.

D.

Government should be able to make demands and place limits on corporations.

According to the classical view, what can be deduced about the role of the government and its relationship to businesses?

B.

Martin, an investor who owns 500 shares of the corporation

According to Friedman, a corporation is only obligated to serve the interests of one group. Who of the following exemplifies a member of this group?

C.

Being socially responsible is usually good business.

Which of the following is the core proposition for the business case for corporate social responsibility (CSR)?

C.

Consumers pressure a clothing distributor not to sell clothes made in a sweatshop.

Which of the following is an example of a purely market demand for corporate social responsibility (CSR)?

C.

Social responsibility gives companies an advantage only if consumers value CSR enough to let it influence their buying decisions.

How does the competitive advantage of corporate social responsibility (CSR) depend on the market for virtue?

C.

Both the company and society should benefit from the CSR program.

What principle of corporate social responsibility (CSR) should guide the design of a strategic CSR program?

D.

Popsy-Cola is aware of the potential environmental impact of its water use. It trains its employees on responsible water use and management and sets a goal to improve the local water conditions around its factories. The company partners with Clean Water America and donates Popsy-Cola bottled water to impoverished areas.

Which of the following is the strongest example of a strategic corporate social responsibility (CSR) program?

A.

Social reporting is less precise and standardized than financial reporting.

What is a key difference between financial reporting and social or ethical reporting?

A.

They can be either nonprofit or for-profit.

What is true about social enterprises?

A.

They both must earn enough revenue to cover expenses.

What is a key similarity between nonprofit and for-profit social enterprises?

A.

The capital can be used to innovate rapidly and effectively.

Andrew is interested in starting a company that provides small loans to impoverished people so that they can start their own company. He finds some investors who are willing to provide equity capital. What advantage does Andrew’s company gain by having outside investors?

C.

there is separation of ownership and de facto control.

Corporate governance issues arise mainly when

C.

They are both risk-adverse if there are no incentives to take chances.

When considering incentives for decision making, what is a key similarity between executives and employees?

D.

The shareholders control managers’ incentives through the board of directors.

Amanda is a shareholder for ProBrakes International. How do she and other shareholders ensure that the managers for ProBrakes act with the goal of turning a maximum profit?

A.

instrumental

Tina is a manager for Holiday Superstore. She studies stakeholder theory and applies the concepts to increase the store’s profits for the third quarter. This situation is an example of the ________ use of stakeholder theory.

A.

normative

Bernardo is a manager for Sour Yummies Candies. He uses stakeholder theory to understand how Sour Yummies Candies should treat all of its stakeholders, including customers, employees, investors, and the community. Bernardo’s understanding of stakeholder theory is an example of the ________ use of stakeholder theory.

A.

Financial reports

What is a corporation’s most effective defense against incompetence and criminal conduct?

B.

Have an independent audit of the existing records.

Melvin is the new CEO of Revin Cosmetics, and he wants to ensure that the company’s financial records are accurate. What should his first step be?

D.

They have the right incentives.

What is the key in ensuring that CEOs and other top executives are accountable?

B.

They are both ways to help hold CEOs accountable.

What is a key similarity between the threat of a takeover and a competitive labor market for CEOs?

A.

Criminal offenses are prosecuted by the state, while civil cases may be brought by individuals.

What is a key difference between criminal offenses and civil offenses?

B.

Ethics officer

Who is commonly tasked with ensuring compliance with a corporation’s ethics program?

A.

Determining a base fine

What is the first step when following the Federal Sentencing Guidelines for organizations that have been convicted of a crime?

D.

Create steps to ensure the violation does not happen again.

Priti is an accountant at a corporation with a strong ethics program. She finds that one employee has violated the generally accepted accounting principles (GAAP) by making improper entries. After she reports the violation and the employee is terminated, what should the company do?

C.

Code of conduct

Papers and Reams posted an employee handbook document in the breakroom that describes specific rules and standards for a variety of situations. This document is an example of which type of document?

B.

Corporate philosophy

An Internet start-up company that has developed a new type of search engine publishes a document that describes the general beliefs that guide the company. This document is an example of which type of document?

D.

Should MNCs follow local, host country ethical standards or apply home country standards everywhere?

What is the main ethical question concerning multinational corporations (MNCs)?

D.

Relativist

A pharmaceutical company has recently released a new vaccine that will help prevent a mosquito-borne illness. Because the illness is rare in the United States, advocates say that the vaccine should be given in a limited manner to Americans, but to the entire population of a developing, tropical nation. This situation is an example of which ethical position regarding multinational corporations (MNCs)?

B.

They are both examples of practices that are viewed differently in different cultures.

What is a key similarity between giving gifts for favors and whistleblowing when considering the ethics of multinational corporations (MNCs)?

A.

fundamental

Thomas Donaldson argues that multinational corporations (MNCs) must consider ________ rights.

B.

Right to some minimum level of education

Swift Shoes has been accused of using child labor in a developing country to produce its shoes. This situation is a violation of which fundamental right?

B.

Tax avoidance

Trina’s Ts is a multinational corporation (MNC) that has subsidiaries throughout the world. One subsidiary sells cotton to another subsidiary, both located in a developing nation. What is the ethical concern with this example of transfer pricing?

C.

Sweatshop conditions

What was the ethical charge against Nike in 1998?

A.

A legal minimum wage is not a living wage.

Orange, a clothing manufacturer, has a factory in Honduras. Orange pays the local legal minimum wage to its employees, but there are many protests. What is a likely cause for the protests against this practice?

B.

They are both arguments against using the market to determine wages.

What is a key similarity between the need for minimum standards and poor market conditions?

C.

No country permits bribery of its own officials.

What is true about bribery?

B.

bribery.

Luis, a manager for a local branch of a multinational corporation (MNC), agrees to hire an official’s son for an assistant manager position in order to gain approval of a necessary permit. This situation is an example of

B.

Altering local priorities

Manny, a government official in a developing nation, chooses to permit the building of a large, high-tech factory instead of a desperately needed hospital. He has been bribed by the builders of the complex. This situation is an example of which effect of bribery?

C.

human rights violations.

The raids in Russia that were conducted with the pretense of stopping software piracy—particularly piracy of Microsoft software—are an example of

B.

constructive engagement with repressive governments.

ABC Tech decides to open a factory in a developing country with a repressive government. Executives argue that the factory will provide good job opportunities for people who live in the area. This approach is an example of

B.

Management control over local operations

Dino Oil announces that it has decided to start drilling for oil in Thailand. Instead of hiring locals to manage the project, Dino Oil brings in executives from the United States. This situation is an example of which of Schermerhorn’s principles?