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Indicate whether the statement is true or false.
1. Although openness is not the solution to ethics issues, it does create trust and facilitates learning relationships.
a. True
b. False
2. An individual can have a high income and very little wealth.
a. True
b. False
3. It is possible to improve ethical behavior in an organization by eliminating unethical persons and improving the
organization’s ethical standards.
a. True
b. False
4. Credit increases current buying power at the expense of future buying power.
a. True
b. False
5. Marketing ethics refers to principles and standards that define acceptable conduct in marketing.
a. True
b. False
6. Price fixing, predatory pricing, and failure to disclose the full price associated with a purchase are pricing activities that
do not result in ethical issues.
a. True
b. False
7. The total amount of disposable income is affected by the amount of taxes consumers pay.
a. True
b. False
8. An ethical issue is an identifiable problem, situation, or opportunity requiring an individual to choose from among
several actions that must be evaluated as right or wrong.
a. True
b. False
9. An individual’s after-tax income is called his or her discretionary income, which is used for spending and/or saving.
a. True
b. False
10. The Sherman Antitrust Act, along with several other laws, is a procompetitive law because it was created to preserve
competition.
a. True
b. False
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11. All members of an industry are bound to follow trade association guidelines.
a. True
b. False
12. If a person has buying power, he or she is influenced only by a product’s absolute price.
a. True
b. False
13. When marketing activities deviate from accepted standards, the exchange process can break down, resulting in
customer dissatisfaction, lack of trust, and lawsuits.
a. True
b. False
14. Credit increases future buying power.
a. True
b. False
15. State and local regulatory agencies usually do not establish and enforce regulations that conflict with the actions of
national regulatory agencies.
a. True
b. False
16. A recession is characterized by extremely high unemployment, very low wages, minimal total disposable income, and
lack of consumer confidence in the economy.
a. True
b. False
17. Under President Kennedy’s consumer bill of rights, consumers must have access and opportunity to review all relevant
information about a product before buying it.
a. True
b. False
18. There is no evidence that being socially responsible and ethical is worthwhile.
a. True
b. False
19. Three important factors that influence ethical decisions in marketing are individual factors, organizational factors, and
opportunity.
a. True
b. False
20. Marketing ethics relates to individual and group evaluations about what is right or wrong in a particular marketing
decision-making situation; social responsibility deals with the total impact of marketing decisions on society.
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a. True
b. False
21. The Food and Drug Administration influences marketing activities the most.
a. True
b. False
22. Marketing ethics goes beyond legal issues, although ethical disputes must sometimes be resolved in court.
a. True
b. False
23. An organization’s obligation to maximize its positive impact and minimize its negative impact on society is known as
social accountability.
a. True
b. False
24. Four dimensions of social responsibility are economic, legal, ethical, and philanthropic.
a. True
b. False
25. It is easy to distinguish between legal and ethical issues.
a. True
b. False
26. To resolve a social responsibility issue, it is helpful to check with concerned consumer groups and industry or specific
company policy regarding the activity.
a. True
b. False
27. Codes of conduct (ethics) are formalized rules and standards that describe what the company expects of its employees
in terms of ethical behavior.
a. True
b. False
28. If an ethical (or social responsibility) issue can withstand open discussion and result in agreements or limited debate, it
is not really an ethical (or social responsibility) issue.
a. True
b. False
29. If a person is rewarded for developing a deceptive advertisement, he or she probably will not engage in such behavior
in the future.
a. True
b. False
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30. Personal computers and cellular phones are technology.
a. True
b. False
31. An increasingly diverse cultural base in the United States means that marketers face increasingly diverse consumer
markets.
a. True
b. False
32. Monitoring the competitive environment guides marketers in developing competitive advantages.
a. True
b. False
33. Changes in general economic conditions affect (and are affected by) supply and demand, buying power, willingness to
spend, consumer expenditure levels, and intensity of competitive behavior.
a. True
b. False
34. According to research, only a small percentage of consumers have a more positive opinion of an organization when it
supports causes they care about.
a. True
b. False
35. Firms always adopt and use new technology.
a. True
b. False
36. Political forces are beyond the control of marketers, and so they can only react to them.
a. True
b. False
37. Companies should promote individuals prone to misconduct to management positions.
a. True
b. False
38. At the most basic level of marketing citizenship, marketers have an obligation to contribute funds to philanthropic
causes.
a. True
b. False
39. Any time an activity causes managers or consumers to feel manipulated or cheated, a marketing ethics issue exists,
regardless of the legality of that activity.
a. True
b. False
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40. Marketing citizenship refers to an organization’s obligation to maximize its positive impact and minimize its negative
impact on society.
a. True
b. False
41. Disposable income is used to pay taxes, spend, and save.
a. True
b. False
42. Many laws that directly influence marketing activities were enacted either to preserve a competitive atmosphere or to
protect consumers.
a. True
b. False
43. A monopoly exists when a firm with many potential competitors attempts to develop a marketing strategy to
differentiate its products.
a. True
b. False
44. The major forces that make up the consumerism movement are consumer organizations and business organizations.
a. True
b. False
45. To achieve their objectives, consumer advocates write letters to companies, lobby government agencies, broadcast
public service announcements, and boycott companies whose actions they deem irresponsible.
a. True
b. False
46. Marketing ethics concerns the impact of an organization’s decisions on society, whereas social responsibility relates to
individual decisions.
a. True
b. False
47. The Council of Better Business Bureaus and the FTC make up the National Advertising Review Board (NARB).
a. True
b. False
48. Although numerous regulatory forces arise from governmental sources, nongovernmental regulatory forces may also
affect marketing decisions.
a. True
b. False
49. A good example of a government regulatory group at the local level is the Better Business Bureau.
a. True
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b. False
50. Changes in cultural values have little effect on people’s needs for products.
a. True
b. False
51. Marketers’ contributions of resources to community causes such as education, recreation, and others illustrate social
responsibility on a community-relations level.
a. True
b. False
52. Political and legal forces in the marketing environment are highly interrelated.
a. True
b. False
53. There are few costs associated with being socially responsible and satisfying society’s demands.
a. True
b. False
54. Wealth is an accumulation of past income, natural resources and financial resources.
a. True
b. False
55. People learn values and principles through socialization by family members, social groups, religion, and formal
education.
a. True
b. False
56. Environmental analysis helps managers identify potential threats and opportunities linked to environmental changes.
a. True
b. False
57. Cause-related marketing refers to the specific development, pricing, promotion, and distribution of products that do
not harm the natural environment.
a. True
b. False
58. The major source of cultural values is the family.
a. True
b. False
59. Bribery is a pricing-related ethical issue.
a. True
b. False
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60. A recent U.S. Supreme Court decision has nullified federal laws that limited corporate contributions to political
campaign funds for specific candidates.
a. True
b. False
61. Employees can easily determine what behavior is acceptable even in organizations that do not have ethics compliance
programs and policies on conduct.
a. True
b. False
62. Marketing ethics and social responsibility mean the same thing.
a. True
b. False
63. Technology can help marketers become more productive.
a. True
b. False
64. Brand competitors market products with similar features, benefits, and prices to the same customers.
a. True
b. False
65. A marketer’s failure to inform customers about changes in the quality of its products does not constitute an ethical
issue.
a. True
b. False
66. Pure competition is a common competitive environment.
a. True
b. False
67. Technology affects the types of products offered to consumers.
a. True
b. False
68. An oligopoly exists when a firm offers a product that has no close substitutes, making the firm the sole source of
supply.
a. True
b. False
69. Technological developments have a direct impact on creating and maintaining a marketing mix.
a. True
b. False
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70. Opportunity is a favorable set of conditions that limit barriers or provide rewards.
a. True
b. False
71. Because of overlapping areas of responsibilities of regulatory agencies, confusion and conflict regarding jurisdiction
of marketing activities are common.
a. True
b. False
72. A bribe offered to benefit an organization is generally considered acceptable.
a. True
b. False
73. Technology is the application of knowledge and tools to solve problems and perform tasks more efficiently.
a. True
b. False
74. Fraud and antitrust violations are the most frequently sentenced organizational crimes.
a. True
b. False
75. Numerous self-regulatory programs have been created to stop or stall the development of laws and government
regulatory groups that would regulate marketing practices.
a. True
b. False
76. Pressures to substitute inferior materials to reduce costs may result in product-related issues.
a. True
b. False
77. The right to be informed means that consumers should be treated fairly when they complain to marketers about their
products.
a. True
b. False
78. The strength of one’s buying power depends partially on the state of the economy.
a. True
b. False
79. Wealth enables consumers to gain buying power.
a. True
b. False
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80. The three major components of sociocultural forces are demographic and diversity characteristics, cultural values, and
consumerism.
a. True
b. False
81. Technological changes do not directly affect what, how, when, and where products are marketed.
a. True
b. False
82. If political officials have positive feelings toward particular firms or industries, they are less likely to create or enforce
laws and regulations that are unfavorable for business organizations.
a. True
b. False
83. The number of firms that control the supply of a product may affect the strength of competition.
a. True
b. False
84. All marketers interpret laws and regulations conservatively and strictly to avoid violating a vague law.
a. True
b. False
85. Top management sets the ethical tone for the entire organization.
a. True
b. False
86. Employees, coworkers, or superiors do not influence the ethical decision-making process.
a. True
b. False
87. The number of single men and women living alone is declining.
a. True
b. False
88. For a given level of buying power, the larger the family, the greater the willingness to spend.
a. True
b. False
89. An organization can rid itself of “bad apples” through screening techniques and enforcement of its code of conduct.
a. True
b. False
90. Single people have quite different spending patterns than couples and families with children. They spend more heavily
on convenience foods, restaurants, travel, entertainment, and recreation.
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a. True
b. False
91. Environmental analysis is the process of collecting information about forces in the marketing environment.
a. True
b. False
92. It is not important to consistently enforce standards and impose penalties or punishment on those who violate codes of
conduct.
a. True
b. False
93. Social responsibility is an organization‘s obligation to maximize its positive impact and minimize its negative impact
on society.
a. True
b. False
94. Product competitors provide very different products that solve the same problem or satisfy the same basic customer
need.
a. True
b. False
95. A factor that affects willingness to spend is general economic conditions.
a. True
b. False
96. Codes of conduct (ethics) must be detailed enough to take every situation into account.
a. True
b. False
97. Through technology assessment, managers try to foresee the effects of new products and processes on the firm’s
operations and on society.
a. True
b. False
98. Manipulating a product’s availability for purposes of exploitation and forcing intermediaries to behave in a specific
manner are ethical issues in distribution.
a. True
b. False
99. The proportion of the U.S. population that will be over 65 years of age is expected to decline by the year 2050.
a. True
b. False
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100. If other persons within an organization approve of an activity and the activity is legal but not customary in the
industry, the activity is probably both ethical and socially responsible.
a. True
b. False
101. The more a person is exposed to unethical activity in the organizational environment, the more likely it is that he or
she will behave unethically.
a. True
b. False
102. Decreases in taxes lead to decreases in disposable income.
a. True
b. False
103. The marketing environment consists of external forces that directly or indirectly influence an organization’s
acquisition of inputs and generation of outputs.
a. True
b. False
104. Strategic philanthropy involves linking a firm’s products to a particular social cause on a sort-term basis.
a. True
b. False
105. Open communication and coaching on ethical issues are essential to nurturing ethical conduct in marketing.
a. True
b. False
Indicate the answer choice that best completes the statement or answers the question.
106. Tasha recently changed employers within the same industry. At her old company, employees routinely took home
company pens, pencils, paperclips, and note pads, and they frequently made personal long-distance calls on company
phones. Tasha observes that employees do not engage in such practices at her new company. What Tasha sees is best
described as a difference in
a. significant others.
b. profit objectives.
c. corporate culture.
d. legal climate.
e. corporate goals.
107. Socially responsible business practices have provided all of the following benefits except
a. creating goodwill toward the organization.
b. attracting employees.
c. reducing marketing costs.
d. generating publicity for the firm.
e. positively impacting local communities.
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108. What national self-regulatory organization screens ads?
a. Federal Advertising Review Division
b. National Advertising Review Board
c. Federal Communications Commission
d. Consumer Federation of America
e. Better Business Bureau
109. The Lazy-Boy Furniture Company collects information about a wide variety of competitive, economic, political,
legal and regulatory, technological, and sociocultural forces that affect its marketing activities. This process is called
a. environmental scanning.
b. survey of environment.
c. marketing.
d. environmental analysis.
e. marketing information processing.
110. Wes Springer is a sales representative with a pharmaceutical company and routinely takes donuts, bagels, cupcakes,
or other bakery items to physician offices as part of his efforts to create strong relationships with customers. Wes has an
expense account and is encouraged to utilize these types of efforts to enhance his relationship with the receptionist, office
manager, and others within the physician’s office that might assist him in gaining access to the physician. However, Wes
was recently contacted by his accounting office who had reviewed his expense report and receipts for entertainment
expenses. They questioned a charge he had made with Sprinkles Cupcakes at 8 p.m. on a Saturday evening. They were
concerned about this purchase since most physician offices are closed on the weekend. Depending upon the reason for this
expense, Wes could face an ethics examination for this purchase if it was not for business purposes. The oversight of the
sales representative’s accounting office that caught the potential false expense is an important element to influence the
_____ factor of ethical decision-making.
a. opportunity
b. corporate culture
c. individual values
d. supervisory
111. All of the following are factors that influence the ethical decision-making process except
a. opportunity.
b. individual factors.
c. organizational culture.
d. organizational pressure.
e. salary or wages.
112. Nabisco learned that health-conscious consumers preferred lower fat snack and lower-carbohydrate foods. At the
same time, the firm saw sales of such products slumping and was careful not to launch any new varieties of these products
for a while. Which of the following best describes Nabisco’s action?
a. Environmental scanning
b. Environmental marketing
c. Demarketing
d. Segmentation
e. Environmental analysis
113. Consumerism is a
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a. diverse group of individuals and organizations opposed to foreign producers that sell products in the United States
that are much cheaper than those produced by U.S. manufacturers.
b. social movement that is trying to encourage consumer satisfaction.
c. social movement that is reorganizing the Council of Better Business Bureaus.
d. diverse group of individuals and organizations attempting to protect the rights of consumers.
e. social movement that provides consumers with means for expressing satisfaction and expressing their gratitude to
producers.
114. Which of the following are the most frequently sentenced organizational crimes?
a. False advertising and price discrimination
b. Price discrimination and fraud
c. Fraud and antitrust violations
d. Price fixing and antitrust violations
e. Fraud and price fixing
115. Your marketing team has started the analysis of your company’s marketing environment. Competition has been very
intense in recent years in your industry, so you decide to place more emphasis on analyzing the competitive forces in your
industry. You group your competitors into the four types that a firm normally faces.
In general, which one of the four types of competitors do you think will be the most formidable for your company?
a. Total Budget Competitors
b. Features-Oriented Competitors
c. Brand Competitors
d. Generic Competitors
e. Product Competitors
116. The four major competitive structures are
a. monopolies, oligopolies, oligopolistic monopolies, and pure competition.
b. pure competition, heavy competition, moderate competition, and light competition.
c. brand, product, total budget, and generic.
d. oligopolies, monopolies, monopolistic competition, and pure competition.
e. monopolies, limited competition, oligopolistic competition, and pure competition.
117.
At the beginning of each of your marketing strategy team meetings, each team member gives a presentation on the current
status of a key force in your company’s marketing environment. The following brief presentations were given by your
team members:
1. John’s presentation focused on the competitive forces in your industry.
2. Karen’s presentation focused on the internal dynamics in your company.
3. Brandon’s presentation focused on the political events emanating from Washington D.C.
4. Susan’s presentation focused on what is driving the technology changes happening in the country.
5. Beverly’s presentation focused on the most recent economic projections issued by the Federal Reserve Bank of
New York.
After reviewing the presentations, you can conclude that
a. Beverly spoke about the economic forces and Karen spoke about the political forces in the marketing
environment.
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b. Brandon spoke about the sociocultural forces and Susan spoke about the technological forces in the marketing
environment.
c. John spoke about the competitive forces and Karen spoke about the political forces in the marketing environment.
d. Beverly spoke about the economic forces and Susan spoke about the technological forces in the marketing
environment.
e. Karen spoke about the political forces and Brandon spoke about the legal and regulatory forces in the marketing
environment.
118. Honeybees are disappearing at an alarming rate and since they pollinate about a third of all foods we eat, it is an
important concern. That’s why Haagen-Dazs launched a microsite to increase the awareness of the issue. In addition, it
launched a “Twitcause” campaign on Twitter, raising $7,000 in 2 days. This example illustrates the positive consequences
of
a. social responsibility.
b. corporate benevolence.
c. green marketing.
d. ethical responsibility.
e. economic responsibility.
119. ____ ethical issues generally surface when companies fail to disclose risks associated with a product or information
regarding its function, value, or use.
a. Promotion-related
b. Distribution
c. Corporate
d. Product-related
e. Safety
120. The Classic Hotel Group has begun to offer entire floors of rooms in its hotels that are smoke-free, adults-only, and
pet-friendly. The Classic Hotel Group is responding to changes in
a. customer demands.
b. the legal environment.
c. demographics.
d. cultural values.
e. cultural diversity.
Scenario 3.2
Use the following to answer the questions.
Clayton Homes, a mobile home manufacturer since 1934, introduced its new i-House in 2007. The i-House is one of the
first of its kind, designed as an updated, modern version of the modular home, offered as a base home plus add-ons known
as “pods.” The base home is a one-bedroom, one-bath 734-square foot version at a price of around $80,000. There is also
a 1,000 square-foot version for around $100,000. All versions may add on the additional one-room pods as desired which
are shipped to your location and constructed on-site. The homes offer galvanized metal roofing, corrugated steel siding,
VOC-free paints, and a “butterfly” roof that collects rainwater. The i-House uses 30% less energy than a similar square-
foot home and offers “green” characteristics of solar panels, tankless water heaters, and low-flow faucets. In addition, it
comes with bamboo flooring, a renewable resource. The modular, pre-fabricated design offers endless options for creating
the customer’s home and its engineered building system cuts down on construction waste. Due to the “green effects” of
the i-House, the state governments have given it a tax abatement for any sales taxes.
121. Refer to Scenario 3.2. In what type of competitive structure is Clayton Homes most likely operating?
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a. Monopoly
b. Oligopoly
c. Monopolistic competition
d. Pure competition
e. Monopsony
122. Since most ethical choices pertaining to marketing decisions are jointly made, an organization must ensure the ____
reflects the organization’s values, beliefs and norms.
a. code of ethics
b. code of conduct
c. enforcement of ethical standards and screening techniques
d. employee self-regulation and screening procedures
e. organizational or corporate culture
123. It is possible to improve ethical behavior in an organization by
a. changing the employees’ individual moral philosophies.
b. increasing legislation aimed at unethical practices.
c. decentralizing authority and responsibilities in the firm.
d. offering ethics awareness training for managers and professionals in the organization.
e. improving the organization’s ethical standards and eliminating unethical persons.
124. The Federal Trade Commission (FTC) is an organization that plays a significant role in defining the principles and
standards that define acceptable conduct in the marketing, promotion and advertising of products and services in the
United States.
Which one of the following statements is true about the organization?
a. It is an industry-sponsored organization.
b. Its primary mission is to protect consumers and promote competition.
c. It is part of the judicial branch of the federal government.
d. It protects consumers by stopping unfair, deceptive or fraudulent practices in the job market.
e. It has the power and authority to directly enforce its rulings.
125. Which of the following is the best example of utilizing technology to improve consumer relationships?
a. Waiters recording orders on handheld computers
b. Surveying customers to determine their needs
c. Responding to changes in competitors’ prices
d. Introducing stringent package standards
e. Requiring dolphin-safe tuna
126. All companies have a responsibility to ____ so they can provide a return on investment to their owners and investors,
create jobs for the community, and contribute goods and services to the economy.
a. offer the lowest price
b. be profitable
c. obey their customers
d. provide the largest selection possible
e. pay employees more than minimum wage
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127. Ethical standards for acceptable conduct for a company should
a. be clearly dictated by top management and enforced by all management staff.
b. consider only the point of view of the customers and the employees.
c. reflect the desires of the company’s employees for a quality working environment.
d. be based on company, industry, government, customer, and society viewpoints.
e. be derived from federal, state, and local laws and regulatory agencies.
128. The U.S. government has implemented a number of laws over the years to ensure the U.S. economy remains fair,
competitive and free of monopolies.
One such law has the following characteristics:
• It is also a criminal law, and individuals and businesses that violate it may be prosecuted by the Department of
Justice.
• It imposes criminal penalties of up to $100 million for a corporation and $1 million for an individual.
• It doesn’t clearly prohibit mergers or interlocking directorates.
• It outlaws “every contract, combination, or conspiracy in restraint of trade.”
Which of the following laws is described by the characteristics described above?
a. The Hart-Scott-Rodino Act
b. The Clayton Act
c. The Sherman Act
d. The Robinson-Patman Act
e. The Federal Trade Commission (FTC) Act
Scenario 3.1
Use the following to answer the questions.
Meyers’ Sporting Goods, a national chain, has been doing business with Soljur Sports, a manufacturer of skateboards, for
several years. Recently, it came to the attention of Meyers’ financial director that the average cost per Soljur Sports
skateboard had substantially increased over that of the previous year. The financial director asked the marketing
department if they knew what the Soljur skateboards cost at competing sporting goods stores, to see if they too were likely
hit with a higher cost.
The marketing department found that the Soljur skateboards were priced at $15 less in the competing store than at
Meyers. The financial director found that Soljur Sports was selling a similar number of skateboards to one of Meyers’
competitors for $10 less per skateboard. The attorney for Meyers’ Sporting Goods immediately filed a complaint with the
Federal Trade Commission.
129. Refer to Scenario 3.1. If the Federal Trade Commission believes that Soljur Sporting Goods is acting in violation of
the law, the first move for the FTC is to
a. issue a cease-and-desist order.
b. issue a complaint stating that the business is in violation of the law.
c. seek a monetary penalty.
d. issue negative publicity about the company.
e. contact the sporting goods manufacturers association.
130. McDonald’s supports and funds Ronald McDonald houses for the families of terminally–ill children to stay in to be
near their loved ones. McDonald’s action demonstrates the fulfillment of ____ responsibility.
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a. legal
b. society
c. philanthropic
d. economic
e. ethical
131. Most marketers operate in a competitive environment of either
a. oligopoly or monopoly.
b. oligopoly or monopolistic competition.
c. oligopoly or pure competition.
d. monopoly or pure competition.
e. pure competition or monopolistic competition.
132. Jared Bledsoe hired Green Gardens, a local landscape firm to plant trees and shrubs in his front yard. The landscape
is beautiful when the company is done; however, in just a few days many of the plants begin to die. When Jared
complained to the manager of Green Gardens, the manager says that Jared must have done something to them that caused
the plants to die, such as overwatering them. Green Gardens doesn’t have any money-back guarantees. Jared is angry that
he can’t get a refund or replacement. At this time, Jared‘s best course of action would be to contact the
a. local Chamber of Commerce.
b. Federal Trade Commission.
c. Sherman Commission.
d. Better Business Bureau.
e. local Small Claims Court.
133. Consumer confidence and willingness to spend begins to increase during periods of ____, and marketers must remain
very flexible to make the necessary adjustments.
a. depression
b. prosperity
c. recovery
d. growth
e. recession
134. According to the textbook, a manager’s duties in an environmental analysis include
a. checking information for accuracy, resolving inconsistencies, and assigning significance to the findings.
b. observation and assessment.
c. conducting research, assessment, and reporting.
d. observation, market research, and fact finding.
e. checking the company database, conducting research, and reporting.
135. In a meeting with key personnel, Watson Corporation’s president speaks to the firm’s managers about social
responsibility in business today. He suggests that the key to being socially responsible is to
a. watch profit impacts very carefully.
b. maintain an updated code of ethics.
c. monitor changes and trends in society’s values.
d. carefully interpret all new legislation.
e. stay with present programs over the long run.
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136. The way to deal with ethical issues is proactively
a. right before the problem is made public
b. after the problem has received extensive media attention
c. immediately after the problem is discovered
d. when lawsuits are brought against the company
e. during the strategic planning process
137. In Europe, companies can voluntarily apply for a designation to indicate that their product is less harmful to the
environment than competing products. This label is known as the
a. Green Marketing Stamp.
b. Eco-label.
c. Forest Stewardship Seal.
d. Better Product Project.
e. Good Housekeeping Seal.
138. Which of the following actions is illegal?
a. Political officials influencing how much a government agency purchases and from whom.
b. Corporate contributions to candidates.
c. Corporate contributions to elected officials.
d. Political officials helping businesses secure foreign markets.
e. Paying political officials not to enforce a particular law.
Scenario 3.3
Use the following to answer the questions.
Hershey Foods was founded in the nineteenth century by Milton Hershey, who had a strong ethical value system⎯always
show integrity, be honest, and respect others. Hershey felt it was important to provide high-quality goods and services of
real value at competitive prices that provide an adequate return on investment. He also founded the Milton Hershey
School, operating today as a cost-free, private home and school dedicated to helping children with social needs and
limited resources. The company also focuses on environmental issues, such as reducing waste by 360,000 pounds
annually by redesigning Hershey’s Syrup caps. Hershey Foods has an ethics compliance program that includes a code of
ethics and training, guidelines for handling legal and ethical issues, an 800 number for assistance with ethical issues, and
support from supervisors and human resource managers in dealing with ethical issues. However, in the last few years,
Hershey has been criticized by several advocacy groups concerning the sourcing of its chocolate from West Africa where
many of the companies use child labor. While Hershey is the largest chocolate candy producer in America, it lags behind
other major chocolate producers with regard to certifying its chocolate as child labor-free.
139. Refer to Scenario 3.3. The fact that the Hershey company has recently reduced its waste by 360,000 pounds through
a packaging redesign is evidence of its focus on
a. a philanthropic culture.
b. an ethical culture.
c. social responsibility.
d. the legal climate.
e. the economic environment.
Scenario 3.5. The Consumer Financial Protection Bureau settled a claim with the Bank of America for deceiving
customers and unfairly billing them for services such as credit monitoring and identity theft protection. Bank of America
agreed to provide refunds to 2.9 million people and pay $45 million in fines for their illegal credit card practices. Their
deceptive practices dated to 2000 where they had billed customers for products such as “Privacy Guard” or “Privacy
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Assist” without first obtaining authorization for the products. The $45 million in fines includes $25 million as a civil
penalty that will be paid to the Office of the Comptroller of the Currency and $20 million to the Consumer Financial
Protection Bureau. The Bureau also claims that Bank of America deceived about 1.4 million customers into making about
$268 million in payments by, among other things, improperly telling them the first 30 days of coverage were free or the
benefits were greater than existed.
140. Refer to Scenario 3.5. Bank of America is interested in helping people understand their money and how to build
Better Money Habits™. They are working to connect customers, clients, employees and communities to the tools,
products, and education they need to help make their financial lives better. The Bank of America has partnered with Khan
Academy to launch BetterMoneyHabits.com where free content is available to anyone via a self-paced learning
experience to explain the complex concepts of financial matters. The partnership between Bank of America and Khan
Academy to provide financial literacy is an attempt by the company to:
a. engage in self-regulatory actions
b. comply with the Consumer Good Pricing Act
c. comply with the Sherman Antitrust Act
d. comply with the Nutrition Labeling and Education Act
141. In its advertisements, Regent Hair Care Products claims that its KLTR-14 gel will restore the hair of bald men. Even
though Regent shows supporting evidence in its ads, members of the National Advertising Review Board (NARB) believe
the claim is unsupportable. What action can the NARB take?
a. Force Regent to stop running the advertisement.
b. File a complaint with the Federal Trade Commission.
c. Fine Regent for each time the ad appears.
d. Sue Regent Hair Care Products in federal court.
e. Sue Regent Hair Care Products in state court.
142. After Home Depot gathers information related to its marketing environment, it attempts to define current
environmental changes and predict future changes. This determines possible opportunities and threats facing the company.
It illustrates the process that is called
a. environmental scanning
b. survey of environment.
c. marketing.
d. environmental analysis.
e. marketing information processing.
143. Which of the following statements about self-regulatory programs is false?
a. Self-regulatory programs are usually less expensive than governmental regulatory programs.
b. Self-regulatory programs’ guidelines generally are more realistic and operational.
c. Many nongovernmental self-regulatory programs have neither the tools nor the authority to enforce guidelines.
d. Self-regulatory guidelines generally are stricter than governmental regulatory programs.
e. When a trade association sets up industry guidelines, some firms that are in the industry but not in the trade
association do not follow the guidelines.
144. The American Heart Association has been using the campaign, Go Red for Women to raise awareness and education
about heart attack symptoms in women. Several companies including Merry Maids have partnered with the American
Heart Association and prominently display the logo on their product packaging. Merry Maids left each of their customers
a donation box to fill with coins and dollars with the campaign slogan “Raise the Roof” to support the American Heart
Association. In one month they raised over $100,000 in donations. Merry Maids’ “Raise the Roof” campaign illustrates a
practice known as
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a. cause-related marketing
b. sustainable marketing
c. philanthropy marketing
d. strategic philanthropy
145. The tobacco industry in the United States is dominated by three large companies. When any one of these companies
changes its price on tobacco products, the other two companies quickly adjust their prices to match it. From these
characteristics, the tobacco industry could best be described as
a. price sensitive.
b. opportunistic.
c. monopolistic competition.
d. an oligopoly.
e. a monopoly.
146. The Center for Responsive Politics publishes data about dollars spent on lobbying efforts by major companies,
industries and other entities seeking to influence Congressional legislation and the political process. The table below lists
the industries that spent the most money on lobbying activities in 2011 and 2013:
Lobbying Industry 2011 Spending 2013 Spending
Pharmaceuticals/Health Products $241,168,770 $226,114,456
Insurance $158,404,505 $153,235,759
Oil & Gas $150,771,677 $144,878,531
Computers/Internet $126,827,796 $141,226,592
Electric Utilities $145,610,040 $129,882,034
TV/Movies/Music $123,061,396 $118,336,958
Business Associations $106,490,640 $108,518,903
Securities & Investment $104,689,226 $98,342,423
Misc. Manufacturing & Distributing $118,520,754 $96,970,399
Hospitals/Nursing Homes $98,480,316 $91,879,521
Health Professionals $82,641,177 $85,003,284
According to this data, which one of the following statements is true?
a. Most of the top industries spent less on lobbying activities in 2013 compared to 2011.
b. Most of the top industries spent more on lobbying activities in 2013 compared to 2011.
c. The Computers/Internet and the Insurance industries both increased spending on lobbying activities from 2011 to
2013.
d. Hospitals and nursing homes spent more on lobbying activities in 2013 than in 2011.
e. Health professionals spent more on lobbying activities in 2011 than 2013.
147. Which of the following is a primary difference between cause-related marketing and strategic philanthropy?
a. Cause-related marketing is short term only while strategic philanthropy is an ongoing approach that lasts for years
or even decades.
b. Strategic philanthropy fulfills a firm’s primary social responsibilities while cause-related marketing does not.
c. Cause-related marketing is unlikely to have a positive effect on society while strategic philanthropy always
benefits society.
d. Strategic philanthropy can take on both a financial and nonfinancial format while cause-related marketing only
involves financial contributions.
e. Customers are likely to feel good about themselves when supporting a cause-related marketing campaign but are
unlikely to notice strategic philanthropy.