Chapter 2 Flashcards
What are inducments?
Rewards(money, power, organisational status)
What can be shareholder’s inducment?
Dividends, increases in the price stock
Name inside stakeholders
Managers, Shareholders, workforce
What would be governemnts inducement to contribute?
Fair and free competition
What would be trade unions inducement to contribute?
Fair and free collective competition
What is authority?
The power to hold people accountable for their actions and to make decisions concerning the use of organisational resources.
Who are the chair of board directors?
Principal representitives of shareholders and has the most authority in an organisation. The chair has the responsibility for monitoring and evaluating the way corporate managers use osrganisational resources.
What does salary committee does?
It sets the salaries and terms of employment for corporate managers.
Who are inside directors?
Directors who also hold offices in a company’s formal hierarchy: they are full-time employees of the company.
Who are outside directors?
They are not employees of the colmpany. Many are professional directors who hold positions on the board of many companies or they are executives of other companies who sit on other companies boards.
What is the goal of having outide directors?
To bring objectivity to a company’s decision making and to balance inside directors power.
Who is corporate level managbement?
Inside stakeholder group
What is corporate management job?
1.To set companies goals
2.To design organisation stgructure
3.To allocate organisational resources
What is chain of demand?
The system of hierarchical reporting relationships in an organization .
What is hierarchy?
A classification of people according to authority and rank- a vertical ordering of organisational roles according to their relative authority.
Explain role line
Held by managers who have direct responsibility for the production of goods and services.Responsible of products that should be sold.
Explain staff role
Held by managers who are in charge of a specific organisational function such as sales or R&D. In charge of support functions, technical support or administrative support.
What is agency theory?
(povezano sa moral hazard)
-Shareholders are at information disadvatage
-The goals and interests of managers and shareholders may diverge
When is self-dealing used?
To describe the conduct of corporate managers who take advantage of their position is an organisation to act in their own interest rfather then in interest of other shareholders.
What is governance mechanism?
It is used to overcome agency problem.
Explain Stock-based compensation schemes
Monetary rewards in the form of stocks or stock options that are linked to the company’s performance.
Explain promotion tournamnets and career paths
One way of linking rewards to performance over the long-run is by developing organisational career paths that allow managers to rise to the top of the organisation.
What is ethical dilemma?
Dilemma people experience when they must decide whether or not they should act in a way that benefits someone else even if it harms others and isnt in their own interest.
What is ethics?
The moral principles or belifs that people use to analyse olr interpret a situation and then decide what is the “right” or appropriate way to behave.
Describe Utilitarian Model
An ethical decision is one that produces the greatest good for the greatest number of people.
Describe Moral Rights Model
An ethical decision is a decision that best maintains and protects the fundamental rights and privileges of people affected by it. They should choose the course of action that best protects stakeholders rights.
Describe Justice Model
An ethical decision is a decision that distributes benefits and harms among stakeholders in a fair, equitable or impartial way.
What are societal ethics?
They are codified in a society’s legal system , in its customs and practices and in unwritten norms and values that people use to interact with each other.
What are professional ethics?
They are moral rules and values that a group of people uses to control the way they perform a task or use resources.
What are individual ethics?
They are personal and moral standards used by individuals to structure their interactions with other people.
Why do ethical rules governing action develop?
-To slow down the pursuit of self-interest
-“Tragedy of commons”-cows
Explain connection between ethical rules and transaction costs
Ethical rules reduce the cost people bear to decide what is right or appropriate.(the costs of monitoring, negotiatins and enforcingg agreements with other people).
Who establishes ethical culture of organisation?
Board and top managers
Describe whistle-blowing
Occurs when emplyee informs an outside person or agency about an orgbanisations(its managers)illegal or immoral behaviour.
