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BGS Pain Flashcards

1
Q

What is a Business?

A

Any organizations that is engaged in making a product or providing a service for a profit

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2
Q

What is a Society?

A

human beings and to the social structures they collectively create

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3
Q

What is General system theory?

A

all organizations are open to, and interact with, their external environments

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4
Q

What is the property/finance/ownership theory of the firm?

A

the firm is seen as the property of its owners
- purpose of firm is to maximize its long-term market value

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5
Q

What is the stakeholder theory of the film?

A

corporations serve a broad public purpose; to create value for society

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6
Q

What is a stakeholder?

A

persons and groups that affect, or are affected by, an organization’s decisions, policies and operations

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7
Q

What are shareholders/investors/stockholders?

A

any person, company, or institution that owns shares in a company’s stock

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8
Q

Are stakeholders and stockholders the same?

A

No, a stockholder is some one/organization that owns share of a company’s stock

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9
Q

What is a market stakeholder?

A

Those that engage in economic transactions with the company as it carries out its purpose of providing society with goods and services

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10
Q

What is a nonmarket stakeholder?

A

people and groups who do not engage directly in economic exchange with the firm are however affected by and can affects its actions

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11
Q

What is the difference between an internal stakeholder and an external stakeholder

A

Internal stakeholder are employed by the firm and are “inside the firm” while external stakeholder are not directly employed but have transactions with the the firm

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12
Q

What is stakeholder analysis?

A

identify relevant stakeholders and to understand both their interests and the power they may have to assert these interests

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13
Q

What is focal organizations?

A

organization from whose perspective the analysis is conducted

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14
Q

What are the 4 key questions of stakeholder analysis?

A

Who are the relevant stakeholders?
What are the interest of each stakeholder?
What is the power of each stakeholder?
How are coalitions likely to form?

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15
Q

What is stakeholder interest?

A

the nature of each group’s stake - their concerns and what they want from their r/s from firm

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16
Q

What is stakeholder power?

A

ability to use resources to make an event happen or to secure a desired outcome

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17
Q

What are the 5 kinds of stakeholder powers?

A

Voting, economic, political, legal and informational

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18
Q

What are stakeholder coalitions?

A

Stakeholders of similar interest temporary form alliance to pursue common interest

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19
Q

What is the GREETS framework

A

G - globalization
R - regulations
E - ethical standards
E - environment standards
T- technology
S - societal expectations

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20
Q

What is the ecosystem?

A

organizations and their surrounding environment of business suppliers, clients, bankers and other stakeholders, with whom they interact

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21
Q

What are the 4 traits of an ecosystem?

A

Dynamic - entities in ecosystem are always active and in motions

Interactive - many actors interact with each other - certain r/s influence actions and decisions

Interdependent - connections and collaborations are essential for a business to survive

Adaptive/Adaptable - environment is VUCA

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22
Q

What is the IPCC?

A

Intergovernmental Panel on Climate Change - bunch of scientist study climate change and write reports of what government should do

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23
Q

What is the C - suite?

A

CEO - strategic decision of company and public face
CFO - account + strategic investment decisions
COO - responsible of daily operations, resource management and collabs within company - efficient and effective
CTO - Hardware and software + technology, innovation and technical leadership
CIO - oversees the flow of info within company and externally (PR)

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24
Q

What is Maslow’s Hierarchy of Needs?

A

Bottom to top:
Biological & Physiological: air, food, shelter
Safety needs: protection from elements, law order stability
Love and belonging: friendship, intimacy, affection, love
Esteem: achievement, mastery, independence, status
Self-actualization: realizing personal potential, self-fulfillment

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25
Q

What is an public/social/sociopolitical issues?

A

any issue that is of mutual concern to an organization and one or more of its stakeholders

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26
Q

What is the performance-expectation gap?

A

Gap between the expected corporate performance (what stakeholders expect) and the actual corporate performance

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27
Q

Are public issues a risk or an opportunity?

A

Risk: if firms do not anticipate and plan for effectively can seriously hurt a company

Opportunity: Correctly anticipating the emergence of a public issue can confer a competitive advantage

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28
Q

What is environmental analysis?

A

method managers use to gather information about external issues and trends -> develop organizational strategy to minimize threat and take advantage of new opportunities

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29
Q

What is an environmental intelligence?

A

acquisition of information gained from analyzing the multiple environments affecting organizations - informal or formal

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30
Q

What are the 8 strategic radar screen for environmental intelligence?

A

Customer, competitor, geophysical, legal, political, social, technological, economic

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31
Q

What is competitive intelligence?

A

systematic and continuous process of gathering, analyzing, and managing external information about the organization’s competitors that can affect the organization’s plans, decisions, and operations
- may overstep ethical and legal boundaries when attempting to learn as much as they can about their competitors

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32
Q

What is stakeholder materiality?

A

importance of prioritizing the relevance of the stakeholders and their issues to the company

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33
Q

What are the 5 steps in the issue management process?

A

Identify issue -> analyze issue -> generate options -> take action -> evaluate results

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34
Q

What is stakeholder engagement?

A

process of ongoing relationship building between a business and its stakeholders

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35
Q

What are the 4 stages in the business-stakeholder relationship?

A

stage 1 to 4:
Inactive - ignore stakeholder concerns and firm believe they are correct without considering impact on others

Reactive - act when forced in a defensive manner

Proactive - try to anticipate stakeholder concerns but treat it as problem to be managed, not as competitive advantage

Interactive - companies actively engage stakeholders in ongoing r/s of mutual respect, openness and trust

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36
Q

What are the drivers of stakeholder engagement?

A

Goals - both business and stakeholder must hv important and urgent problem to solve

Motivation - must be motivated to work tgt (governmental campaigns)

Organizational capacity - engage each other in productive dialogue - firm: support of top leadership + funding and stakeholders: leadership team for dialogue

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37
Q

What is stakeholder dialogue?

A

a business and its stakeholder come tgt for face to face conversations about issues of a common concern

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38
Q

What is stakeholder networks?

A

encounter public issues that they can address effectively only by working collaboratively with other businesses and concerned persons and organizations

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39
Q

What is the tragedy of the commons?

A

a situation in which individuals with access to a public resource (also called a common) act in their own interest and, in doing so, ultimately deplete the resources

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40
Q

What is corporate power?

A

capability of corporations to influence government, the economy, and society based on their organizational resources

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41
Q

What is the iron law of responsibility?

A

in the long run those who do not use power in ways that society considers responsible will tend to lose it

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42
Q

What is corporate social responsibility (CSR)?

A

corporation should act in a way that enhances society and its inhabitants and be held accountable for any of its actions that affect people, their communities, and their environment

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43
Q

What is corporate citizenship?

A

the actions they take to put their commitment to corporate social responsibility into practice

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44
Q

What are the 8 aspects of corporate citizenship?

A

Ethical business behavior, stakeholder commitment, community, consumers, employees, investors, suppliers and environment commitment

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45
Q

What are the principles under ethical business behavior for corporate citizenship?

A
  1. Engages in fair and honest business practice in its r/s with stakeholders
  2. set high standards of behavior for all employees
  3. exercise ethical oversight executive and board levels
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46
Q

What are principles under stakeholder commitment for corporate citizenship?

A
  1. strives to manage the company for benefit of all stakeholders
  2. initiates and engages in genuine dialogue with stakeholders
  3. Values and implements dialogue
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47
Q

What are the principles under community for corporate citizenship?

A
  1. Fosters a reciprocal relationship between the corporation and community
  2. Invest in the communities in which the corporation operates
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48
Q

What are the principles under consumer for corporate citizenship?

A
  1. Respects the rights of consumers
  2. Offers quality products and services
  3. provides information that is truthful and useful
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49
Q

What are the principles under employees for corporate citizenship?

A
  1. Provides a family-friendly work environment
  2. Engages in responsible HR management
  3. Provides an equitable reward and wage system for employees
  4. Engages in open and flexible communication with employees
  5. Invest in employee development
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50
Q

What is the principle under investors for corporate citizenship?

A

strives for a competitive return on investment

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51
Q

What is the principle under suppliers for corporate citizenship

A

Engages in fair trading practices with suppliers

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52
Q

What are the principles under environment commitment for corporate citizenship?

A

Demonstrates a commitment to
1. environment
2. sustainable development

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53
Q

What is enlightened self-interest?

A

the notion that providing value to stakeholders is in a business’s long run self-interest

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54
Q

What are the arguments for corporate social responsibility?

A
  1. Balances corporate power with responsibility
  2. Discourage government regulations
  3. Promotes long-term profits for business
  4. Improves stakeholder relationships
  5. Enhances business reputation
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55
Q

What are the arguments against corporate social responsibility?

A
  1. Lowers economic efficiency and profits
  2. Imposes unequal cost among competitors
  3. Imposes hidden cost passed on to stakeholders
  4. Requires skills business may lack
  5. Places responsibility on business rather than individuals
56
Q

What is reputation?

A

Desirable or undesirable qualities associated with an organization or its actors that may influence the organization’s relationships and stakeholders

57
Q

What are B Corporations?

A

Emerging businesses that explicitly seek to balance the interest of multiple stakeholders

58
Q

What are the 5 stages of global corporate citizenship?

A

stage 1: Elementary - underdeveloped and defensive
stage 2: Engaged - aware of public expectations and reactive
stage 3: Innovative - Responsive + understand their lacks and will prompt structural innovation
stage 4: Integrated - Proactive - partnerships and alliance
stage 5: transforming - Visionary + multi-organizational approach

59
Q

What is a social audit?

A

systematic evaluation of an organization’s social, ethical and environmental performance

60
Q

What is corporate social reporting?

A

When company decides to publicize information collected in social audit

61
Q

What is transparency?

A

quality of complete clarity

62
Q

What is an integrated report?

A

Integration of legally required financial information with social and environmental information into a single report

63
Q

What is globalization?

A

increasing movement of goods, services, and capital across national borders

64
Q

What are transnational corporations (TNCs)?

A

firms that control assets abroad

65
Q

What is Foreign direct investment (FDI)?

A

When a company, individual, or fund invest money in another country

66
Q

What are the international financial trade institutions (IFTIs)?

A

Most important are World Bank, the International Monetary Fund and World Trade Organization - they set rules by which the international commerce is transacted

67
Q

What is the main and initial role of World Bank?

A

Main: provide economic development loans to its nations - now world’’s largest sources of economic development

Initial: help rebuild the war-torn economies of Europe

68
Q

How is World Bank’s governing board represented?

A

Based on economic power; country have voting power based on size of economies

69
Q

What is the sister organization to the World Bank?

A

International Monetary Fund (IMF)

70
Q

What is the main role of the International Monetary Fund (IMF)?

A

To stabilize the systems of currency exchange rate and international payments to enable member countries to participate in global trade

71
Q

What is the similarity between World Bank and International Monetary Fund?

A

imposes strict conditions on governments that receives loans. Conditions may include demands that government cut spending, devalue their currencies, increase exports, liberalize financial markets and reduce wages

72
Q

What is the main role of the World Trade Organization (WTO)?

A

international body that establishes ground rules for trade among nations

73
Q

What is the main objective of the World Trade Organization (WTO)?

A

Promote free trade; eliminate barriers of trade such as quotas, duties and tariffs

74
Q

What is World Trade Organization’s predecessor?

A

General Agreement on Tariffs and Trade (GATT)

75
Q

What is the difference between WTO and WB + IMF?

A

WTO does not lend money or foreign exchange; only sets rules for international trade

76
Q

What is WTO’s most favored nation rule about?

A

member countries may not discriminate against foreign products for any reasons; all import restrictions are illegal unless proven scientifically

77
Q

What is inversion?

A

Local company avoid paying taxes in home country by moving their headquarters or merging with companies outside the home country

78
Q

What is venture funds?

A

Private equity fund (aka hedge fund) that buys debt of weak companies or heavily indebted countries with the intention of making a profit

79
Q

How do venture funds make profit?

A

Buy defaulted loans of country/company of deep discount and then sue that country/company to pay back loans at full face value with interest :c

80
Q

What are the benefits of globalization?

A
  1. Increases economic productivity
  2. Reduces prices for consumers
  3. Gives foreign investments funds to support economic development
  4. Transfer technology
  5. Spreads democracy and freedom, and reduces military conflict
81
Q

What are the costs of globalization?

A
  1. Cause job insecurity
  2. Weakens environmental and labor standards
  3. Prevents individuals nations form adopting policies promoting environmental or social objectives, if these discriminate against products from another country
  4. Erodes regional and national cultures and undermines, cultural, linguistic, and religious diversity
  5. Is compatible with despotism
82
Q

What does race to the bottom mean?

A

progressive lowering or deterioration of standards as a result of the pressure of competition

83
Q

What is democracy?

A

broadly to the presence of political freedom

84
Q

What is a military dictatorship?

A

repressive regimes ruled by dictators who exercise total power through control of the armed forces

85
Q

What is the free enterprise systems?

A

principle of voluntary association and exchange

86
Q

What is central state control?

A

Economic power is concentrated in the hands of government officials and political authorities

87
Q

What is wealth?

A

assets that a person accumulates and he or she owns at a point in time

88
Q

What is the bottom of the pyramid (The global wealth pyramid)?

A

individuals who earn below $3000 a year in local purchasing power

89
Q

What is microfinance?

A

when financial organizations provides loans to low-income clients or solidarity lending groups (a community of borrowers) who traditionally lack access to banking or related services

90
Q

What are global action networks (GANs)?

A

Development of collaborative, multi-sector partnerships focuses on particularly social issues or problems in global economy

91
Q

What is civil society/NGOs?

A

social organizations that do not have a commercial or governmental purpose

92
Q

What is a public policy?

A

plan of action undertaken by government officials to achieve some broad purpose affecting a substantial segment of a nation’s citizens

93
Q

What are the elements of a public policy?

A

Inputs: external pressure that shape a government’s policy decisions and strategies to address the problems (e.g 3k people die in distracted crashes)

Goals: broad and high-minded or narrow and self-serving (e.g. avoid more crashes)

Tools: combinations of incentives and penalties that government uses to prompt citizens and businesses to act in ways to achieve goals (e.g. fines, jail)

Effect: outcomes arising from government regulations - intended and unintended (e.g. number of crashes reduced)

94
Q

What are the two economic policies?

A

Fiscal policy and Monetary policy

95
Q

What is fiscal policy?

A

patterns of government collecting and spending funds that are intended to stimulate or support the economy

96
Q

What is monetary policy?

A

policies that affect supply, demand, and value of a nation’s currency

97
Q

What are social assistance policies?

A

government’s response to human needs such as food, housing, healthcare, employment, and other necessities

98
Q

What are regulations?

A

primary way of accomplishing public policy

99
Q

What is market failure?

A

marketplace fails to adjust to prices for the true cost of a firm’s behavior

100
Q

What are negative externalities/spillover effects?

A

the manufacture or distribution of product gives rise to unplanned or unintended costs borne by stakeholders

101
Q

What are economic regulations?

A

modify the normal operation of the free market and the forces of supply and demand

102
Q

What are antitrust laws?

A

prohibit unfair, anti-competitive practices by businesses

103
Q

What is predatory pricing?

A

the practice of selling below cost to drive rivals out of business

104
Q

What are social regulations?

A

aimed at such important social goals as protecting consumers and the environment and providing workers with safe and healthy working conditions

105
Q

What is deregulation?

A

the removal or scaling down of regulatory authority and regulatory activities of government

106
Q

What are examples of institutional investors?

A

pensions, mutual funds, insurance companies, and university endowments, also own stock

107
Q

What is a bear market?

A

the global economy fell into a severe recession

108
Q

What is a bull market?

A

a market in which share prices are rising

109
Q

What is proxy?

A

Shareholders not attending are given an opportunity to vote by absentee ballot

110
Q

What are the major legal rights of shareholders?

A
  1. To receive dividends, if declared
  2. To vote on:
    - Members of board of directors
    - Major mergers and acquisitions
    - Charter and bylaw changes
    - Proposals by stockholders
  3. To receive annual reports on the company’s financial condition
  4. To bring shareholder suits against the company and officers
  5. To sell their own shares of stock to others
111
Q

What is corporate governance?

A

process by which a company is controlled, or governed

112
Q

What are the board of directors?

A

play a central role in corporate governance

113
Q

What are the two different types of board of directors?

A

outside directors :not managers of the company

Inside directors: managers of the company

114
Q

What are the principles of good board governance?

A
  1. Select outside directors to fill most positions
  2. Hold more open elections for members of the board
  3. Appoint an independent lead director (also called a nonexecutive chairman of the board)
  4. Align director compensation with corporate performance
  5. Evaluate the board’s own performance on a regular basis
115
Q

What is the agency problem?

A

A conflict of interest inherent in any relationship where one party is expected to act in another’s best interest

116
Q

What is stock options?

A

to buy a company’s stock at a set price (called the strike price) for a certain period

117
Q

What is the idea for pay-for-performance approach for executives?

A

executives will work hard to improve the company’s results, because this will increase the stock price and therefore the value of their compensation.

118
Q

What are the 2 main arguments for high salaries for CEOs?

A
  1. Being rewarded for outstanding performance
  2. Incentive for innovation and risk taking
119
Q

What are the 3 main arguments against high salaries for CEOs?

A
  1. Top managers have such high salaries is due to influence over pay-setting process
  2. High compensation diverts financial resources that could be invested in the business
  3. higher pay does not necessarily produce higher returns
120
Q

What is say-on-pay provision?

A

public companies must hold shareholder votes on executive compensation at least once every 3 years

121
Q

What is shareholder activism?

A

Shareholders taking action directly to protect their own interests

122
Q

What are hedge funds?

A

pools of private capital; uses aggressive strategies use to earn high returns for their investors

123
Q

What are private equity firms?

A

managed pools of money invested by very wealthy individuals and institutions (they are not usually open to ordinary individuals).

124
Q

Is shareholder activism always beneficial?

A

-pressure companies to cut costs, add debt, sell divisions and increase share repurchases -> creates shareholder value but its short lived

  • don’t promotes investing in jobs, R&D and growth
125
Q

What is social/sustainable/responsible/impact investment?

A

to the use of stock ownership as a strategy for promoting social, environmental, and governance objectives

126
Q

What is stock screening?

A

selection of companies to invest in and removing those who don’t meet a social criteria: human rights, fair pay, safe products

127
Q

What is the social responsibility shareholder resolutions?

A

is a resolution on an issue of corporate social responsibility placed before shareholders for a vote at the company’s annual meeting

128
Q

What are shareholder/derivative lawsuits?

A

Checks on abuses, including insider trading, an inadequate price obtained for the company stock in a buyout (or a good price rejected), or failure to disclose material information in a timely manner

129
Q

What is the role of the Securities and Exchange Committee (SEC)?

A

major government agency to to protect shareholders’ rights by making sure that stock markets are run fairly and that investment information is fully disclosed

130
Q

What are the areas that Securities Exchange Committee regulate?

A
  1. Information transparency and disclosure
  2. Insider trading
  3. Protect investors against fruad
131
Q

What is insider trading?

A

when a person gains access to confidential information about a company’s financial condition and then uses that information, before it becomes public knowledge, to buy or sell the company’s stock

132
Q

What is front running?

A

another kind of insider trading where traders place buy and sell orders for stock in advance of the moves of big institutional investors - esp with today’s high speed trading, only need a few milliseconds of advance notice

133
Q

What is agency cost?

A

type of internal cost that a principal may incur as a result of agency problem e.g. cost of inefficiency

134
Q

What is the fiduciary rule?

A

advisors are to put their clients’ interests above their own

135
Q

What is the goal of the fiduciary rule?

A

protect investors from advisors who are concealing potential conflicts of interest

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