Chandler, Strategic Corporate Social Responsibility, 5e
SAGE Publishing, 2020
Chapter 7: Markets and Profit
Test Bank
Multiple Choice
1. The textbook argues that ______ is the most effective means to ensure the firm’s
long-term viability.
A. ensuring strong capital reserves
B. corporate social responsibility
C. innovation
D. marketing
2. Which of the following is true of Patagonia’s Product Lifecycle Initiative?
A. It encourages and supports governmental regulation of the clothing industry.
B. It emphasizes the importance of shareholder oversight of manufacturing processes.
C. It places primary responsibility for environmental stewardship on the CEO.
D. It consists of a mutual contract between the company and its customers to act
responsibly.
3. If we want the market to change, therefore, we are likely to be more successful if we
change the collective set of ______ that the market reflects.
A. rules
B. values
C. operations
D. ethics
4. Which of the following is NOT a component of Patagonia’s Product Lifecycle
Initiative?
A. reduce
B. repair
C. restructure
Chandler, Strategic Corporate Social Responsibility, 5e
SAGE Publishing, 2020
D. recycle
5. According to the textbook, the fact that one can buy a T–shirt for $5 in the United
States is due primarily to ______.
A. the accessibility of cheap cotton
B. marketing strategies of large apparel companies
C. consumer demand for $5 T-shirts
D. lack of concern for the workers who make T-shirts
6. One overall effect of the encroachment of the Internet and social media into every
aspect of our lives is to cause companies to ______.
A. lose control over the flow of information
B. gain greater control over the flow of information
C. establish significantly larger marketing budgets
D. increase profit sharing among primary stakeholders
7. According to the textbook, BP’s (British Petroleum’s) series of accidents might have
been prevented if ______.
A. the firm’s stakeholders had enforced their oversight
B. the firm had been appropriately managed
C. shareholders had a greater voice at annual meetings
D. the firm had hired an environmental management team
8. According to the textbook, economic value and social value are ______.
A. completely separate constructs
B. not completely separate constructs
C. best understood as shareholder values
D. changing most dramatically in bottom-of-the-pyramid (BOP) countries
9. The role of ______ is a significant reason for the supremacy of market forces.
A. profit
B. social value
C. stakeholders
D. shareholders
10. The textbook author argues that there is no distinction between ______ and social
problems.
A. economic problems
B. personal problems
C. stakeholder problems
D. shareholder problems
11. ______ is a more valuable focus than ______ in understanding value creation for
stakeholders.
A. Profit maximization; profit optimization
B. Profit optimization; profit maximization
C. Profit optimization; profit sharing
D. Profit sharing; profit maximization
12. The pursuit of ______ is characteristic of firms that are implementing strategic CSR.
A. short-term profits
B. medium–term profits only
C. medium- to long-term profits
D. long-term profits only
13. Unilever’s rethinking of refrigeration technology allows it to deliver ice cream in India
for just two cents per portion. This is an example of ______.
A. a company serving neglected customers
B. a company maximizing its profits
C. a company that cares about its customers
D. a company being socially responsible
14. A company that stirred controversy for marketing a product to “the next billion” that
is a luxury rather than a necessity is ______.
A. IBM
B. Amazon
C. KFC
D. L’Oréal
15. The bottom of the pyramid (BOP) refers to ______.
A. the largest sector of the four-tier pyramid used to represent the world’s population by
income
B. the section of the economy occupied by the wealthiest individuals
C. the smallest sector of the four-tier pyramid used to represent the world’s population
by income
D. the section of the economy that serves as the base for future economic development
16. By 2016, it is estimated that the richest 1% of the world’s population will own more
wealth than approximately ______ of the population.
A. 25%
B. 50%
C. 75%
D. 99%
17. From a strategic CSR perspective, the “next billion” represents ______.
Chandler, Strategic Corporate Social Responsibility, 5e
SAGE Publishing, 2020
A. a hugely untapped market segment
B. victims of globalization and modernization
C. an important source of cheap labor
D. a growing source of mineral resources
18. As an illustration of China’s economic revolution, in 1990, approximately two-thirds
of people in China lived in poverty. Today the figure is ______.
A. 32%
B. 22%
C. 12%
D. 2%
19. C. K. Prahalad argued that countries at the bottom of the pyramid ______.
A. deserve restitution from the colonial powers that historically exploited these countries
B. should work with the United Nations to develop health programs for their
impoverished people
C. will soon be more economically powerful than the United States, France, and
Germany combined
D. represent a huge and largely untapped market with many business opportunities
20. Prior to the work of C. K. Prahalad, the main way in which Western countries
provided aid to the Third World was to ______.
A. provide educational opportunities to the middle class
B. develop industrial manufacturing capabilities in large Third World cities
C. give materials such as surplus food and medical equipment to poor people
D. develop trading relationships with indigenous cultures
21. Cadbury’s business model includes ______.
A. expanding the company’s presence in the confectionary market in India into the
bottom of the pyramid by providing low-cost products
Chandler, Strategic Corporate Social Responsibility, 5e
SAGE Publishing, 2020
B. focusing primarily on wealthy, Western markets in which people can pay premium
prices for Cadbury products
C. marketing the company’s candy and confectionary products to all age groups
D. transitioning from confectionary products to basic hygiene products, such as soap
and toothpaste, that are necessary in bottom of the pyramid countries
22. The challenge we face as a society is to strike a balance between the part of our
standard of living that is formed from the ______ of goods and services and the part
that is formed from the ______ of goods and services.
A. production; consumption
B. regulation; control
C. monetizing; donation
D. control; freeing
23. ______ is working to deliver products that are both in demand and essential to
societal progress and human well-being.
A. Cadbury
B. Coca-Cola
C. Philip Morris
D. Unilever
24. ______, rather than ______, offers the best means for rapid social progress in the
developing world.
A. International aid; educational opportunity
B. Economic development; international aid
C. Health care; educational opportunity
D. Educational opportunity; technological infrastructure
25. ______ are the best hope for social progress in developing countries.
Chandler, Strategic Corporate Social Responsibility, 5e
SAGE Publishing, 2020
A. Educational institutions
B. For-profit firms
C. Health-care institutions
D. Transportation infrastructure improvements
26. Recognizing that many Indians could not afford to buy a big bottle of shampoo,
______ developed single-use packets that sell for a few cents, and now the company
sells 4.5 billion of them per year.
A. Johnson & Johnson
B. Colgate-Palmolive
C. Proctor & Gamble
D. Unilever
27. Unilever has committed itself to implementing ______ as a core component of
strategy and operations.
A. profit sharing
B. corporate social responsibility
C. shareholder activism
D. cause marketing
28. William Lever, one of the founders of Unilever, is known for ______.
A. promoting women in management positions
B. reducing the environmental impact of company products
C. sourcing agricultural materials sustainably
D. creating soap to encourage cleanliness and reduce infectious disease
29. In partnering with UNICEF on a handwashing campaign in Uganda, Unilever’s goal
is to sell Lifebuoy soap, while UNICEF’s goal is ______.
A. to show Ugandans market principles
B. to introduce Ugandans to other Unilever products
Chandler, Strategic Corporate Social Responsibility, 5e
SAGE Publishing, 2020
C. to enhance UNICEF’s reputation
D. to reduce infectious diseases
30. Which of the following is not a component of Unilever’s Sustainable Living Plan?
A. halve the environmental impact of its products
B. source 100% of agricultural raw materials sustainably
C. hire women in 50% of executive positions within the company
D. help more than 1 billion people improve their health and well–being
31. Which of the following can be considered a negative externality?
A. pollution caused in manufacturing a product
B. change in a political administration
C. changing demographics
D. globalization
32. ______ is central to the concept of strategic CSR.
A. Compassion in organizations
B. Profit generation
C. Focus on social problems
D. all of these
33. The idea of profit maximization is unhelpful because ______.
A. it distorts decision-making within the firm
B. it deemphasizes shareholder value
C. it distracts from profit optimization
D. it does not consider the needs of all of the firm’s stakeholders
34. According to the textbook, ______ are becomingly increasingly important in
developing countries for conducting business.
A. business school graduates
B. elements of technological infrastructure, such as fixed landlines
C. mobile phones
D. NGOs
35. If I buy a hybrid car like a Prius, one benefit that I receive is ______.
A. I show how well off I am
B. I show how persuasible I am
C. I show how environmentally conscious I am
D. I show how economical I am
36. Which of the following describes strategic CSR?
A. a theoretical exercise
B. a passive doctrine
C. a highly empowering approach
D. all of these
1. According to the textbook, stakeholders do not have it in their collective power to
shape which firms they want to populate the economy.
2. A significant reason for the supremacy of market forces is the pivotal role of profit.
3. The existence of profit is a prima facie indication that the business has succeeded in
producing something consumers want and value.
4. Prahalad argued that poor people in the developing world needed more educational
and health services provided by Western democracies.
5. Research has shown that consumers at the bottom of the pyramid (BOP) have
different aspirations than do other consumers.
1. Assuming a company found a profitable niche in serving the poorest 4 billion people
in the world, how might such a breakthrough help the firm sell to the developed world at
the top of the economic pyramid?
Ans: Varies. Good answers will emphasize the role of understanding all stakeholders
and the use of strategic CSR.
Cognitive Domain: Analysis
Answer Location: Social Progress
Difficulty Level: Medium
2. Is it OK for a for-profit company to profit from poverty? Why or why not?
Ans: Varies.
Cognitive Domain: Analysis
Answer Location: Social Progress
Difficulty Level: Medium
3. The $5 T-shirt is readily available today, and its existence has profound implications
for the type of society in which we live. Describe and analyze these implications.
Ans: Varies. Good answers should emphasize the centrality of consumption decisions in
relation to the existence of the $5 T-shirt.
Cognitive Domain: Analysis
Answer Location: Markets
Difficulty Level: Hard
4. Why is competition valuable? How does competition contribute to strategic CSR?
5. In your opinion, what was the primary cause of the BP oil company’s series of serious
accidents? In your response, you should explain whether or not stakeholders have it in
their collective power to shape the firms that they populate their economies.
Ans: Good answers should emphasize the failure of stakeholder oversight.
Cognitive Domain: Analysis
Answer Location: Markets | Stakeholders as Market Makers
Difficulty Level: Medium
6. Why is profit optimization a more useful focus for firms than profit maximization?
Ans: Good answers should describe the major challenges to the concept of profit
maximization.
Cognitive Domain: Analysis
Answer Location: Profit | Profit Optimization
Difficulty Level: Hard