Deck 7: Markets and Profit

Question 1

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

Answer 1

A

Question 2

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

Answer 2

B

Question 3

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

Answer 3

B

Question 4

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

Question 5

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

Question 6

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

Question 7

Which of the following is NOT a component of Patagonia's Product Lifecycle Initiative?

A)reduce
B)repair
C)restructure
D)recycle

Question 8

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

Question 9

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

Question 10

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

Question 11

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%

Question 12

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

Question 13

______ 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

Question 14

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

Question 15

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.

Question 16

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%

Question 17

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

Question 18

From a strategic CSR perspective, the "next billion" represents ______.

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

Question 19

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

Question 20

The role of ______ is a significant reason for the supremacy of market forces.

A)profit
B)social value
C)stakeholders
D)shareholders

Question 21

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

Question 22

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

Question 23

Prahalad argued that poor people in the developing world needed more educational and health services provided by Western democracies.

Question 24

______ 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

Question 25

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

Question 26

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

Question 27

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

Question 28

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

Question 29

______, 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

Question 30

According to the textbook, stakeholders do not have it in their collective power to shape which firms they want to populate the economy.

Question 31

______ are the best hope for social progress in developing countries.

A)Educational institutions
B)For-profit firms
C)Health-care institutions
D)Transportation infrastructure improvements

Question 32

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

Question 33

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
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

Question 34

A significant reason for the supremacy of market forces is the pivotal role of profit.

Question 35

______ is central to the concept of strategic CSR.

A)Compassion in organizations
B)Profit generation
C)Focus on social problems
D)all of these

Question 36

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

Question 37

Which of the following describes strategic CSR?

A)a theoretical exercise
B)a passive doctrine
C)a highly empowering approach
D)all of these

Question 38

The existence of profit is a prima facie indication that the business has succeeded in producing something consumers want and value.

Question 39

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
C)to enhance UNICEF's reputation
D)to reduce infectious diseases

Question 40

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

Question 41

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?

Question 42

Why is competition valuable? How does competition contribute to strategic CSR?

Question 43

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.

Question 44

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.

Question 45

Research has shown that consumers at the bottom of the pyramid (BOP) have different aspirations than do other consumers.

Question 46

Why is profit optimization a more useful focus for firms than profit maximization?

Question 47

Is it OK for a for-profit company to profit from poverty? Why or why not?