Badm Ch 1

Front 1

Business

Back 1

Refers to any organization that is engaged in making a product or providing a service for a profit

Front 2

Society

Back 2

Broad Def: refers to human beings and to the social structures they collectively create
Specific: Refers to segments of human kind, such as members of a particular community, nation or interest group

Front 3

Business and Society's interaction

Back 3

Business and Society are highly interdependent. Business activities impact other activities in society and actions by various social and government entities affect business

Front 4

General Systems Theory

Back 4

Introduced in 1940's. Argues that all organisms are open to and interact with their external environment
Ex: business firms(social organisms) are embedded in a broader social structure( external environments) with which they constantly interact.
Even though organisms have boundaries, we cannot understand them without taking into account there surroundings and the things they interact with.

Front 5

Interactive Social System

Back 5

Each needs the other, the are intertwined so completely that any action taken by one will affect the other

Front 6

Ownership Theory of the Firm
(Property or Finance Theory)

Back 6

The firm is seen as the property of its owners. The firm's purpose is to maximize its market value to make the most amount of money for the shareholders.

Front 7

Stakeholder Theory

Back 7

Argues that corporations serve a broader public purpose, to create value for society.
3 arguments for Stakeholder Theory: Descriptive, Normative, Instrumental

Front 8

Stakeholder Theory (Descriptive Argument)

Back 8

Argues that the stakeholder theory is just an extension of the ownership theory. In order to maximize value a corporation should look to serve a broader public purpose to sustain consistent productivity

Front 9

Stakeholder Theory (Instrumental Argument)

Back 9

States that the Stakeholder theory is more effective as a corporate strategy. This is because historically companies that have used the stakeholder theory have been more financially successful over the long run. Good relationships with stakeholders results in better value for the firm

Front 10

Stakeholder Theory (Normative Argument)

Back 10

States that the Stakeholder theory is just the right thing to do. Since corporations have access to vast resources, these privileges come with responsibility.

Front 11

Stakeholder:

Back 11

Refers to people that affect, or are affected by an organization's decisions, policies, or operations.

Front 12

Market Stakeholders (primary stakeholders):

Back 12

those that engage in economic transactions with the company as it carries out its primary purpose of providing goods and services. aka directly involved with business.
Ex: Employees, stockholders, creditors, suppliers, customers, distributors

Front 13

Non-Market Stakeholders (secondary stakeholders):

Back 13

people and groups who dont engage in actual economic activity with the company but can still affect or are affected by the company
Ex: communities, governments, non-gov organizations, media, business support groups, general public

Front 14

Stakeholder Analysis:

Back 14

process of identifying and recognizing market and non-market stakeholders and understand their interests and the power they have to assert these interests

Front 15

Stakeholder Interests:

Back 15

essentially are the nature of each groups stake. What their concerns are and what they want from the firm.

Front 16

Stakeholder Power:

Back 16

means the ability to resources to make an event happen or secure a desired outcome.
4 types: voting, economic, legal, and political power.

Front 17

Stakeholder Power ( Voter Power):

Back 17

means stakeholder has right to cast a vote, their voting power being proportionate with the amount of shares in the company they own

Front 18

Stakeholder Power (Economic Power):

Back 18

Customers, Suppliers, and Retailers have economic power because they can have a direct economic affect on the company. Customer boycotts, retailers can choose to not sell companies products, suppliers can withhold supplies

Front 19

Stakeholder Power (Political Power):

Back 19

Governments implement political power through regulations, legislation, or lawsuits. Also other stakeholders can use political power to convince governments to take actions against or for the company.

Front 20

Stakeholder Power (Legal Power):

Back 20

when stakeholders bring suit against the company. Human rights and environmental activists for instance. Also employees and customers for defective products or mal-treatment

Front 21

Stakeholder Coalitions:

Back 21

Temporary alliances between stakeholder groups to reach a common goal.

Front 22

Salience

Back 22

means it stands out from a background, is seen as important, or draws attention.
Managers tend to pay most attention to stakeholders who are most salient. Also legitimacy of the argument and urgency all factor in to how much attention is paid to a particular stakeholder.

Front 23

Stakeholder Map:

Back 23

diagram of different stakeholder and importance. x-axis represents position on the issue, y-axis represents stakeholder salience. Helps managers map out who is involved and what affects and consequences their decision might have.

Front 24

Boundary Spanning Departments:

Back 24

Departments within a company that reach across line that separates the company from groups of people in society. They strive to build positive and mutually beneficial relationships across organizational boundaries

Front 25

Dynamic Environment of Business

Back 25

the external environment of business is ever changing. Changing societal expectations, Growing Emphasis on ethical reasoning, Globalization, Evolving gov regulations, Dynamic natural environment, new tech and innovation. Book argues purpose of firm isnt just to make a profit but to create value for all its stakeholders.