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Social Responsibility and Issue Intensity (Scenario)

question 39

Multiple Choice

Social Responsibility and Issue Intensity (Scenario)
Rick is president of a company that manufactures secondary wood products for the construction industry. Recently, there have been many reports of a plywood sub-flooring product that has been failing in a number of commercial locations, resulting in several complaints about ruined floor coverings and, in one instance, the partial collapse of a floor, which injured three people. The manager of research and development has asked marketing to stop selling the product while he runs some tests to determine the source of the problem. However, third-quarter earnings reports are due out in two weeks and public knowledge of problems concerning this lucrative product are likely to delay the financing of the company's expansion plans and cause stock prices to tumble. Rick has a dilemma. Should he continue to sell the product and delay research efforts in order to maintain the expansion plans, but risk causing more damage and injury? Or should he immediately stop sales of the product and run the necessary tests, thereby placing the expansion plans at risk and causing potential losses for the company's shareholders?
-The other three managers expressed concern that many more people could eventually be injured if the company did not quickly correct the problem.This relates to which determinant of issue intensity?

Definitions:

Callable Bonds

Bonds that the issuer has the right to redeem before their maturity date at a predetermined price.

Fiscal Year

A 12-month period used for bookkeeping, financial reporting, and tax purposes, which may not coincide with the calendar year.

Interest Payable

The amount of interest expense that has been incurred but not yet paid by a company on its borrowings.

Callable Bonds

Bonds that can be redeemed by the issuer before their maturity date at a predefined call price.