Business and Its Environment University

Business and Its Environment – Chapters 3, 4, 5 (News Media, Private Politics, Crisis Management)

60 questions

90 min

Answer key

Exam info

Subject: Business and Its Environment
Exam type: University
Questions: 60
Duration: 90 min
Answers: ✓ With explanations

Questions (60)

Q 1.
According to Baron's theory combining intrinsic audience interest and societal significance, how are news media coverage level and treatment most accurately differentiated?
- A.
  Coverage level depends more on societal significance, while treatment depends more on intrinsic audience interest.
- B.
  Both coverage level and treatment depend equally on the two variables.
- C.
  Coverage level depends more on intrinsic audience interest, while treatment depends more on societal significance.
- D.
  Both coverage level and treatment depend primarily on intrinsic audience interest.
Q 2.
A federal agency quietly updates standards for a widely used agricultural pesticide, affecting public health and food prices but rarely making headlines. According to Baron's theory, how would the news media most likely handle this issue?
- A.
  Provide no coverage because both intrinsic audience interest and societal significance are low.
- B.
  Provide extensive coverage with advocacy tone because both dimensions are high.
- C.
  Provide minimal coverage but interpret and analyze the issue in depth because societal significance is high even though audience interest is low.
- D.
  Provide frequent coverage as brief factual notes because audience interest is high even though societal significance is low.
Q 3.
Why might an NGO prefer to share a pre-packaged report with journalists rather than demand that journalists launch their own original investigation into the same subject?
- A.
  Because journalists demand entertainment value that only NGOs can produce.
- B.
  Because media organizations are forced to rely on relatively low-cost sources of information due to budget constraints.
- C.
  Because journalists are legally required to obtain information from NGOs.
- D.
  Because NGOs possess greater expertise than journalists in all areas of public interest.
Q 4.
An issue carries a sense of urgency, involves a celebrity endorser, includes public confrontation, and presents a strong human-interest dimension. According to the criteria Baron uses to extend the theory, this issue is best characterized as:
- A.
  Costly to cover and unlikely to attract media attention.
- B.
  Editorially balanced with little controversy.
- C.
  Highly newsworthy and likely to attract substantial coverage.
- D.
  Factually straightforward but socially insignificant.
Q 5.
Which of the following best describes the distinction among the four forms of media treatment identified in Baron's framework?
- A.
  They differ only in length, not in journalistic intent.
- B.
  They move progressively from mere description toward explicit recommendations and persuasion.
- C.
  They apply only to print media and not to television.
- D.
  They are mutually exclusive, so each story uses only one form.
Q 6.
In the General Motors case, NBC's Dateline segment reportedly placed a model rocket engine in a pickup truck to simulate an explosion during crash testing. The most accurate interpretation of GM's strategic dilemma is that:
- A.
  GM had no information to challenge NBC's claims and was legally prohibited from disclosing technical data.
- B.
  GM could pursue either a public strategy aimed at exposing NBC's staging or a private legal route, each with significant risks.
- C.
  GM's lawyers were certain that NBC's actions constituted criminal fraud and would lead to immediate conviction.
- D.
  GM was legally required to refrain from criticizing any media coverage.
Q 7.
Under U.S. defamation law as described in Baron's chapter, which statement most accurately distinguishes libel from slander?
- A.
  Libel applies to spoken statements and slander to written or broadcast statements.
- B.
  Libel applies to written or broadcast statements and slander to spoken statements.
- C.
  Both libel and slander apply only to spoken statements.
- D.
  There is no legal distinction between libel and slander in U.S. tort law.
Q 8.
The Sullivan ruling is most relevant to which type of plaintiff in a defamation case?
- A.
  Private individuals suing their neighbors.
- B.
  Corporations suing rival firms.
- C.
  Public figures suing the news media for false statements.
- D.
  Foreign governments suing U.S. news outlets.
Q 9.
Why does the news media resist being used as a public relations arm for firms?
- A.
  Because journalists profit directly from firms and wish to hide this conflict of interest.
- B.
  Because editorial independence is essential to the media's credibility and watchdog role.
- C.
  Because firms always offer false information.
- D.
  Because the law forbids any collaboration between firms and media.
Q 10.
Hewlett-Packard's media guideline advising executives to "speak in plain English" primarily serves the purpose of:
- A.
  Reducing legal liability for technically inaccurate statements.
- B.
  Avoiding jargon that could alienate audiences and reduce trust.
- C.
  Limiting the executive's responsibility to answer difficult questions.
- D.
  Helping the firm hide the complexity of its products.
Q 11.
The rise of blogs and social media most directly challenges traditional news media by:
- A.
  Eliminating the costs of news production entirely.
- B.
  Allowing citizens to bypass traditional gatekeepers and broadcast their own accounts of nonmarket issues.
- C.
  Making advertising the only revenue source for journalism.
- D.
  Replacing professional standards with corporate standards.
Q 12.
Which of the following best describes the "media vacuum" problem facing businesses?
- A.
  The tendency of media to fill stories with entertainment content instead of facts.
- B.
  The strategic risk of avoiding media contact in the hope that no story will appear.
- C.
  The natural tendency of media to go out of business when boycotts occur.
- D.
  The legal requirement that media maintain complete silence about lawsuits.
Q 13.
The News of the World scandal most fundamentally illustrates:
- A.
  The value of investigative journalism in exposing corporate misconduct.
- B.
  The risks of media organizations engaging in unethical reporting practices.
- C.
  The success of regulatory capture by powerful media owners.
- D.
  The benefits of close media-government relations in democracies.
Q 14.
Why do business executives commonly perceive media as harboring antibusiness bias?
- A.
  Because media outlets are primarily owned by corporations that compete with their subjects.
- B.
  Because coverage of conflict, controversy, and harm tends to dominate, giving disproportionate attention to criticism.
- C.
  Because journalists are required by law to publish only negative stories about firms.
- D.
  Because business executives consistently commit unethical acts.
Q 15.
The media watchdog role and the "megaphone" function differ primarily in that:
- A.
  The watchdog role seeks to publicize firm wrongdoing, while the megaphone function amplifies any issue activists raise regardless of merit.
- B.
  Both functions are identical in purpose and effect.
- C.
  The watchdog role is enforced by law, while the megaphone function is voluntary.
- D.
  The megaphone function reduces costs of collective action by broadcasting activist messages to mass audiences.
Q 16.
The ethical ideal of balance and fairness is difficult to achieve in nonmarket reporting primarily because:
- A.
  Most nonmarket issues involve only one side with no controversy.
- B.
  Nonmarket issues are inherently complex, but media operate under severe time and space constraints.
- C.
  Audience interest is always higher for one side of the issue.
- D.
  Firms are required by law to be excluded from coverage.
Q 17.
Television interviews give media disproportionate power relative to business executives because:
- A.
  Executives are always less articulate than journalists.
- B.
  Audiences only trust video content over written coverage.
- C.
  Media control the editing process and can select which clips best serve the story they want to tell.
- D.
  Executives are legally prohibited from preparing notes in advance.
Q 18.
The "worst offender" targeting strategy would most likely be chosen by activists when:
- A.
  The industry has only one firm and symbolic value is unnecessary.
- B.
  The goal is to demonstrate that their demands are unreasonable.
- C.
  They want a high-profile target whose behavior change will set industry-wide norms.
- D.
  They have no interest in media attention for their cause.
Q 19.
By lowering the costs of mobilizing supporters, the news media primarily enable activists to:
- A.
  Reduce the legal penalties for protest activities.
- B.
  Coordinate collective action and bring nonmarket issues onto public agendas more efficiently.
- C.
  Eliminate the need for any formal organization among activist groups.
- D.
  Replace direct lobbying of governments with private lawsuits.
Q 20.
Which of the following expectations would most directly violate the principle of media independence described in Baron's chapter?
- A.
  A media outlet giving equal coverage to opposing sides of a controversy.
- B.
  A firm expecting journalists to share story drafts for pre-publication approval.
- C.
  An NGO funding an independent journalistic investigation.
- D.
  A public official declining to comment on a story.
Q 21.
Which of the following is the most distinctive feature of private politics compared with public politics?
- A.
  Private politics focuses on changing firm behavior through social pressure rather than through government action.
- B.
  Private politics operates only in developing countries.
- C.
  Private politics always involves lawsuits against firms.
- D.
  Private politics is conducted exclusively by government regulators.
Q 22.
Which of the following best captures the difference between confrontational and cooperative private politics?
- A.
  Confrontational politics uses lawsuits exclusively, while cooperative politics uses dialogue.
- B.
  Cooperative politics occurs only when firms have nothing to lose.
- C.
  Confrontational politics applies public pressure, while cooperative politics works with firms on joint solutions, sometimes achieving more through synergies.
- D.
  The two strategies are identical in their goals and only differ in language.
Q 23.
The "good cop-bad cop" dynamic in private politics relies on the insight that:
- A.
  Firms prefer to negotiate with radical activists because radicals are easier to satisfy.
- B.
  Threat of confrontation from radicals makes cooperation with moderate NGOs appear more attractive by comparison.
- C.
  All NGOs are paid by the same source.
- D.
  Moderates and radicals always oppose each other without common goals.
Q 24.
When activists choose a target, "vulnerability" most accurately refers to:
- A.
  The target's lack of any consumer base.
- B.
  The degree to which the firm relies on reputation, brand image, or consumer goodwill that can be damaged.
- C.
  The geographic location of the target's headquarters.
- D.
  The target's unwillingness to communicate.
Q 25.
Activists often target symbolically important firms rather than the worst technical offenders primarily because:
- A.
  Legal action is only possible against symbolic firms.
- B.
  Success against a high-profile firm sends a signal to the entire industry.
- C.
  Symbolic firms always have worse practices.
- D.
  Audiences cannot relate to less famous companies.
Q 26.
The advocacy-science strategy most directly helps activists by:
- A.
  Generating media-friendly content with a veneer of objectivity.
- B.
  Bribing journalists to publish favorable coverage.
- C.
  Replacing the role of courts in deciding disputes.
- D.
  Fundraising exclusively for one political party.
Q 27.
When consumer boycotts arise in response to a company's practices, the motivation is best described as:
- A.
  Government enforcement.
- B.
  Self-interest combined with broader concerns about an issue.
- C.
  Strictly ideological with no personal stake.
- D.
  Random behavior with no underlying motivation.
Q 28.
The rise of digital and social media most significantly expanded private politics by:
- A.
  Eliminating activist organizations.
- B.
  Enabling viral mobilization and dramatically increasing the speed and reach of activist messaging.
- C.
  Making all firms equally vulnerable regardless of visibility.
- D.
  Removing the role of news media entirely.
Q 29.
According to Baron's discussion, why did activists encounter limits when pressuring certain firms through corporate campaigns?
- A.
  All firms were equally easy to pressure, so campaigns had no leverage.
- B.
  Some firms had low visibility or decentralized structures that diluted reputational consequences.
- C.
  Campaigns were illegal everywhere.
- D.
  Consumers were universally enthusiastic about corporate practices.
Q 30.
According to Baron, the first step a firm should take in addressing social pressure from activists is:
- A.
  Filing lawsuits against activist organizations.
- B.
  Issuing press releases denying wrongdoing.
- C.
  Assessing the activists' strength, motivations, and the likely consequences of their campaign.
- D.
  Immediately implementing all activist demands.
Q 31.
A firm is most likely to choose a challenging strategy toward activists when:
- A.
  The activists' demands reflect broad public concerns with overwhelming public support.
- B.
  The firm's actions are clearly illegal and indefensible.
- C.
  Demands are unreasonable, the firm has strong evidence, and challenging is likely to succeed.
- D.
  The activists are moderate and seek negotiation.
Q 32.
In the Nike case, Nike's establishment of a Labor Practices Department primarily reflects:
- A.
  A purely symbolic gesture with no operational substance.
- B.
  A cooperative response to activist pressure, including monitoring and upgrading subcontractor conditions.
- C.
  An attempt to evade regulatory inspection.
- D.
  A unilateral decision unrelated to private politics.
Q 33.
In the Brent Spar case, Shell's initial decision to pursue deep-sea disposal was contested by Greenpeace. Shell's eventual shift toward dialogue most directly illustrates:
- A.
  That firms never have legitimate operational choices.
- B.
  How sustained confrontational pressure can push firms toward cooperative engagement with moderates.
- C.
  That scientific disputes are always resolved in court.
- D.
  That government regulators forced Shell to change course.
Q 34.
According to Baron, why does greater intensity of radical activism increase the bargaining power of moderate NGOs willing to cooperate?
- A.
  Because radicals and moderates are paid by the same sponsors.
- B.
  Because radical pressure creates urgency that gives moderates a unique opportunity to offer firms a less costly exit from conflict.
- C.
  Because firms are required by law to negotiate only with moderates.
- D.
  Because moderates are less competent than radicals.
Q 35.
Which of the following most accurately contrasts public politics with private politics?
- A.
  Public politics relies on lawsuits; private politics relies on social campaigns.
- B.
  Public politics seeks to change laws and regulations through government, while private politics seeks to change firm behavior via social pressure without going through government.
- C.
  Public politics involves only corporations; private politics involves only NGOs.
- D.
  Public politics and private politics are identical.
Q 36.
Critics who characterize activist NGOs as "unelected and unaccountable" are most directly challenging:
- A.
  The economic profitability of activist groups.
- B.
  The legitimacy that activist organizations claim in representing public interests.
- C.
  The corporate structure of NGOs.
- D.
  The international composition of NGO coalitions.
Q 37.
Industry-wide cooperative programs are sometimes criticized as lacking legitimacy primarily because:
- A.
  They are always illegal.
- B.
  They involve only firms and exclude other stakeholders, leading observers to doubt the depth of commitment.
- C.
  They are always more effective than government regulation.
- D.
  They are too transparent to be meaningful.
Q 38.
Which of the following best illustrates "decentralized" activist pressure?
- A.
  A single leader issuing a press release.
- B.
  Thousands of consumers independently choosing not to buy a firm's product.
- C.
  A courtroom filing.
- D.
  A government fine.
Q 39.
A firm facing sustained activist pressure might "change the boundaries of the organization" by:
- A.
  Disbanding the firm entirely.
- B.
  Outsourcing or relocating problematic activities so they fall outside the firm's direct accountability.
- C.
  Reducing advertising spend on related products.
- D.
  Lowering product prices.
Q 40.
According to Figure 4.1 in Baron's chapter, which of the following characteristics most directly contributes to a company's susceptibility to private politics?
- A.
  Low brand visibility and high switching costs for consumers.
- B.
  Strong brand name that can be damaged and consumer-facing products.
- C.
  Domestic-only operations with low public visibility.
- D.
  Vertically integrated supply chains in heavily regulated industries.
Q 41.
According to Baron's definition, a "crisis" is most accurately characterized as:
- A.
  Any minor business setback that affects quarterly profits.
- B.
  A situation in which harm to people, property, or the organization has occurred or is imminent.
- C.
  A scheduled public relations event.
- D.
  Any negative customer review.
Q 42.
The correct chronological order of stages in Baron's crisis management framework is:
- A.
  Resolution, identification, escalation, intervention.
- B.
  Identification, escalation, intervention, resolution.
- C.
  Escalation, identification, resolution, intervention.
- D.
  Intervention, identification, escalation, resolution.
Q 43.
The components "avoidance" and "preparedness" differ primarily in that:
- A.
  Avoidance involves no preparation, while preparedness involves no prevention.
- B.
  Avoidance focuses on preventing crises from occurring; preparedness focuses on being ready to respond when prevention fails.
- C.
  Both terms refer to the same activity under different names.
- D.
  Avoidance and preparedness apply only to large corporations.
Q 44.
Root cause analysis in crisis management aims primarily to identify:
- A.
  The single employee responsible for the crisis.
- B.
  The systemic processes, decisions, or conditions that allowed the crisis to occur.
- C.
  The journalist who first reported the crisis.
- D.
  The financial value of the crisis.
Q 45.
Effective crisis communication is most accurately described as:
- A.
  Denying responsibility until proof emerges.
- B.
  Combining speed, transparency, empathy, and accuracy to maintain stakeholder trust.
- C.
  Avoiding media contact entirely.
- D.
  Communicating only through legal counsel.
Q 46.
The rectification component of crisis response most directly involves:
- A.
  Issuing apology statements only.
- B.
  Stopping the source of harm, recalling products, and compensating affected parties.
- C.
  Reorganizing the marketing department.
- D.
  Preparing for the next quarterly report.
Q 47.
Johnson & Johnson's response to the 1982 Tylenol poisoning case became a model in crisis management because the firm:
- A.
  Denied the problem until forced by regulators to act.
- B.
  Conducted a nationwide recall, prioritized public safety, and communicated transparently, restoring trust.
- C.
  Blamed competitors for the tampering.
- D.
  Avoided media contact to control the narrative.
Q 48.
Exxon's handling of the 1989 Exxon Valdez spill is often cited as a cautionary tale primarily because:
- A.
  The company acted with great speed and transparency, minimizing damage.
- B.
  The response was slow and defensive, escalating reputational and regulatory damage.
- C.
  Exxon had no spill to manage.
- D.
  Exxon avoided media scrutiny entirely.
Q 49.
In the Mattel case discussed in Chapter 5, the root cause of the lead-paint recall was traced to:
- A.
  Mattel's direct purchase of unauthorized pigment.
- B.
  A subcontractor's decision to source unapproved pigment from a local supplier when the certified pigment ran out.
- C.
  Intentional contamination by Mattel executives.
- D.
  Consumer misuse of the toys.
Q 50.
BP's post-crisis reforms after the Deepwater Horizon spill most directly aimed to:
- A.
  Eliminate all future oil production.
- B.
  Rebuild safety culture and improve operational procedures to prevent recurrence.
- C.
  Reduce the company's tax liability.
- D.
  Increase marketing spend unrelated to safety.
Q 51.
When formulating a crisis response strategy, why must firms consider liability exposure?
- A.
  Because every statement made during a crisis automatically waives legal rights.
- B.
  Because admissions or communications can affect subsequent litigation, regulatory action, and stakeholder trust.
- C.
  Because liability is irrelevant to crisis management.
- D.
  Because firms are required by law to publicly disclose all legal arguments.
Q 52.
The primary purpose of a Crisis Management Team (CMT) is to:
- A.
  Replace all other corporate functions during a crisis.
- B.
  Provide predefined roles, decision rights, and coordination before, during, and after a crisis.
- C.
  Limit information flow to top executives only.
- D.
  Issue legal opinions to outside parties.
Q 53.
Crisis management programs typically include insurance coverage primarily to:
- A.
  Eliminate the need for any other crisis response activities.
- B.
  Mitigate the financial impact of crises that cannot be fully prevented.
- C.
  Guarantee positive media coverage.
- D.
  Replace crisis communication plans.
Q 54.
Post-crisis learning aims primarily to:
- A.
  Assign blame and terminate employees.
- B.
  Translate experience into systemic improvements in controls, training, and culture.
- C.
  Avoid discussing the crisis in the future.
- D.
  Limit external communications permanently.
Q 55.
Communication during a crisis is judged "effective" primarily when it is:
- A.
  Delayed until all facts are verified, regardless of public concern.
- B.
  Timely, accurate, empathetic, and aligned with stakeholder information needs.
- C.
  Restricted to a single press release.
- D.
  Designed primarily to deflect blame.
Q 56.
In Baron's crisis life cycle, the "before" phase is concerned mainly with:
- A.
  Communicating apologies.
- B.
  Preventing crises and preparing systems, training, and plans.
- C.
  Conducting litigation.
- D.
  Reducing product prices.
Q 57.
Johnson & Johnson's 1982 Tylenol recall involved recalling approximately how many capsules, at a cost of about $100 million?
- A.
  31,000
- B.
  31 million
- C.
  310 million
- D.
  3.1 billion
Q 58.
A widely accepted principle of crisis communication timing is that:
- A.
  Firms should delay all responses until lawsuits are filed.
- B.
  Early, honest acknowledgment of developing facts reduces speculation and protects credibility.
- C.
  Silence is always preferable to speaking.
- D.
  Responses should only follow competitor disclosures.
Q 59.
The Société Générale trading scandal of 2008 was primarily caused by:
- A.
  A coordinated team that evaded controls for years.
- B.
  A single rogue trader who circumvented internal controls over an extended period, resulting in massive losses.
- C.
  External hacking of trading systems.
- D.
  A natural disaster damaging trade settlements.
Q 60.
A firm seeking to recover its reputation after a crisis should most directly focus on:
- A.
  Demonstrating concrete corrective actions and improvements that reduce the likelihood of recurrence.
- B.
  Promising that no future problems will ever occur.
- C.
  Discontinuing all communications about the crisis.
- D.
  Attacking critics and shifting blame onto them.

Answers and explanations are in mode.