Chapter 2 Flashcards

1
Q

True or false: Building effective relationships is one of the most important areas of business today.

A

True. Business ethics is a team sport and few decisions are made by only one individual

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2
Q

The relationship between companies and their stakeholders is a (one/two way) street

A

Two-way street. Not just about what you do to them, but what they do to you.

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3
Q

What does the stakeholder framework do?

A

-identify internal and external stakeholders -Helps monitor and respond to needs, values, and expectations of stakeholder groups

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4
Q

Define Corporate governance

A

The formal system of accountability and control of ethical and socially responsible behavior

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5
Q

Give four examples of stakeholders

A

Customers employees government agencies investors suppliers communities

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6
Q

Define stakeholders

A

Those who have a stake or claim in some aspect of a company’s products, operations, markets, industry, and outcomes

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7
Q

Define the Descriptive approach to stakeholder theory

A

Focuses on actual behavior, addressing decisions and strategies in stakeholder relationships

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8
Q

The three approaches to Stakeholder theory (IND) are

A

Instrumental Descriptive Normative

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9
Q

What is the normative approach to stakeholder theory?

A

Principles and values help identify ethical guidelines that dictate how to treat stakeholders

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10
Q

Difference between primary and secondary stakeholders?

A

Primary: those whose continued association is absolutely necessary for a firm’s survival Secondary:do not typically engage in transactions with the firm and are not essential to a firm’s survival

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11
Q

What is the instrumental approach to stakeholder theory?

A

Examines stakeholder relationships and describes outcomes for particular behaviors

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12
Q

Media, trade associations, and special interest groups are examples of (primary/secondary/neither/both) stakeholders

A

secondary

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13
Q

What are four levels of social responsibilty?

A

Economic Legal Ethical Philanthropic

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14
Q

Define the Stakeholder Orientation

A

The degree to which a firm understands and addresses stakeholder demands.

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15
Q

Give two examples of primary stakeholders

A

Employees, customers, investors, governments, and communities

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16
Q

Peta is an example of a Trade association. True or false?

A

False, PETA is a special interest group

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17
Q

The Legal step of social responsibility is “following standards of acceptable behavior as judged by stakeholders”. True or Fale?

A

False. Legal is “abiding by all laws and government regulations. See the steps of social responsibility in picture attached (slide 9)

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18
Q

Where are primary stakeholders arranged on the Stakeholder interaction model?

A

Around the Company, with arrows between each other showing dependence upon one another.

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19
Q

An organization’s obligation to maximize its positive impact on stakeholders and minimize its negative impact is known as its

A

social responsibility

20
Q

Businesses can (continue to/no longer afford to) ignore the natural environment as a stakeholder

A

no longer afford to. This is known as Sustainability, a social responsibility issue.

21
Q

True or false: Caring about stakeholders has no effect on profits

A

False. Can lead to increase profits. The purpose of a stakeholder orientation is to maximize positive outcomes that meet stakeholder’s needs

22
Q

The extent to which businesses strategically meet their economic, legal, ethical, and philanthropic responsibilities is known as

A

Corporate Citizenship

23
Q

Define Consumer Protection, a social responsibility issue.

A

The company has the responsibility of taking precautions to prevent consumer harm

24
Q

True or false: Reputation is one of an organization’s greatest intangible assets with tangible value

A

True. Although difficult to quantify, important because a single negative incident can influence an organization’s image and reputation instantly and for years afterwards

25
Q

Research shows corporate governance has a strong negative relationship with social responsibility. True or false?

A

False - Research shows corporate governance has a strong POSITIVE relationship with social responsibility

26
Q

Just incase, see list of World’s most ethical companies.

A

(slide 11)

27
Q

The four interrelated dimensions of Corporate Citizenship are

A

Strong sustained economic performance Rigorous compliance Ethical actions beyond what is legally required Voluntary contributions to advance reputation and stakeholder commitment

28
Q

Social responsibility issues deal with concerns that affect the welfare of our entire society, associated with the common good. True or false?

A

True

29
Q

Accountability, a component of corporate governance, is defined as

A

How closely workplace decisions align with a firm’s strategic direction

30
Q

Are Executive Compensation, Strategies, Shareholder Relations considered corporate governance topics?

A

Yes, see list attached (slide 17)

31
Q

Corporate Governance is defined as

A

Formal systems of accountability, oversight, and control

32
Q

Stakeholders support companies they perceive to be socially responsible, enhancing profitability. True or false?

A

True.

33
Q

Just incase, see list of best corporate citizens

A

(slide 15)

34
Q

Difference between Oversight and Control, two aspects of Corporate Governance

A

Oversight: A system of checks and balances to minimize opportunities for misconduct Control: The process of auditing and improving organizational decisions and actions

35
Q

True or False: Boards, on average, are getting larger

A

False. Boards are getting smaller, with an average of 11 members ( 5 : 1 ratio independent: non-independent)

36
Q

True or false: less than half boards conduct annual board performance evaluations

A

False. Almost all boards conduct annual board performance evaluations

37
Q

True or false: the majority of boards have mandatory retirement rules for directors.

A

True. 74 % of boards have mandatory retirement rules for directors

38
Q

Many boards spend (more/less/no/all of their) time discussing compensation than ensuring integrity of financial reporting systems

A

More. Ask questions like: How closely linked is executive compensation to company performance? Does performance-linked compensation encourage executives to focus on short-term performance at the expense of long-term growth?

39
Q

Define the interlocking directorate

A

the concept of board members being linked to more than one company

40
Q

True or false: Important characteristics in directors: strong financial background, industry background, and international experience

A

True

41
Q

See picture attached for changes in corporate governance

A

(slide 18)

42
Q

Difference between the Shareholder Model and the Stakeholder Model

A

Shareholder model: Founded in classic economic precepts Maximizing wealth for investors and owners. Stakeholder model: A broader view of the purpose of business. Includes satisfying concerns of primary stakeholders including employees, suppliers, regulators, communities and special interest groups

43
Q

true or false: The global financial crisis motivated many to demand greater accountability from boards

A

True.

44
Q

Define the Role of Board of Directors

A

Holds final responsibility for its firm’s success, failure, and ethicality of actions. In reality, boards rarely manage but instead monitor executive decisions.

45
Q

True or false: Stakeholders demand that boards are accountable and transparent

A

True. Directors offer expertise, competence, and diverse perspectives to strategic decisions. Qualified, knowledgeable, diverse, unbiased boards can prevent misconduct.

46
Q

Executive compensation is a (stable/growing/declining) ethical concern in the role of board of directors

A

growing ethical concern

47
Q

What are the six steps towards implementing a stakeholder perspective?

A
  1. Assessing the corporate culture 2. Identifying stakeholder groups 3. Identifying stakeholder issues 4. Assessing organizational commitment to social responsibility 5.Identifying resources and determining urgency 6.Gaining stakeholder feedback