MGMT 445: Exam 1 (Chp1-6)
Terms
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- Ownership Theory of the firm
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Firm is the property of its owners.
Purpose: to make money for the owners - Stakeholder Theory of the firm
- Business is to create value for society. All Stakeholder interest must be taken into account. Corporations serve a broader purpose
- Define: Stakeholder
- Persons and groups that affect, or are affected by, an organization's decisions, policies, and operations.
- Define: Market Stakeholder
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Those that engage in Economic transactions with the company as it carries out it's primary purpose.
EX: Employees, Stockholders, Creditors, Suppliers, Customers, Retailers - Define: Non-Market Stakeholder
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Can affect, or are affected by a firm's actions, but have no direct economic exchange.
EX: Communities, Gov't, Activist Groups, Media, General Public - Define: Stakeholder Interests
- Essentialy, the nature of each group's stake.
- Define: Stakeholder Power
- the ability to use resources to make things happen
- What are the Four (4) Types of Stakeholder Power?
- Voting Power, Economic Power, Political Power, Legal Power
- What are the Four (4) Types of Corporate engagement with Stakeholders?
- Inactive, Reactive, Proactive, Interactive
- Define: Stakeholder Engagement
- Process of ongoing relationship building between a business and stakeholders
- What are the Six (6) Forces of Changing Societal Expectations?
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Changing Societal Expectations
Growing Emphasis on Ethical Value
Globalization
Evolving gov't regulation
Dynamic Natural Environment
Explosion of New Technology - Define: Public Issue
- An issue that is of concern to an org's stakeholders
- Define: Performance-Expectations Gap
- The Gap between stakeholder expectation and what an organization is actually doing.
- Define: Public Issue Life Cycle
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Four Phases: Changing Stakeholder Expectation,
Political Action,
Formal Gov't Action,
Legal Implementation - Define: Public Affairs Management
- Active management of a company's external relations
- Define: Issue Management
- Structured and systematic process to aid Orgs about public issues
- Steps of Issue Management Process
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Issue Identification
Issue Analysis
Policy Options
Program Design
Results - Define: Crisis Management
- Process Orgs use to respond to short-term and immediate crisis
- Define: Iron Law or Responsibility
- In the long run, those who do not use power in ways that society considers responsible will tend to lose it
- Define: Charity Principle
- Business should give voluntarily and to society's needy persons and groups
- Define: Stewardship Principle
- Business have an obligation to see that everyone benefits from their firm's actions.
- Define: Reputation
- Qualities associated with an org that may influence the the orgs relationships with its stakeholders
- What are the arguments for Corporate Social Responsiblity?
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Balances Corporate Power with Responsiblity
Discourages Gov't Regs
Promotes Long-Term Profits
Improves Business Value and Reputation - Define: Enlightened Self-Interest
- The interrelated social and economic value in loking toward the long term.
- What are the Arguments Against Corporate Social Responsiblity
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Lowers Economic Efficiency and Profits
Imposes Unequal Costs Among Competitors
Requires Social Skills that Business Lack
Places Responsiblity on Businesses rather than Individuals - Define: Legal Obligations
- Following laws and regulations, you maintain a minimum level of social responsiblity.
- Define: Corporate Citizenship
- Refers to Businesses acting responsibly toward their stakeholders
- What are the Four (4) steps of Corporate Citizenship?
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Proactively addressing business and society issues,
Building stakeholder partnerships,
discovering business opportunities through social strategic goals,
transforming a concern for fin. performance into a vision of corporate financial and social performance. - Define: Social Performance Audit
- Systematic evaluation of an organizations social and ethical performance
- Define: Triple Bottom Line
- Financial, Social, and Environmental Reports
- Define: Ethics
- A conception of right and wrong conduct
- Define: Ethical Principles
- Guides to Moral Behavior
- Define: Business Ethics
- The Applicatin of General Ethical Ideas to Business Behavior
- Define: Functional Area Ethics
- Application of Ethical principles to unique industry specific circumstances
- Define: Conflict of Interests
- Loyalty or Obligation to the company is in conflict with self-interest and the interest of others
- Why should Business be Ethical?
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Meet demands of stakeholders,
To Enhance Business Performance,
Comply with Legal Requirements - Why do Ethical Problems Occur?
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Personal gain and selfish Interest,
Competitive Pressures on Profit,
Business Goal vs Personal Values,
Cross-Cultural Contradictions - How are Laws and Ethics Similar?
- they both define proper and improper behavior.
- How are Laws and Ethics Different?
- Ethical principles tend to be broader than legal principles.
- How does Ethics go beyond Law?
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Laws are minimum standards of Responsiblility
Ethics deals with complex human dilemmas that go beyond legal rules - What are the Three (3) Key Components of a Company's Ethical Performance?
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The Values & Virtues of its Managers,
The Personal Character and Spirituality of its managers,
Traditions, Attitudes, and Business Practices built into the Company's Culture. - What are Stages of Moral Development?
- How one understands values is based on one's level of maturity
- Name Kohlberg's Six (6) Stages of Moral Development.
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1: Punishment Avoidance
2: Reward Seeking
3: Social Groups
4: Society at Large
5: Moral beliefs
6: Universal Principles - Corporate Culture
- Personal values and moral character play key ruoles in a company's ethical performance.
- Ethical Climates
- The unspoken understanding among employees of what is and is not acceptable
- Define: Utilitarian Reasoning
- A Cost/Benefit analysis of a decision or action. The costs and benefits can be economical, social, or human. If the benefits are greater than the costs, the action is ethical.
- Challanges to Utilitarian Reasoning
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Difficult to measure Cost and Benefit,
Difficult to establish proper boundaries of measurement,
It often fails to consider the means for acheiving the beneficial end. - Define: Human Rights
- Person or group is entitiled to be treated in a certain way: life, safety, freedom, due process
- Define: Justice
- exists when benefits and burdens are distributed equitably and according to some accepted rule
- Define: Equality of Distribution
- Everyone gets the same thing (communist)
- Define: Equality of Opportunity
- Everyone gets the same opportunity