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296 Cards in this Set
- Front
- Back
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Business |
A firm that sells a product for a profit
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Product
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A good, service, or both
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Proprietorships
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Owned by one Person
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Partnerships
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Owned by two or more people
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Corporations
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Owned by any number of stockholders
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Society
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The people, which include interest groups, and the communities affected by business
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Societal interest groups
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Nonprofit organizations that promote a cause
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Government
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The executive, legislative, and judicial branches at the local, county, state, federal, and international
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Capitalism
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Market economic system, private individuals/corporations own the means of production and operate to make a profit with limited social intervention and goverment restraint
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Pluralistic
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Political system, tries to balance power between business, society, and gov't so one doesn't dominate
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Special Interest Groups
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Any profit, nonprofit, or gov't organization that is working for its own best interest, sometimes at the expense of others
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Democracy
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Every person is free with equal right to particiapte in a system of Government
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Social problems
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When society's expectations are not met by business and/or government
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Market Environment
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(Direct) Owners, employees, suppliers, customers, and (Indirect) competitors
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Customers
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Buy product
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Consumers
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Use product
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Creditors
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Firms that lend money which is paid back with interest
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Internal Environment
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Includes stakeholders within the business firm (owners/stockholders) and employees
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External Enviroment
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Includes stakeholders outside of the business (customers, suppliers, etc) and nonmarket society
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Nonmarket Environment
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Interactions with society and government
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Nonmarket society environment
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Societal interrest groups and communities and the news media
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Public Sentiment
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Community favor of or against a particular business
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Macroenvironment
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The total environment of the business context
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CSR (Corporate Social Responsibility) |
The conscious effort to operate in amanner that balances stakeholder interests
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Strategy
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Guides the firm's interactions with its stakeholders to achieve the firm's objectives
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Market strategies
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Used to compete for customers with the help of suppliers
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Nonmarket strategies
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Guides the firm's interactions with society and government stakeholders
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Ethics
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The moral standard of right and wrong that influences behavior
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Honesty
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A tendancy not to lie, cheat, or steal
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Lying |
Making statements that one knows to be false of misleading
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Cheating
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Breaking the rules
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Stealing
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Taking something that does not belong to the thief
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Moral Management
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Moral, immoral, and amoral managers
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Amoral Managers
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Does not believe ethics applies to business
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Values
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Important desired behaviors
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Business Ethics
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The application of ehtics to issues that arise in business
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Stakeholders
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Individuals who are affected by the business and can affect firm performance
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Stockholder Approach to Management |
Focused on meeting the needs of owners/stockholders and maximizing profits, without regard for other business stakeholders
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Stakeholder Management
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Making decision on specific issues in an ethical manner in ways that provide calue to strategic stakeholders
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Strategic Stakeholders
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Those who creitically affect the environment by firm action, and.or can affect firm performance
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Public Affairs (PA)
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How business interacts with stakeholders
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Public Affairs management
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The process of developing corpoerate public policies and strategies regarding how the business will interact with stakeholders in the BSGE (IM, CM, SA)
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Issues Management
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A PA Man. Appr. to identifying, monitoring, and analyzing, and selecting public issue that may warrant nonmarket strategies
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Issues Management Process |
1) Scanning the envir. to identitfy issues/trends that will affect the business, 2) Evaluating the impact issues will have on the firm and prioritizing, 3) Conduct a strategic analysis to develop PP
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Crisis
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Major unexpected event that has a large negatice consequence
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Crisis Man. Stages |
1) Developing the crisis team, 2) planning, 3) Managing the crisis -- communication, 4) Analyzing post crisis
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3As of Crisis Communication
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1) Acknowledge (Admit to the crisis), 2) Action (Tell what is being done), 3) Avoid (Establish a plan to avoid a repeat)
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5 I's of Strategic Analysis
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1) Issue Identification, 2) Interested Strategic Stakeholders, 3) Incentive of Stakeholders, 4) Information -- objectives, 5) Interaction Strategies
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Issues Life Cycles
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Stage 1) Identification and formation of public sentiment, 2) Interested Stakeholder formation, 3) Isue brought ot business for voluntary action, 4) legislative formation, 5) enforcement/litigation
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Objectives
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State the end result the business wants to achieve in trying to create value for the stakeholders of the issue
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Writing Objectives Models
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To + action verb + singular, specific, and measurable results to be achieved + target date
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Supportive information
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Contains accurate facts and figures and is stronger when gathered or supported by outside sources
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Information strategies
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Outside sources conducting research, getting expert testimony, and getting stakeholder support
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A Right
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Entitled to be treated in a certain way
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Duty
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An obligation to do something
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Employment Relationship |
Employer and employee expectations, rights, and duties
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Labor unions
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Societal interest groups that represent their members' special interests with employers through collective bargaining
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Norris-LaGuardia Act (1932)
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The act made the yellow dog contract (says that you will not join a union) illeal
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Wagner Act (1935, NLRA, which established the NLRB) |
Gave employees the right to unionize w/o fear of prosecution and listed unfair practices of employeers
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The Fair Standards Act (1938)
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The act established minimmum wages
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The Taft-Hartley Act (1947)
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Was passed to offset some of the imbalance of power between labor and managemnet (listed unfair practices of unions)
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The Landrum-Griffen Act (1959)
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Passed to protect union members from corrupt or discriminatory union activities (as it required regulation of internal union affairs)
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Worker Adjustment. & Retraining Notification (WARN) 1988 |
Also known as WARN, which requires employers with a 100 or more employees to give 60 da advanced notice of a plant closing or mass layoffs |
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Collective Bargaining
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Negotiation process resulting in a contract that covers employment conditions
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Mediator
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Neutral party who helps management and labor settle their disagreements
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Arbitrator |
Neutral party who makes a binding decision for management and labor
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Employee Rights
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Provide workers with desired ourcomes and protection form undesired outcomes
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6 Employee Rights
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Job Security, Due Process, Safety, Health, Privacy, and Freedom of Speech/Whistle-Blowing
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Employment-at-will |
The employment relationship is voluntary and that employees can be fired or quit for any or no reason
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Due Process
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The right to be treated fairly and to receive an impartial review of a complaint
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Ombuds
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Investigates complaints and helps to settle them fairly
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OSHA
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Assures safe and healthful working conditions for working men and women by setting and enforcing standards
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Whistleblowing
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Occurs when employees report employer wrongdoing to high-level company managers, the media, or government
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Sarbanes-Oxley Act of 2002
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Made it illegal for employers to retaliate in any way against whistleblowers who report information that could have a material impact on the value of a company's stock (reformed corporate goverance)
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Individual Stockholders
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Individuals who buy stock directly from the company
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Institutional Stockholders
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Firms that buy stock on behalf of their clients or members, including mutual funds, pensions, and endowment funds
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Corporate Charter
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Granted by the state giving the firm the right to operate under basic terms of its existence and goverance
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Stockholders
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Are the legal owners of the corporation
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Board of Directors
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Provides strategic direction and goverance and oversees the managers of the corporation
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Managers
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Individuals who plan, organize, lead, and control firm resources to achieve corporate goals
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Security and Exchange Commission
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SEC's mission is to protect stockholders' right by regulating the stock market to ensure it is run fairly
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Insider training
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Occurs when a person uses confideential information before it becomes public knowledge to buy or sell the comany stock
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Shareholder resolutions
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Place a suggested action on the proxy statement to be voted by all stockholders
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Corporate Goverance
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The legal system of checks and balances defining the power of stockholders, boards of directors, and managers
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Inside directors
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Employees orhave other ties to the company
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Outside directors
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Not employees and have no ties to the firm
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Corporate Social Responsiblity (CSR)
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The conscious effort to operate in a manner that balances stakeholder interests
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4 Areas of CSR
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Economic, Legal, Ethical, and Philanthropic
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Corporate Citizenship
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Social responsibility, responsiveness, and performance
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Responsiveness
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Business actions in society
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Corporate Reputation
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Affects the bsiness's relationship with stakeholders
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Rating Research
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Measures and rates corporations by repuutation and disseminates the ratings
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Levels of CSR
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Legal, Ethical, or Benevolent
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Legal CSR
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Focuses on maximizing profits while obeying the law
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Ethical CSR
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Focus on profitability and going beyond the law to do what is right, just, and fair
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Benevolent CST
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Focus on profitability and helping society through philanthropy
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Corportate Social Performance (CSP)
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The assessment of the firm's corporate social responsibility and responsiveness
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Stages of Corporate Citizenship
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Elementary, Engaged, Innovative, Integrated, Transform
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Corporate Citizenship Stage 1: Elementary |
Profit only
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Corporate Citizenship Stage 2: Engaged |
Philanthropy, social issues
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Corporate Citizenship Stage 3: Innovative |
Stakeholder management
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Corporate Citizenship Stage 4: Integrated |
Partnerships, triple-bottom-line
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Corporate Citizenship Stage 5: Transform |
Change the game (radical)
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Social audit
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Assesses the coporation's impact on society
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International Organization for Standardization (ISO) |
Provides guidelines for Corporate Social Responsibility |
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Triple bottom line
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A stakeholder approach to asessing financial, social, and environmental performance
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Diversity
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Refers to the degree of differences among members of a group or an organization
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Protected Groups
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Include race, color, religion, sex (including pregnancy), national origin, age (40+), etd
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Title VII of the Civil Right Act (1964) |
Prohibited discrimination in all areas of employment
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Equal Employment Opportunity Act (1972) |
Gave greater power to the EEOC to combat discrimination
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Executive Order 11246 (1965) |
Mandated affirmative action for all federal contractors
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Age Discrimination in Employment Act (1967) |
Prohibited discrimination against people 40+ years old
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ADA (Americans w/Disabilities Act - 1990) |
Strenghtened the Rehab Act to require employers to provide reasonable accommodations to allow disabled employees to work
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Equal Pay Act (1963)
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Required that men and women be paid the same for equal work
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FMLA (Family and Medical Leave Act) |
Required employers (w/50+ employees) to provide up to 12 weeks unpaid leave
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Cause-Related Marketing
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Links a corporation or brand to a social issue to benefit the business and societal interest groups
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Ethics
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The moral standard of right and wrong and fiarness that influences behavior
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Honesty
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A tendancy not to lie, cheat or steal
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Values
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Important desired behaviors
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Universal Ethics
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Impartial, it applies to everyone and morals should take precedence over self-interest
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Relativism Ethics
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Contends that morals can change based on time the circumstances of the situation, and person opinion
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Moral Development
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Understanding right from wrong and choosing to do the right thing
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Levels of Moral Development |
Preconventional, conventional, postconventional. (Lawrence Kohlberg)
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Moral Development: Level 1 - Preconventional |
(Self-centered) 1) Punishment avoidance, 2) Reward Seeking |
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Moral Development: Level 2 - Conventional |
(Social-Centered) 1) Social group norms - managers develop ethical norms, 2) Society norms |
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Moral Development: Level 3 - Postconventional |
(Principle-centered) 1) Fairness ethics, 2) universal ethics |
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Business Ethics
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The application of ethics to issues tha rise in business |
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Ethical dilemma
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When a decision must be made in the midst of conflicting interests; there is no simple right and wrong answer
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Moral Management
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Includes moral, immoral, and amoral managers
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US Foreign Corrupt Practices Act
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Prohibits companies that operate in the US from bring foreign governments to get business
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Ethical Rationalization
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The process of determining motives, reasons, explanations, and justifications that lead to particular decisions and behavior when faced with ethical dilemmas
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Justifying unethical behavior
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The process of convincing oneself that a decision is rationand ethical, when in fact it really serves and is the easy way out of the ethical dillema
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Distributive Justice
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The distribution of benefits and burdens
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Compensatory Justice
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Compensates people for past injustices, such as in the case of affirmative action
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4-Way Test (Rotary International)
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1) Is it the truth? 2) Is it fair to all concerned? 3) Will it build goodwill and better friendships? 4) Will it be beneficial to all concerned?
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5-Question Test (Sears, Roebuck)
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1) Is it legal? 2) Is it within Sears' shared beliefs and policies? 3) Is it right/fair/appropriate? 4) Would I want everyone to know it? 5) How will I feel about myself?
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Virtue Ethics
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refers to having personal character traits as the basis for ethical dilemma decisions
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Virtues Ethics Test
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The behavior must be honest, be based on good character traits, and maintain one's integrity and relationships
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Deontological Ethics
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Refers to using standards of conduct to determine right and wrong behavior when making ethical decisions
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Fiduciary
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Literally means loyalty
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Generalization test
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The reasons for the action must be consistent, and everyone in the same situation with the same resons will us the same behavior
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Utilitarian Ethics
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Refers to making ethical decisions based on the consequences of the behavior
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Utilitarian test
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One specific action leads to more favorable consequences than the alternative
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Ethics Helpline
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A system through which anonymous callers can get advice on ethical issues and whistleblowing
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Ethics audit
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focuuses on reporting ethics violations, actions taken, and methods of continuously improcing the ethics system
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Managerial Ethics
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Managers are not only responsible for their individual behavior at work, but also for setting policies and procedures to guide employee behavior
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Community
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The local area in which businesses operate and affect stakeholders
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Eniment domain
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The government's ability to take private property for government use
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Community relations
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The organized involvement of business with local society and government
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Community involvement
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Business participation in changing and improving communities
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Community involvement Programs
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Includes volunteers, philanthropic giving of resources and cash, and collaborative partnerships
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Collaborative Partnerships
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Voluntary relationships among business, society groups, and/or government for community improvement
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Customers
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Buy products from business
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Consumers
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Use business product
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Consumerism
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The organized collective efforts to safeguard all consumers by promoting their rights and power
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Consumer Rights
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Safety, information, choice, voice, and privacy
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Consumer Financial Protection Bureau (CFPB) |
Enforces laws protecting consumers of financial products, such as mortgages, home equity loans
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Consumer Product Safety Commission (CPSC) |
Protects the public by setting safety standards to avoid unreasonable risks of injury or death from products
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Federal Trade Commission (FTC) |
Prevents business practices that are anticompetitive or deceptive to consumers
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Food and Drug Administration (FDA) |
Assuring the safety of food and drugs
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National Highway Traffic Safety Administration (NHTSA) |
Works to achieve the highest standards of excellence in motor vehicle and highway safety
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Securities & Exchange Commission (SEC) |
Protects investors; maintains fair, orderly, and efficient markets
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Product Liability
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The firm's legal responsibility for its action and products, especially costs and damages
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Warranty
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A contract in which the seller guarantees the integrity of the product and the buyer is entitled ot compensation for any consequent harm and defective goods
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Express Warranty
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An explicit claim made by the producer to the customer
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Implied Warranty
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An unwritten guarantee that the product is adequate to meet reasonable expectations for intended purposes
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Full Warranty
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Must express unconditional assurance that the product will be replaced or repaire within a reasonable time
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Limited Warranty
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Conditionally excludes certain parts of the product or particular types of defects from coverage
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Product liability litigation
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The process of a consumer filing a lawsuit against a firm seeking compensation for harm resulting from defective products or business actions
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Strict Liability
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The plaintiff does not have to prove negligence when the activity or product is inherently dangerous
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Media
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The combined means of mass communication that influences society
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Newsworthy stories
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Interesting and have social significance; they are about people, are immediate or urgent, involve controversy or conflict, and are easy to tell
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Treatment of Stories
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1) Factual Stories, 2) Interpretation Stories, 3) Implication Stories, 4) Advocacy Stories
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Advocacy Advertisements
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Used to present the business side of a controversial social or political issue
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Activists
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Societal interest groups, their members, and anyone interested in their causes
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Roles of Activists
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1) Provide information about business activities, 2) Develop nonmarket agenda issues for business, 3) Set voluntary standards and influence laws and regulations
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Public Citizen (PC)
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A consumer advocat to the government
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Consumer Federation of America
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(CFA)
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Center for Public Integrity |
a non advocacy institution that provides investigation journalism on issues of public concern
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business interest groups
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nonprofit organizations comprised of groups of firms join together to their interests on issues
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peak interest groups
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represent businesses from several industries on a broad range of general business interest issues
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trade groups |
represent businesses on a narrower range of industry or business specific interest issues
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Roles of business interest groups
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1. Provide information, 2. keep the business side of issues, 3. Prime members services, 4. Set voluntary standards and enforce laws regulations
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Better Business Bureau (BBB)
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a neutral third party interest group that helps consumers and businesses like maintain ethical marketplace
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US Chamber of Commerce
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the largest business advocates to government and society
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the Business Roundtable
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an association of chief executive officers of leading US corporations that serve as a business advocate for the government
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National Federation of Independent Business |
a small independent business advocates to government that serves as a key resource to its members
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7 Activist Strategies
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grassroots efforts, demonstrations: picketing and rallies, boycotting, news media relations and advocacy advertising coalition, appeal to government, and litigation
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Grassroots Efforts |
involves getting stakeholders support to pressure organizations to meet activist special interests
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Six Grassroots Tactics
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visits, calls, letters, preprinted letters and postcards, grass-tops, internet (emails, and cyber advocacy)
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Boycotts
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Activist requests that society not do business with a firm
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Coalitions
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Diverse organizationn and interest groups working together temporarily for a common interest
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8 Nonmarket Business Tactics |
Public sentiment, GNS, lockouts, grassroots, news/media, coalitions, government, and litigation
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Grand Nonmarket Strategies
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Donating, ignoring, opposing, negotiating, and working with activists
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Lockouts
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Occur when the business does not allow employees to come and work, usually only with unionized employees when labor negotiations break down
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Supremmacy Clause
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Gives federal laws precedence over state laws
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Regulations
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The business rules of conduct
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Natural Monopoly
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Occurs when one large business can supply the entire market more efficiently and cheaply than several small firms due to economics of scale
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Externalities
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Costs of production borne by society rather than the business causing them
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Rules
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Are developed by regulatory agencies to implement laws passed by congress
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Wagner Act
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Established the National Labor Relations Board (NLRB)
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Taft-Hartley Act
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Established the Federal Mediation and Conciliation Services (FMCS)
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Sarbanes-Oxley Act
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Created the Public Company Accounting Oversight Board (PCAOB)
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Congress
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Passes statute and delegates the responsibility for writing and law enforcing the law to regulatory agencies
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President
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Signs statutes into law
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Regulatory Agencies
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Write the rules and enforce them
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Public Policy
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The action government takes to deal with issues
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Industrial Policy
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Government action directing resources to the development of specific industries
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Fiscal Policy
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Government taxing and spending to support and/or stimulate the economy
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Monetary Policy
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The supply, demand, and value of the US currency
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Taxation Policy
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Raises or lowers taxes on individuals and business to encourage or discourage spending
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Legistlative process
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Committee action, floor action, conference action, a vote by both chambers, signed by president, or vetoed, then passed by congress
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Pivotal Voters
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Those most likely to switch the outcome of the vote because they are often undecided and they can be influenced
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Political information strategies
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Focus on technical facts and how the business side of the issue will benefit politicians and their constitutents
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Message Framing
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Refers to the terms used to gain public sentiment for one's side or an issue
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Hard money
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A direct contribution to a candidate's political campaign
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Soft money
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A contribution to a PAC for use in party-building activities
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Prisoners' Dilemma
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A situation in which if one competitor uses a strategy to gain an advantage, the other must follow, even when all lose
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The Executive Branch
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1) The Executie Office of the President, 2) Executive Departments, 3) Independent Agencies and Gov't Corporations, 4) Boards, Commissions, and Committees, 4) Quasi-Official Agencies
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Executive Office
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Made up of White House offices and agencies
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The Cabinet
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Includes the heads of the 15 executive departments
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Executive Departments
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Have their own offices, regulatory agencies, and advisory committees
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Independent Agencies
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Regulators that are not part of and do not report to any of the 15 executive departments
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Regulatory Impact Analysis (RIA)
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A statement of the need for the proposed regulatory action, an examination of alternative approaches, and an evalutation of th benefits and costs
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Federal Register
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A daily journal publication of rules, proposed rules, notices, and other public regulatory information
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Regulations.gov
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Enables users to find, view, and comment regulations for all federal agencies
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Administrative Procedures Act (APA)
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Developed the rule-making process that includes prociding public notice and allowing comments during agency rule making, prior to agency action
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Procedural Due Process
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Allows business to challenge a rule by claiming that the agency did not follow the APA procedures in making the rule
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Substantive Due process
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Allows business to challenge a rule by claiming that the agency exceeded its scope of regulatory authority
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Cross-subsidization
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Occurs when one group of customers pays less then the cost and others pay more to offset that loss
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Cost-of-service regulation
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When prices are regulated based on costs that are passed on to customers, which reduces the incentive to keep costs down
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Privatization
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Government allowing business to perform functions and services for it
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Deregulation
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A significant reduction in the regulation of an industry
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Rule Making Process
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1) Regulatory agencies write proposed rule, 2) Rule goes to the Federal Register, 3) Agency revises and finalizes rule, 4) Published in Federal Register, 5) Rules take effect in a minimum of 30 days, 6) Businesses may challenge, 7) Agency enforces rule
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Antitrust Laws
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Preserves capitalism by protecting competition to benefit consumers
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The Sherman Act (1890)
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Prohibited unreasonable restraints of trade and monopolization (Price-fixing)
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The Clayton Act (1914)
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Prohibited anicompetitive mergers, price discrimination, director interlock, and typing contracts
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Fed. Trade Commission Act (1914)
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Prohibited unfair competition and deceptive practices and created the FTC to help enforce antitrust laws
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Antitrust Improvement Act (1976)
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Required premerger notification and approval and alowed states to sue business for price fixing
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Predatory Pricing
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Selling products below cost to drive competitors out of business
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Benefits of Antitrust Laws
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To protect competition, to protect consumers, to protect small business from large busines
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Price-fixing (Sherman Act)
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Competitors colluding to explicity or implicitly agree on the price they will charge
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Price Discrimination (Clayton Act)
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Selling products to a customer for less without evidence of a lower cost for serving the customer
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Director Interlock (Clayton Act)
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Having a director serving on the boards of two companies that are in direct competition
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Typing Contracts (Clayton Act)
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Require the buyer to purchase additional products as a condition of the sale
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Acquisition
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Occurs when a larger company buys a smaller company
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Merger
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When two relatively equal sized companies combine
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Horizontal Mergers
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Combine two companies in the same industry
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Vertical Mergers
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Combine two companies at different stages of the supply chain
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Conglomerate mergers
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Combine a company with a firm in an unrelated industry
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Duties of the Department of Justice / Federal Trade Commission |
Duties: Investigations, settlements, and lawsuits
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Consent decrees
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Agreements reached by the litigants under the sanction of a court
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Common law
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Consists of the precedents from the rulings in courts on cases brought by plaintiffs
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Crinimal Lawsuits
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Cases brought by the government against a person or group for breaking the law
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Civil lawsuits
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Cases brought by a plaintiff against a defendant seeking compensation for damages
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Public lawsuits
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Cases brought by a plaintiff against the government for failure to act in accordance with its statutory obligations
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Federal Courts
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Trail -- Appellate --- Supreme
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Globalization
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The integration of national economies into one global economy
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Domestic Company
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Conducts business in one country
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International Comapanies
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Based primarily in one country but transact business in other countries -- imports and exports
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Multinational Corporations (MNCs)
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Have significant direct investment operations in more than one country
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Free enterprise
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Allows anyone to start a business, with open markets and essentially no government regulation of business
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Central State Control
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Does not allow, or limits, private ownership of businesses, and markets are closed because only the government operates all business
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Competitive advantage of nations
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A country has a cluster of similar companies in industries that give the country advantage over other countries
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Trade subsidies
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Government funds given to a business to lower its costs
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Tariffs
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A tax on imports and exports to make them more expensive
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Trade quotas
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Set limits on imports and exports
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Trade bans
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Prohibit the import and export of products
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Antidumping
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Allows tariffs on products that are imported at a price that is less than fair value
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World Trade Organization (WTO)
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Administers trade agreements, develops trade rules, and settle trade disputes between member nations
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World Bank
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A lending institution that provides loans and technical assistance to poor countries that they can conduct trade in the global economy
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International Monetary Fund (IMF) |
Keeps track of the global economy and the economies of member countries, lend to countries with balance of payments difficulties
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Grease payments
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Involves small amounts of money paid to employees to facilitate the conduct of business
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Bribes
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Payments of "gifts" given to business and government officials for the purpose of getting or maintaining business, usually paid to high-level
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Offset
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Government requirements to fund nonbusiness projects as a prerequisite to conducting business
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Ethical Impact Statements
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Assessing the underlying moral justification for businesses' actions and the consequences of those actions
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Technology
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The process of transforming resources into products
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Productivity
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A performance measure relating product and service outputs to resource inputs (producing more with less) [Output/Input = Productivity]
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Information Technology (IT)
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The ability to process, store, and retrieve large amounts of information at great speeds through networks of linked systems
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E-commerce
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Involves transacting business electronically through the Internet
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M-commerce
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Involves transacting business through a mobile device
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Online communities
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Interact with each other through a firm's website
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Chief Information Officers (CIO)
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Are responsible for ensuring privacy and information security
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Biotechnology
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Combines biology and technology to develop and produce business products
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Bioethics
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The application of ethics to the field to biotechnology
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Pollution
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A substance released into the environment that has a negative effect on the environmment and on society
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Ozone
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An oxygen-related gas that floats in a thin layer in the stratosphere between 8 and 25 miles above the earth
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Greenhouse Effect
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The prevention of solar heat absorbed by the atmosphere from returning to space, creating global warming and climate changes
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Biodiversity
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The number and variety of species and the range of their genetic makeup
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Clean Air Act
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Requires the EPA to set national standards that limit pollution harmful to people and the environment without regard for the cost
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Clean Water Act
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Sets broad environmental quality goals and an implementation system for the federal and state governments
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National Pollutant Discharge Elimination System |
(NPDES) was created to specify maximum permissible discharge levels and timetables for installing state-of-the-art water-pollution control equipment
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Solid Waste Disposable Act
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Gives regional, state, and local gov'ts the main reponsibility for nontoxic wast management
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Resource Conservation & Recovery Act |
Created a federal system for the responsibility of hazardous waste
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Pollution Prevention Act
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Provides guidelines, training, and incentives for companies to reduce pollution
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Sustainable Development
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Balances the need for economic growth with the need to maintain our natural environment |
