Exam 1 Flashcards
1
Q
Define business
A
Collection of private, commercially oriented organizations, ranging in size from one-family proprietorships to corporate giants
2
Q
Define Society
A
A community, nation, or a broad grouping of people w/common traditions, values, institutions, and collective activities and interests
3
Q
What is the macroenvironment
A
The total environment outside the firm
4
Q
What are the four segments of the macroenvironment
A
Social, Economic, Political, and Technology
5
Q
What composes the social macroenvironment
A
Demographics, lifestyles, culture and social values of society
6
Q
What composes the economic environment
A
Nature and direction of the economy in which business operates
7
Q
What composes the political environment
A
The process by which laws get passed and officials get elected and all other aspects of the interaction between firms, political practices and government
8
Q
What composes the technological environment
A
The total set of tech-based advancements taking place in society and the world
9
Q
Define pluralism
A
A diffusion of power among society’s many groups nd organizations
10
Q
What is a pluralistic society
A
One in which there is a wide decentralization and diversity of power concentration
11
Q
What is a special interest society
A
One characterized by many special interest groups with pursuit of their own agendas
12
Q
Define Nongovernmental organization (NGO)
A
Interest groups that represent all sectors of society
13
Q
ist the ten factors in the social environment
A
Affluence Education Awareness by TV, movie, internet, and social media Revolution of rising expectations Entitlement Mentality Rights movement Victimization Philosophy
14
Q
Define affluence
A
Level of wealth, disposable income, and standard of living of the society
15
Q
What is the revolution of rising expectations
A
One of the factors of the social environment that is the belief that each generation ought to have a higher standard of living than the previous
16
Q
What is entitlement mentality
A
One of the factors of the social environment that is the general belief that someone is owed something simply by being a part of society
17
Q
What is the rights movement
A
One of the factors of the social environment that is the combination of rising expectations and entitled mentality
18
Q
What is the victimization philisophy
A
One of the factors of the social environment that states that people/groups are the victim of buisness
19
Q
What is business power
A
The capacity to impart a group of people/society
20
Q
What are the four levels of business power
A
Macrolevel, intermediate, microlevel, individual level
21
Q
What is the macrolevel of bus power
A
the entire corporate system
22
Q
what is the intermediate level of bus power
A
Groups of corporations working together to produce an effect
23
Q
What is the microlevel of bus power
A
The level of an individual firm
24
Q
What is the individual level of bus power
A
The leader of a corporate firm
25
What are the spheres of power (list)
```
Economic
Social/cultural
Individual
Technological
Environmental
Political
```
26
What is the Iron law of Responsibility
If power and responsibility become out of balance, forces will be generated to return it to balance
27
What is a social contract
Set of the reciprocal understand and expect that characterize the relationship between business and society
28
What is business ethics
Urgent ethical issues (fairness/justness) in the organizational realm
29
What is sustainability
Businesses ability to survive and thrive long term
30
Sustainable Development
Pattern of resource use that aims to meet current needs while considering the envirnoment
31
What is a stakeholder
Has a vied interest in the firm
32
Initial definition of corporate social responsibility (CSR)
Seriously considering the impact of the company on society
33
Define Business for social responsibility (BSR)
A national business alliance that fosters responsible social practices
34
What were the components of the Economic Model (1800s)
Philanthropy, community obligations, and paternalism
35
Define philanthropy
Contributions to charity and other worthy causes
36
Define CSR (modern)
The social responsibility of business encompasses the economic, legal, ethical and discretionary expectations that society has of organizations at a given point of time
37
Define economic responsibility
Part of CSR that is the base-level tier of production of goods that society wants and to sell them at fair prices
38
Define legal responsibility
Business must follow the laws set in place and society can change if not followed
39
Define ethical responsibility
Encompassing the decision and behaviour arenas in which society expects certain levels of moral or principled performance but has not yet been put into law
40
Define Philanthropic responsibility
Expectation that business will give back even though it is not required by law nor ethics
41
What is the pyramid of CSR
1 - be profitable
2 - obey the law
3 - be ethical
4 - be a good corporate citizen
42
Define CSR exemplar firms
Take the lead on Corporate Social Responsibility - social entrepreneurship, social intrapreneruship, and mainstream adopters
43
Define social entrepreneurship firm
A CSR exemplar firm that begins with the CSR values and move forward
44
Define social intrapreneurship firm
A CSR exemplar firm that did not start with a social agenda but have developed a highly visible one
45
Define mainstream adopters
A CSR exemplar firm that has some degree of adoption of a social agenda
46
What are the four approaches to CSR
Defensive approach
Cost-benefit approach
Strategic approach
Innovation and learning approach
47
Define defensive approach
An approach to CSR that is focused on alleviating negatives
48
Define cost-benefit approach
An approach to CSR that is focused on the benefits over the cost of something
49
Define strategic approach
An approach to CSR that is focused on the environmental changes
50
Define innovation and learning
An approach to CSR that states that it provides opportunity to the business
51
What are the five ages of CSR
Greed, philanthropy, marketing, management, and responsibility
52
What is CSR Greenwashing
Intentionally seeking to conevy the image of social responsibility when there is no evidence that they are
53
What is political CSR
emphasizes activities with unintentional poltical consequences
54
What is Corporate Social Responsivess
Difference between an obligation and an action/dynamic decision
55
What is corporate social performance (CSP)
Suggests that the results are better than the intentions
56
What is Carroll's CSP model
1 - categories (CSP levels)
2 - philosophies of social responsibility
3 - social issues involved
57
What are the seven dimensions of corporate citizenship
Citizen concept, strategic intent, leadership, structural, issues material, stakeholder relationship, and transparency
58
What is the triple-bottom line composed of?
3 key spheres of sustainability that must be met - economic, social, and environmental (the 3 Ps! Profits, People, and Planet)
59
What is the economic component of the triple-bottom line
Creation of wealth - profits
60
What is the social component of the triple-bottom line
Quality of life- people
61
What is the environmental component of the triple-bottom line
Protection and conservation - planet
62
What is creating shared value
Framework developed by Porter and Kramer that allows for the generation of economic value while also producing value for society
63
What is conscious cpitalism
Capitalism that reflects and leverages the interdependent nature of life and the stakeholders in business
64
What are the 4 pillars of conscious capitalism
Higher Purpose
Stakeholder Orientation
Conscious Leadership
Conscious Culture
65
ESG investing?
Environmental, Social, Governance investing
66
What is the 21st century key to success
Stakeholder Inclusion
67
Define stake
An interest in or a share in an undertaking
68
Define claim
demand for something thought to be or actually due
69
What is a legal right
When a person or group has a legal claim to be treated in a certain way or to have a particular right protected
70
Stakeholder
Individual or group that has one or more of the various levels of stakes in an organization
71
What is the most imoprtant stakeholder
The natural environment
72
What are the stakeholder groups (examples)
```
Employee
Shareholder
Customer
Community
Competitors
Supplies
Media
Society
Specialist Groups
Activist Groups
```
73
What is the production view of firms
Owners viewed stakeholder as the individual or groups that supplied resources or bought products/services
74
What is the managerial view
View that in addition to suppliers and users of goods, the owners and employyees are also stakeholders
75
What is the stakeholder view
Encompasses the numerous different individuals and groups that are embedded in the firms international and external environment
76
What is a primary social stakeholder
One with a direct stake in the organization and thus are the most influential
77
Examples of primary social stakeholders
```
Shareholders and investors
Employees
Customers
Suppliers
Local Community
```
78
what is a secondary social stakeholder
One that can also be extremely influential, especially in public reputation and public standing, but their stake is indirect or derived
79
Examples of a secondary social stakeholder
```
Government and regulators
Civic Institutions
Social Pressure
Media
Trade bodies
Competitors
```
80
What are primary nonsocial stakeholders
Natural environment, future generation, nonhuman species
81
What are secondary nonsocial stakeholders
Those who represent the primary nonsocial stakeholders - can be activist groups
82
What are the important stakeholder attributes (list)
Legitimacy, power, and urgency
83
Define legitamacy
The perceived validity of a stakeholders claim to stake (one of the important stakeholder attributes)
84
Define Power
The ability or capacity of the stakeholder to produce an effect (one of the important stakeholder attributes)
85
Define Pressure
The ability and capacity of stakeholders to affect an organization by influencing its organizational decisions - regardless of legitimacy, power, and urgency
86
Define Urgency
The degree to which the stakeholders claim on the business calls for the businesses immediate action/response (one of the important stakeholder attributes)
87
Define proximity
The spatial distance between the organization and its stakeholders
88
What is the strategic approach SH
An approach to stakeholders where the stakeholders are viewed as factors to be taken into consideration and managed while the firm pursues profits for its shareholders
89
What is the multifiduciary approach SH
An approach to stakeholders where stakeholders are more than just individuals/groups that can wield economic or legal power, and management has a responsibility towards them
90
What is the stakeholder synthesis appraoch
An approach to stakeholders where business has a moral responsibility to stakeholders but they should not be seen as part of a fiduciary obligation
91
What are the three approaches to stakeholders (list)
Strategic
Multifiduciary
Stakeholder Synthesis
92
What are the three values of the stakeholder model (List)
Descriptive
Instrumental
Normative
93
Define descriptive value
A value of the stakeholder model that provides language and concepts to describe effectively the corporation or organization in stakeholder inclusion terms
94
Define Instrumental value
A value of the stakeholder model that is useful in portraying the relationship b/t the practice of stakeholder management and the resulting achievement of corporate performance goals
95
Define normative value
A value of the stakeholder model where stakeholders are seen as possessing value irrespective of their instrumental use to management
96
What are the 5 key questions to Stakeholder mgt
Who are the organizations SH
What are their stakes
What opportunities and challenges do they present
What responsibilities do we have to them
What strategies or actions should firms take to best address the opp and challenges
97
What are the kinds of responsibilities a firm has to a stakeholder?
Legal, Ethical, Economic and Philanthropic
98
What are the four strategies to be taken towards stakeholders
Supportive SH - INVOLVEMENT (High coop, low threat)
Nonsupporive SH - DEFENSIVE (low coop, high threat)
Marginal SH - MONITOR (low coop, low threat)
Mixed-Blessing SH - COLLABORATE ( high coop, high threat)
99
Define SH Thinking
Process of always reasoning in SH terms throughout the management process
100
Define SH mindset
Managers look at world thru a SH script
101
What is a SH culture
Embraces the beliefs, values, and practices that organizations have developed for addressing stakeholder issues and relationships
102
What is stakeholder management capacity (SMC)
An organizational integration of SH thinking into its process at one of the three levels of increasing sophistication (rational - process - transactional)
103
What are the three levels of stakeholder management capacity (SMC)
Rational - Company can ID who and what
Process - Company develops and implements a process to dealing with them
Transactional - Company engages with SH
104
What is SH corporation
A corporation with a primary focus of SH inclusiveness and embraces the idea of a symbiotic rln
105
What are the three strategic steps towards global SH MGT
Governing Philosophy, Values Statement, Measurement System
106
Define legitimacy
Helps to explain the importance of relative roles of a corporations character, SH, board of directors, MGT and employees
107
Define legitimation
Dynamic process by which bus seeks to perpetuate its acceptance
108
Microlevel of legitimacy - 3
1 - adapt to societies expectations
2 - change societal values to those of rim
3 - enhance legitimacy by ID w/others already legit in society
109
Define corporate governance
Method by which a firm is being governed, directed, administered, or controlled and to the goals for which it is being governed
110
What is corporate governance concerned with
The relative roles, rights, and account of such SH groups (owners, board of direct, managers, employees, other)
111
What is the American-Anglo model of corp gov
Outside directors, following common law, w/market oriented and SH governance
112
What is continental-European model
Inside directors, civil law, block ownership w/bank orientation and SH-coordinated governance
113
What is the role of SH in Anglo-Amer model
Own stock in firm which gives them ultimate control over corporation and its owners
114
What is the role of the board of directors in Anglo-Amer model
Govern and oversee mgt of business - put SH interest first
115
What is the role of MGT in Anglo-Amer model
Group of individuals hired by the board to run the company and manage it on a daily basis
116
What is the role of employees in Anglo-Amer model
Hired by company to perform the operational work
117
What are agency problems
Interests of SH do not equal the interests of MGT and MGT begins to pursue self-interest instead
118
What is the CEO pay/firm performance relationship
One of the issues surrounding compensation of CEOs in which there is a relation between firm performance and compensation. Includes stock options such as backdating, spring-loading, bullet-dodging, and finding restricted stock
119
Define backdating
Recipient has option to purchase stock at yesterdays price, resulting in an immediate increase "in the money"
120
Define spring-loading
Buy at todays price with knowledge that something good is about to happen
121
Define bullet dodging
Delay stock option grant until right after the bad news
122
Define restricted stock
Stock that always has value, even in a down market and does not have an exercise price
123
Define clean capitalism
An economic system in which prices fully incorporate social, economic and ecological costs
124
Define clawback provisiosn
Compensation mechanisms that enable companies to recoup compensation
125
What is the council of institutional Investors
A non profit association of corporate, public, and employee benefit funds
126
What is the Say on Pay movement
Evolved from excessive CEO pay firms that involves the ideals of clean capitalism and clawback provisions
127
What did the SEC require companies to do (with CEO pay)
Pay-ratio disclosure rule - requires company to publish the ratio
128
What are some of the issues with CEO pay
Excessive compensation thru stock and large exit and retirement packages
129
What is a poison pill
Intended to discourage/prevent a hostile takeover - when one SH hostily buys a lot of stock, other SH will buy more to dilute it
130
What are golden parachutes
Provision in an employment contract in which a corporation agrees to make payments to key officers in the event of a change in control of the corporation
131
What is insider trading?
Buying/selling info that is not available to the public
132
What is the Sarbanes Oxley Act of 2002
Improves financial reporting in the company
133
What are the principal monitoring committees?
Audit committee, nominating committee, and compensation committee
134
What is the role of the audit committee
Responsible for assessing the adequacy of internal control systems and the integrity of financial statements
135
What is the role of the nominating committee
Composed of outside directors, has the responsibility of evaluating executive performance and recommending terms and conditions of employment
136
What is the role of the compensation committee
Has the responsibility of evaluating executive performance and recommending terms and conditions of employment
137
What is the risk committee
Provides oversight about risks regarding strategy and tactics across operational, financial, and compliance areas
138
What is CEO duality?
When someone is the CEO and sits on the board of directors
139
What is a ponzi scheme
Lures investors in with fake promise of profit but actually pays earlier investors with later investors money
140
What is the shareholder primacy model
Maximizing share value is the ultimate goal and increase corporate governance by decreasing board power and maximizing sh power
141
what is the director primacy model
based on the idea that a corporation is not owned but is independent and owns itself
142
what is shareholder engagement
a strategy and set of formal procedures for opening communication between sh and a company on a variety of issues
143
Why do we have committees
Ensure there is no misleading financials and follow up on any irregularities
144
What are the 9 red flags that there are board problems
```
Company restates earnings
Poor employee moral
Adverse SOX 404 opinion
Poor customer satisfaction
MGT misses strategic performance goals
Company is target of employee lawsuits
Stock price decrease
Quarterly financial results miss analysis expectations
Low corporate governance quotient rating
```
145
What are the 3 components to the democracy movement for SH
1 - majority vote
2 - banning classified/staggered boards
3 - proxy access
146
What are the 9 steps to repair a board
```
Spread risk oversight over committees
Seek outside help to ID risks
Deepen involvement in corp strategy
Align board size and skill mix strategy
Revamp executive compensation
Pick compensation committee members who will question the status quo
Use independent compensation consultants
Evaluate CEO on grooming potential replacers
Know what matters to your investors
```
147
What is strategic mgt
overall mgt process that strives to ID corporate purpose and position in a firm to succeed in its market environment by achieving competitive advantage
148
Corporate public policy
A firms posture, stance, strategy, or position regarding the environmental, social, global, and ethical aspects of stakeholders and corporate functioning
149
What is corporate public affairs
public affairs mgt
150
What are the four key strategy levels of strategic mgt (list)
Enterprise level
Corporate level
Business level
Functional Level
151
Defin enterprise level strategy
The books fav strategic mgt strategy that poses basic questions and encompasses the development and articulation of corporate public policy
152
Define corporate level stratgey
A strategic mgt strategy - defining business questions of the firm
153
define bus level strategy
A strategic mgt strategy that asks - how should we compete in a given business or industry
154
define functional level strategy
A strategic mgt strategy that asks how should a firm integrate its various subfunctional activities and how should they be related to changes taking place in the diverse firm areas
155
What is social entrepreneurship
one in which the mission of societal value creation is central to the business - start w/sustainable social values and then continuously pursue and innovate ways to achieve it
156
What is BOP (bottom of the pyramid)
largest and poorest socioeconomic group of people
157
What are B Corporations
organizations that pursue SH and social welfare maximization and SH wealth max due to missions in society
158
What are the 6 steps to the strategic mgt process
```
goal formulation
strategy formulation
strategy evolution
strategy implementation
strategic control
environmental analysis
```
159
Define responsive CSR
address generic social impacts through good corporate citizenship and value chain social impacts by mitigating them
160
Define strategic csr
transform value chain social impacts into actions that benefit society and reinforce corporate input
161
What is the Porter and Kramer Framework - steps
Inside-out vs outside-in link (company -> society)
categorize issues (gen, value chain, etc)
Split into 2 models - responsive vs strategic CSR
Integrate inside out and outside in
Create social dimension to value proposition
162
Sustainable reporting/social responsibility reports/social audits/integrated reporting
measure firms overall value creation and spur integrated thinking
163
What is ceres
An NGO national network of investors, environmental organizations, and other public interest groups that work with us to address sustainability challenges and promote sustainable reporting
164
global reporting initative
more than 300 global organizations that want to standardize IR
165
Define public affairs mgt
umbrella term used to describe management process that focuses on the formulization and institutionalization of corporate public policy
166
what is the future of public affairs ? 3 options
PA develop value-based enterprises
PA assert as thought leaders of company and engage with outside
PA can seek alternate areas of resolution and broader issues
167
Define Issue MGT
Process by which organization IDs issues in the SH environment, analyze and prioritize those issues in terms of their relation to the organization, plan responses to the issues and then evaluate and monitor the results
168
Define Crisis MGT
MGT of issues that have become major threats
169
Define Risk MGT
Efforst to keep issues from arising
170
List the three types of risks
preventable, strategic, external
171
Define preventable risks
internal and forseeable - no strategic benefit
172
define strategic risks
risks taken to achieve greater returns
173
Define external risks
External threats that cannot be controlled
174
How to prep for strategic risks
can decrease probability of risk occurring and develop capacity to manage the risk
175
How to prep for external risks
Scenarios and war gaming
176
What is Risk shifting
places the risk of the firm onto the consumers
177
What is the portfolio approach
issue mgt idea that experience with prior issues will ikely influence future issues
178
What is an emerging issue
terms not clearly defined matters of conflicting values and interest, no automatic resolution stated in value-laden terms and trade offs are inherent
179
List the steps of the issue management process
```
ID of issues
Analysis of issues
Ranking and prioritizing issues
Formulation of issue response
implementation of issue responses
Evaluating, monitoring, and controlling results
```
180
what are the steps to the issue development process
felt need
media coverage
leading political jurisdictions adopt policy, federal government attention, legislation and regulation
regulation and litigation
181
List the types of crises
```
economic
physical
personnel
criminal
informational
reputational
natural disasters
```
182
Examples of economic crises
recessions, hostile takeovers, stock market crashes
183
ex of physical crises
industrial accidents, product failures, supply breakdown
184
ex of personnel crises
strikes, exodus of key employees, workplace violence
185
ex of criminal crises
product tampering, kidnapping, acts of terrorism
186
ex of informational crises
thefot of proprietary info, cyber attacks
187
ex of reputational crises
rumor mongeirng/slander, logo tampering
188
ex of natural disasters
earth quakes, floods, fires, tornados
189
What are the 4 crises stages
prodromal- warning
acute - actual crisis stage where event has occured
chronic - lingering period
crisis resolution - whole again and learn moving forward
190
Steps to manage business crisis
```
ID areas of vulnerability - scenarios, risk analysis
Develop a plan for dealing with threats
forming crisis teams
simulating crisis drills
learning from experience
```
191
Crisis communcation
VERY important key to crisis management --> have a trained group and knowledgeable spokesperson to know the audience, ID key messages to comm to key groups, and redirect the storm
