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100 Cards in this Set
- Front
- Back
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Social responsibility
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Proposes that a private corporation has responsibilities to society that extend beyond making a profit
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Milton's view of 'social responsibility'
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Even if the businessperson has shareholder permission or encouragement to do so, he or she is still acting from motives other than economic and may, in the long run, harm the very society the firm is trying to help. By taking on the burden of these social costs, the business becomes less efficient. Social responsibility is a "fundamentally subversive doctrine". There is one and only one social responsibility of business - to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud
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Byron on maximization of profits
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"It cannot be the primary obligation of business."
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Carroll's proposition is that managers of business organizations have 4 responsibilities:
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Economic, Legal, Ethical, Discretionary
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Carroll: Economic responsibilities of a business orgnaization's management
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- Produce goods and services of value to society so that the firm may repay its creditors and shareholders
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Caroll: Legal responsibilities
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- Defined by governments; management should obey laws
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Caroll: Ethical responsibilities
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Follow the generally held beliefs about behavior in a society
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Carroll: Discretionary responsibilities
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Purely voluntary obligations a corporation assumes.
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Difference b/w ethical & discretionary responsibilities
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Few people expect an organization to fulfill discretionary responsibilities, whereas many expect an org. to fulfill ethical ones
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T or F: Carroll's responsibilities are listed in order of priority.
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True
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Social responsibility includes which responsibilities?
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Ethical and discretionary
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As societal values evolve, what happens?
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The discretionary responsibilities of today may become the ethical responsibilities of tomorrow
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Carroll suggests that, to the extent that business corporations fail to acknowledge discretionary/ethical responsibilities, what will happen?
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Society, through gov't, will act to make them legal responsibilities.
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Empirical research now indicates that socially responsible actions may have a positive effect on a firm's financial performance. T or F?
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T
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Social capital
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The goodwill of key stakeholders
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Examples of benefits received from being socially responsible:
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- Ability to charge premium prices & gain brand loyalty
- Generate enduring relationships w/ suppliers & distributors - Attract outstanding employees - Welcome in foreign countries - Political support |
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Stakeholders
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People/groups with interest in a business organization's activities, who affect or are affected by the achievement of the firm's objectives.
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T or F: 90% of U.S. public believes U.S. corporations owe something to their workers and the communities in which they operate and that they should sometimes sacrifice some profit for the sake of making things better for their workers and communities.
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False. 95%!
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True or False: the DJIA has outperformed the DJSI
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False. Dow Jones Sustainability Index has outperformed.
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Enterprise strategy
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An overarching strategy that explicitly articulates the firm's ethical relationship with its stakeholders.
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Stakeholder analysis
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The identification and evaluation of corporate stakeholders.
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Step 1 in stakeholder analysis
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Identify primary stakeholders (direct connection to corp.; sufficient bargaining power to affect corp. activities)
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Step 2 in stakeholder analysis
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Identify secondary stakeholders - those who only have an indirect stake in the corp. but are affected by it. (NGOs, activists, local communities, trade associations, competitors, and govts.)
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Step 3 in stakeholder analysis
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Estimate the effect on each stakeholder group from any particular strategic decision
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Rule-based countries
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Tend to be more transparent and have a lower degree of corruption than relationship-based countries
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Relationship-based countries
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Tend to be less transparent and have a higher degree of corruption than rule-based countries
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Countries w/ the most opaque/least transparent ratings are:
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Indonesia, Venezuela, China, Nigeria, India, Egypt, and Russia
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Moral relativism
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Claims that morality is relative to some personal, social, or cultural standard and that there is no method for deciding whether one decision is better than another.
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Types of moral relativism
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Naive, role, social group, cultural
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Naive relativism
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"individuals have the right to run their own lives"
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Role relativism
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"Social roles carry with them certain obligations to that role"; e.g., blindly following orders
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Social group relativism
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"Everyone's doing it." Morality is simply a matter of following the norms of an individual's peer group.
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Cultural relativism
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Morality is relative to a particular culture, society, or community. "You should understand, but not judge, another culture."
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Kohlberg's levels of moral development:
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preconventional, conventional, principled
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Kohlberg's 1st level of moral development:
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Preconventional: concern for self. Evaluate based on the basis of personal interest.
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Kohlberg's 2nd level of moral development:
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Conventional: considerations of society's laws and norms. Actions are justified by an external code of conduct.
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Kohlberg's 3rd level of moral development:
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Principled: adherence to an internal moral code. Look beyond norms or laws to find universal values or principles.
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Code of ethics
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Specifies how an organization expects its employees to behave while on the job.
It (1) clarifies company expectations of employee conduct in various situations and (2) makes clear that the company expects its people to recognize the ethical dimensions in decisions and actions |
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Ethics
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The consensually accepted standards of behavior for an occupation, a trade, or a profession.
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Morality
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(contrasted w/ ethics) is the precepts of personal behavior based on religious or philosophical grounds
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Law
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Formal codes that permit or forbid certain behaviors and may or may not enforce thics or morality
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Utilitarian approach
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Proposes that actions and plans should be judged by their consequences. People should therefore behave in a way that will produce the greatest benefit to society and produce the least harm or the lowest cost.
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Individual rights approach
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Proposes that human beings have certain fundamental rights that should be respected in all decisions. Problem: defining "fundamental rights"
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Justice approach
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Proposes that decision-makers be equitable, fair, and impartial in the distribution of costs and benefits to individuals and groups.
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Kant's categorical imperatives
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1. A person's action is ethical only if that person is willing for that same action to be taken by everyone who is in a similar situation.
2. A person should never treat another human being simply as a means but always as an end. |
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Environmental scanning
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The monitoring, evaluation, and dissemination of information from the external and internal environments to key people within the corporation. A corp. uses this tool to avoid strategic surprise and to ensure its long-term health.
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Natural environment
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Physical resources, wildlife, climate (inherent parts of existence on Earth)
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Societal environment
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Mankind's social system that includes general forces that do not directly touch on the short-run activities of the organization that can (and often do) influence its long-run decisions.
i.e., economic, technological, political-legal, and sociocultural |
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Economic forces
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Forces that regulate the exchange of materials, money, energy, and information
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Technological forces
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Forces that generate problem-solving inventions
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Political-legal forces
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Forces that allocate power and provide constraining and protecting laws and regulations
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Sociocultural forces
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Forces that regulate the values, mores, and customs of society
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Task environment
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Includes those elements or groups that directly affect a corporation and, in turn, are affected by it (govt's, local communities, suppliers, competitors, customers, creditors, employees/labor unions, special-interest groups, trade associations)
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Industry analysis
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An in-depth examination of key factors within a corporation's task environment
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Externalities
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Costs not included in a business firm's accounting system, but felt by others
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Sustainability
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A firm's ability to continuously renew itself for long-term success and survival is dependent not only upon the greater economic and social system of which it is a part, but also upon the natural ecosystem in which the firm is embedded.
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Carbon footprint
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The amount of greenhouse gases it is emitting into the air
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Repatriation of profits
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The transfer of profits from a foreign subsidiary to a corporation's headquarters
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STEEP analysis
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Sociocultural, Technological, Economic, Ecological, and Political-legal environmental forces (also called PESTEL for a similar acronym)
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BRIC countries
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Brazil, Russia, India, China
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Technological breakthroughs that are having a significant impact on many industries:
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- Portable info devices and electronic networking
- Alternative energy sources - Precision farming -Virtual personal assistants - Genetically altered organisms - Smart, mobile robots |
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The global economy operates through a set of rules established by which org?
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World Trade Organization (WTO). Composed of 153 member nations and 30 observer nations, the WTO is a forum for governments to negotiate trade agreements and settle trade disputes.
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Demographic trends are a part of which aspect of the societal environment?
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Sociocultural
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8 current sociocultural trends transforming N. America & the rest of the world:
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1. Increasing environmental awareness
2. Growing health consciousness 3. Expanding seniors market 4. Impact of Generation Y Boomlet 5. Declining mass market 6. Changing pace and location of life 7. Changing household composition 8. Increasing diversity of workforce and markets |
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Riba
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Interest (in sharia)
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Multinational corporation (MNC)
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a company w/ significant assets and activities in multiple countries
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An important economic variable for any firm investing in a foreign country
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currency convertability
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Before planning its strategy for a particular international location, a company must scan the particular country environment(s) in question for what?
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opportunities and threats, and it must compare those w/ its own org. strengths and weaknesses
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trigger point
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The time when enough people have enough money to buy what a company has to sell but before competition is established.
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Purchasing power parity (PPP)
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Measures the cost in dollars of teh U.S.-produced equivalent volume of goods that an economy produces
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PPP offers what?
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An estimate of the material wealth a nation can purchase, rather than the financial wealth it creates (measured by GDP). it identifies when demand for a particula rproduct is about to rapidly increase in a country.
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The origin of competitive advantage lies where?
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In the ability to identify and respond to environmental change well in advance of competition
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Strategic myopia
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The willingness to reject unfamiliar as well as negative information
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The Issues Priority Matrix plots likely trends on what basis?
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Probability of occurrence (low to high) against Probable impact on corporation (low to high)
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External strategic factors
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Key environmental trends that are judged to have both a medium to high probability of occurrence and a medium to high probability of impact on the corporation
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Industry
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A group of firms that produces a similar product or service, such as soft drinks or financial services
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Michael Porter's 6 forces:
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new entrants, rivalry among existing firms, threat of substitute products or services, bargaining power of buyers, bargaining power of suppliers, relative power of other stakeholders
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A strategist can analyze any industry by rating each competitive force on which scale:
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low, medium, or high in strength
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New entrants
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typically bring a new capacity, desire to gain market share, and substantial resources
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Entry barrier
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Obstruction that makes it difficult for a company to enter an industry
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Entry barriers
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Economies of scale; product differentiation; capital requirements; switching costs; access to distribution channels; cost disadvantages independent of size; gov't policy
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Factors in the intensity of rivalry of other firms
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- # of competitors
- rate of industry growth - product/service characteristics - amount of fixed costs - capacity - height of exit barriers - diversity of rivals |
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Substitute product
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A product that appears to be different but can satisfy the same need as another product
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Commodity
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A product whose characteristics are the same, regardless of who sells it
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Complementor
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A company or industry whose product works well with a firm's product and without which the product would lose much of its value (e.g., Microsoft and Intel)
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Fragmented industry
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Where no firm has large market share, and each firm serves only a small piece of the total market in competition with others (for example, cleaning services)
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Consolidated industry
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Dominated by a few large firms, each of which struggles to differentiate its products from those of the competition
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Multidomestic industries
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Specific to each country or group of countries; industry in which companies tailor their products to the specific needs of consumers in a particular country.
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Global industries
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Industries in which companies manufacture and sell the same products, with only minor adjustments made for individual countries around the world
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Factors that tend to determine whether an industry will be primarily multidomestic or primarlily global:
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1. Pressure for coordination with the MNCs operating in that industry
2. Pressure for local responsiveness on the part of individual country markets |
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Regional industries
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MNCs that primarily coordinate their activities w/in regions, such as the Americas or Asia
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Strategic group
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A set of business units or firms that "pursue similar strategies with similar resources" (e.g., Red Lobster, Olive garden, and ChiChis are a strategic group)
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Strategic type
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A category of firms based on a common strategic orientation and a combination of structure, culture, and processes consistent w/ that strategy
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Defenders
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Companies w/ a limited product line that focus on improving the efficiency of their existing operations
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Prospectors
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Companies w/ fairly broad product lines that focus on product innovation and market opportunities
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Analyzers
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Corps. that operate in at least two different product-market areas, one stable and one variable
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Reactors
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Corps. that lack a consistent strategy-structure-culture relationship. Their (often ineffective) responses to environmental pressures tend to be piecemeal strategic changes. Most major US airlines have recently tended to be reactors -- given the way they have been forced to respond to new entrants such as Southwest and JetBlue.
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Hypercompetition
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The frequency, boldness, and aggressiveness of dynamic movement by the players accelerates to create a condition of constant disequilibrium and change. Market stability is threatened by short product life cycles, short product design cycles, new technologies, frequent entry by unexpected outsiders, repositioning by incumbents, and tactical redefinitions of market boundaries as diverse industries merge. In other words, environments escalate toward higher and higher levels of uncertainty, dynamism, heterogeneity of the players and hostility.
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Key success factors
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Variables that can significantly affect the overall competitive positions of companies w/in any particular industry.
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industry matrix
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summarizes the key success factors w/in a particular industry
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