Chapter 3 - Social Responsibility and Ethics

Question 1

Social Profit

Answer 1

The benefit an organization and society receive from the organization’s ethical practices, community service, efforts to promote cultural diversity, and concern for the natural environment.

Question 2

Business Ethics

Answer 2

• Rules of conduct for an organization - they guide a firm’s behavior.
• First step toward creating social profit.

Question 3

Codes of Ethics

Answer 3

Written standards of behavior to which everyone in the organization must subscribe.

Question 4

Consumerism

Answer 4

A social movement that attempts to protect consumers from harmful business practices.
- Gives consumers greater protection from big businesses.

Question 5

Consumer Bill of Rights

Answer 5

The rights of consumers to be protected by the federal government.

• Right to be safe.
• Right to be informed.
• Right to be heard.
• Right to choose freely.
  2. Privacy and 6. Clean Environment Came later

Question 6

Discriminatory Pricing

Answer 6

A pricing practice in which different customers are charged different prices.

Question 7

Corrective Advertising

Answer 7

Advertising that clarifies or qualifies previous deceptive advertising claims.

Question 8

Puffery

Answer 8

Claims made in advertising of product superiority that cannot be proven true or untrue.

Question 9

Slotting Allowance

Answer 9

A fee paid by a manufacturer to a retailer in exchange for agreeing to place products on the retailer’s shelves.

Question 10

Social Responsibility

Answer 10

A management practice in which organizations seek to engage in activities that have a positive effect on society and promote the public good.

Question 11

Environmental Stewardship

Answer 11

A position taken by an organization to protect or enhance the natural environment as it conducts its business activities.

Question 12

Green Marketing

Answer 12

A marketing strategy that supports environmental stewardship by creating an environmentally founded differential benefit in the minds of consumers.

Question 13

Cause Marketing

Answer 13

Marketing activities in which firms seek to have their corporate identity linked to a good cause though advertising, public service, and publicity.
- Marketing socially responsible causes.

Question 14

Cultural Diversity

Answer 14

• A management practice that actively seeks to include people of different sexes, races, ethnic groups, and religions in an organization’s employees, customers, suppliers, and distribution channel partners.
• AFFIRMATIVE ACTION - certain groups that may not have equal opportunity should get equal opportunity. May need to be given some market segment advantages, and quotas need to be decided.

Question 15

Quality

Answer 15

The level of performance, reliability, features, safety, cost, or other product characteristics that consumers expect to satisfy their needs and wants.

Question 16

Total Quality Management (TQM)

Answer 16

A management philosophy that focuses on satisfying customers through empowering employees to be an active part of continuous quality improvement.

Question 17

ISO 9000

Answer 17

Criteria developed by the International Organization of Standardization to regulate product quality in Europe.
- Established voluntary standards for quality management (conform to customer’s requirements)

Question 18

ISO 14000

Answer 18

Standards of the International Organization of Standardization concerned with “environmental management” aimed at minimizing harmful effects on the environment.

Question 19

Corporate Culture

Answer 19

The set of values, norms, and beliefs that influence the behavior of everyone in the organization.

• Risk-Taking Cultures
• Profit-Centered vs. People-Centered Cultures

Question 20

Business Cylce

Answer 20

The overall patterns of change in the economy that affect consumer and business purchasing power.

• Prosperity - high levels of demand, employment, and income.
• Recession - falling demand, employment, and income.
• Recovery - gradual improvement
• Depression
• Inflation - prices and cost of living rise, while money loses it’s purchasing power.

Question 21

Consumer Confidence

Answer 21

An indicator of future spending patterns as measured by the extent to which people are optimistic or pessimistic about the state of the economy.

Question 22

Competitive Intelligence (CI)

Answer 22

The process of gathering and analyzing publicly available information about rivals.

Question 23

Discretionary Income

Answer 23

The portion of income people have left over after paying for the necessities such as housing, utilities, food, and clothing.

Question 24

Product Competition

Answer 24

When firms offering different products compete to satisfy the same consumer needs and wants.

Question 25

Brand Competition

Answer 25

When firms offering similar goods or services compete based on their brand’s reputation or perceived benefits.

Question 26

Monopoly

Answer 26

A market situation in which one firm, the only supplier of a particular product, is able to control the price, quality, and supply of that product.
- The gov’t attempts to limit monopolies by presenting violations of antitrust legislation.

Question 27

Oligopoly

Answer 27

A market structure in which a relatively small number of sellers, each holding a substantial share of the market, compete in a market with many buyers.

Question 28

Monopolistic Competition

Answer 28

A market structure in which many firms, each having slightly different products, offer unique consumer benefits.

Question 29

Perfect Competition

Answer 29

A market structure in which many small sellers, all of whom offer similar products, are unable to have an impact on the quality, price, or supply of a product.

Question 30

Patent

Answer 30

Legal documentation granting an individual or firm exclusive rights to produce and sell a particular invention.

Question 31

Demographics

Answer 31

Statistics that measure observable aspects of a population, including size, age, gender, ethnic group, income, education, occupation, and family structure.

Question 32

Social Responsibility

Answer 32

To act in the interest of an organization and it’s stakeholders as well as society.

Question 33

Stakeholders

Answer 33

• Customers
• Owners
• Managers
• Suppliers
• Employees
• Creditors
• Community
• Government

Question 34

Types of Social Responsibility

Answer 34

1. Economic (revenue and making money)
2. Legal (make money legally)
3. Ethical (do things ethically)
4. Discretionary (highest level. Doing things because you want to benefit other people)

Question 35

Who is most responsible to society?

Answer 35

Consumers

Question 36

CPSC

Answer 36

• Consumer Product Safety Commission

- Protects from potentially hazardous products.

Question 37

EPA

Answer 37

• Environmental Protection Agency

- Aimed at protecting the environment.

Question 38

FCC

Answer 38

• Federal Communications Commission

- Regulates phone, radio, and TV

Question 39

FTC

Answer 39

• Federal Trade Commission

- Enforces laws against deceptive advertising and product-labeling regulations.

Question 40

FDA

Answer 40

• Food and Drug Admin.

- Regulations and laws on food, drugs, cosmetics and veterinary products.

Question 41

ICC

Answer 41

• Interstate Commerce Commission

- Regulates interstate bus, truck, rail, and water operations.

Question 42

Social Dilemma Theory

Answer 42

• I sacrifice, I lose. All sacrifice, all ?
• If you get energy going for all, people join the cause.
• Demonstrate that 1. the goal will be met and 2. the majority will participate.
• When asked to sacrifice, most reject.