Exam 1 Flashcards
Define business
Collection of private, commercially oriented organizations, ranging in size from one-family proprietorships to corporate giants
Define Society
A community, nation, or a broad grouping of people w/common traditions, values, institutions, and collective activities and interests
What is the macroenvironment
The total environment outside the firm
What are the four segments of the macroenvironment
Social, Economic, Political, and Technology
What composes the social macroenvironment
Demographics, lifestyles, culture and social values of society
What composes the economic environment
Nature and direction of the economy in which business operates
What composes the political environment
The process by which laws get passed and officials get elected and all other aspects of the interaction between firms, political practices and government
What composes the technological environment
The total set of tech-based advancements taking place in society and the world
Define pluralism
A diffusion of power among society’s many groups nd organizations
What is a pluralistic society
One in which there is a wide decentralization and diversity of power concentration
What is a special interest society
One characterized by many special interest groups with pursuit of their own agendas
Define Nongovernmental organization (NGO)
Interest groups that represent all sectors of society
ist the ten factors in the social environment
Affluence Education Awareness by TV, movie, internet, and social media Revolution of rising expectations Entitlement Mentality Rights movement Victimization Philosophy
Define affluence
Level of wealth, disposable income, and standard of living of the society
What is the revolution of rising expectations
One of the factors of the social environment that is the belief that each generation ought to have a higher standard of living than the previous
What is entitlement mentality
One of the factors of the social environment that is the general belief that someone is owed something simply by being a part of society
What is the rights movement
One of the factors of the social environment that is the combination of rising expectations and entitled mentality
What is the victimization philisophy
One of the factors of the social environment that states that people/groups are the victim of buisness
What is business power
The capacity to impart a group of people/society
What are the four levels of business power
Macrolevel, intermediate, microlevel, individual level
What is the macrolevel of bus power
the entire corporate system
what is the intermediate level of bus power
Groups of corporations working together to produce an effect
What is the microlevel of bus power
The level of an individual firm
What is the individual level of bus power
The leader of a corporate firm
What are the spheres of power (list)
Economic Social/cultural Individual Technological Environmental Political
What is the Iron law of Responsibility
If power and responsibility become out of balance, forces will be generated to return it to balance
What is a social contract
Set of the reciprocal understand and expect that characterize the relationship between business and society
What is business ethics
Urgent ethical issues (fairness/justness) in the organizational realm
What is sustainability
Businesses ability to survive and thrive long term
Sustainable Development
Pattern of resource use that aims to meet current needs while considering the envirnoment
What is a stakeholder
Has a vied interest in the firm
Initial definition of corporate social responsibility (CSR)
Seriously considering the impact of the company on society
Define Business for social responsibility (BSR)
A national business alliance that fosters responsible social practices
What were the components of the Economic Model (1800s)
Philanthropy, community obligations, and paternalism
Define philanthropy
Contributions to charity and other worthy causes
Define CSR (modern)
The social responsibility of business encompasses the economic, legal, ethical and discretionary expectations that society has of organizations at a given point of time
Define economic responsibility
Part of CSR that is the base-level tier of production of goods that society wants and to sell them at fair prices
Define legal responsibility
Business must follow the laws set in place and society can change if not followed
Define ethical responsibility
Encompassing the decision and behaviour arenas in which society expects certain levels of moral or principled performance but has not yet been put into law
Define Philanthropic responsibility
Expectation that business will give back even though it is not required by law nor ethics
What is the pyramid of CSR
1 - be profitable
2 - obey the law
3 - be ethical
4 - be a good corporate citizen
Define CSR exemplar firms
Take the lead on Corporate Social Responsibility - social entrepreneurship, social intrapreneruship, and mainstream adopters
Define social entrepreneurship firm
A CSR exemplar firm that begins with the CSR values and move forward
Define social intrapreneurship firm
A CSR exemplar firm that did not start with a social agenda but have developed a highly visible one
Define mainstream adopters
A CSR exemplar firm that has some degree of adoption of a social agenda
What are the four approaches to CSR
Defensive approach
Cost-benefit approach
Strategic approach
Innovation and learning approach
Define defensive approach
An approach to CSR that is focused on alleviating negatives
Define cost-benefit approach
An approach to CSR that is focused on the benefits over the cost of something
Define strategic approach
An approach to CSR that is focused on the environmental changes
Define innovation and learning
An approach to CSR that states that it provides opportunity to the business
What are the five ages of CSR
Greed, philanthropy, marketing, management, and responsibility
What is CSR Greenwashing
Intentionally seeking to conevy the image of social responsibility when there is no evidence that they are
What is political CSR
emphasizes activities with unintentional poltical consequences
What is Corporate Social Responsivess
Difference between an obligation and an action/dynamic decision
What is corporate social performance (CSP)
Suggests that the results are better than the intentions
What is Carroll’s CSP model
1 - categories (CSP levels)
2 - philosophies of social responsibility
3 - social issues involved
What are the seven dimensions of corporate citizenship
Citizen concept, strategic intent, leadership, structural, issues material, stakeholder relationship, and transparency
What is the triple-bottom line composed of?
3 key spheres of sustainability that must be met - economic, social, and environmental (the 3 Ps! Profits, People, and Planet)
What is the economic component of the triple-bottom line
Creation of wealth - profits
What is the social component of the triple-bottom line
Quality of life- people
What is the environmental component of the triple-bottom line
Protection and conservation - planet
What is creating shared value
Framework developed by Porter and Kramer that allows for the generation of economic value while also producing value for society
What is conscious cpitalism
Capitalism that reflects and leverages the interdependent nature of life and the stakeholders in business
What are the 4 pillars of conscious capitalism
Higher Purpose
Stakeholder Orientation
Conscious Leadership
Conscious Culture
ESG investing?
Environmental, Social, Governance investing
What is the 21st century key to success
Stakeholder Inclusion
Define stake
An interest in or a share in an undertaking
Define claim
demand for something thought to be or actually due
What is a legal right
When a person or group has a legal claim to be treated in a certain way or to have a particular right protected
Stakeholder
Individual or group that has one or more of the various levels of stakes in an organization
What is the most imoprtant stakeholder
The natural environment
What are the stakeholder groups (examples)
Employee Shareholder Customer Community Competitors Supplies Media Society Specialist Groups Activist Groups
What is the production view of firms
Owners viewed stakeholder as the individual or groups that supplied resources or bought products/services
What is the managerial view
View that in addition to suppliers and users of goods, the owners and employyees are also stakeholders
What is the stakeholder view
Encompasses the numerous different individuals and groups that are embedded in the firms international and external environment
What is a primary social stakeholder
One with a direct stake in the organization and thus are the most influential
Examples of primary social stakeholders
Shareholders and investors Employees Customers Suppliers Local Community
what is a secondary social stakeholder
One that can also be extremely influential, especially in public reputation and public standing, but their stake is indirect or derived
Examples of a secondary social stakeholder
Government and regulators Civic Institutions Social Pressure Media Trade bodies Competitors
What are primary nonsocial stakeholders
Natural environment, future generation, nonhuman species
What are secondary nonsocial stakeholders
Those who represent the primary nonsocial stakeholders - can be activist groups
What are the important stakeholder attributes (list)
Legitimacy, power, and urgency
Define legitamacy
The perceived validity of a stakeholders claim to stake (one of the important stakeholder attributes)
Define Power
The ability or capacity of the stakeholder to produce an effect (one of the important stakeholder attributes)
Define Pressure
The ability and capacity of stakeholders to affect an organization by influencing its organizational decisions - regardless of legitimacy, power, and urgency
Define Urgency
The degree to which the stakeholders claim on the business calls for the businesses immediate action/response (one of the important stakeholder attributes)
Define proximity
The spatial distance between the organization and its stakeholders
What is the strategic approach SH
An approach to stakeholders where the stakeholders are viewed as factors to be taken into consideration and managed while the firm pursues profits for its shareholders
What is the multifiduciary approach SH
An approach to stakeholders where stakeholders are more than just individuals/groups that can wield economic or legal power, and management has a responsibility towards them
What is the stakeholder synthesis appraoch
An approach to stakeholders where business has a moral responsibility to stakeholders but they should not be seen as part of a fiduciary obligation
What are the three approaches to stakeholders (list)
Strategic
Multifiduciary
Stakeholder Synthesis
What are the three values of the stakeholder model (List)
Descriptive
Instrumental
Normative
Define descriptive value
A value of the stakeholder model that provides language and concepts to describe effectively the corporation or organization in stakeholder inclusion terms
Define Instrumental value
A value of the stakeholder model that is useful in portraying the relationship b/t the practice of stakeholder management and the resulting achievement of corporate performance goals
Define normative value
A value of the stakeholder model where stakeholders are seen as possessing value irrespective of their instrumental use to management
What are the 5 key questions to Stakeholder mgt
Who are the organizations SH
What are their stakes
What opportunities and challenges do they present
What responsibilities do we have to them
What strategies or actions should firms take to best address the opp and challenges
What are the kinds of responsibilities a firm has to a stakeholder?
Legal, Ethical, Economic and Philanthropic
What are the four strategies to be taken towards stakeholders
Supportive SH - INVOLVEMENT (High coop, low threat)
Nonsupporive SH - DEFENSIVE (low coop, high threat)
Marginal SH - MONITOR (low coop, low threat)
Mixed-Blessing SH - COLLABORATE ( high coop, high threat)
Define SH Thinking
Process of always reasoning in SH terms throughout the management process
Define SH mindset
Managers look at world thru a SH script
What is a SH culture
Embraces the beliefs, values, and practices that organizations have developed for addressing stakeholder issues and relationships
What is stakeholder management capacity (SMC)
An organizational integration of SH thinking into its process at one of the three levels of increasing sophistication (rational - process - transactional)
What are the three levels of stakeholder management capacity (SMC)
Rational - Company can ID who and what
Process - Company develops and implements a process to dealing with them
Transactional - Company engages with SH
What is SH corporation
A corporation with a primary focus of SH inclusiveness and embraces the idea of a symbiotic rln
What are the three strategic steps towards global SH MGT
Governing Philosophy, Values Statement, Measurement System
Define legitimacy
Helps to explain the importance of relative roles of a corporations character, SH, board of directors, MGT and employees
Define legitimation
Dynamic process by which bus seeks to perpetuate its acceptance
Microlevel of legitimacy - 3
1 - adapt to societies expectations
2 - change societal values to those of rim
3 - enhance legitimacy by ID w/others already legit in society
Define corporate governance
Method by which a firm is being governed, directed, administered, or controlled and to the goals for which it is being governed
What is corporate governance concerned with
The relative roles, rights, and account of such SH groups (owners, board of direct, managers, employees, other)
What is the American-Anglo model of corp gov
Outside directors, following common law, w/market oriented and SH governance
What is continental-European model
Inside directors, civil law, block ownership w/bank orientation and SH-coordinated governance
What is the role of SH in Anglo-Amer model
Own stock in firm which gives them ultimate control over corporation and its owners
What is the role of the board of directors in Anglo-Amer model
Govern and oversee mgt of business - put SH interest first
What is the role of MGT in Anglo-Amer model
Group of individuals hired by the board to run the company and manage it on a daily basis
What is the role of employees in Anglo-Amer model
Hired by company to perform the operational work
What are agency problems
Interests of SH do not equal the interests of MGT and MGT begins to pursue self-interest instead
What is the CEO pay/firm performance relationship
One of the issues surrounding compensation of CEOs in which there is a relation between firm performance and compensation. Includes stock options such as backdating, spring-loading, bullet-dodging, and finding restricted stock
Define backdating
Recipient has option to purchase stock at yesterdays price, resulting in an immediate increase “in the money”
Define spring-loading
Buy at todays price with knowledge that something good is about to happen
Define bullet dodging
Delay stock option grant until right after the bad news
Define restricted stock
Stock that always has value, even in a down market and does not have an exercise price
Define clean capitalism
An economic system in which prices fully incorporate social, economic and ecological costs
Define clawback provisiosn
Compensation mechanisms that enable companies to recoup compensation
What is the council of institutional Investors
A non profit association of corporate, public, and employee benefit funds
What is the Say on Pay movement
Evolved from excessive CEO pay firms that involves the ideals of clean capitalism and clawback provisions
What did the SEC require companies to do (with CEO pay)
Pay-ratio disclosure rule - requires company to publish the ratio
What are some of the issues with CEO pay
Excessive compensation thru stock and large exit and retirement packages
What is a poison pill
Intended to discourage/prevent a hostile takeover - when one SH hostily buys a lot of stock, other SH will buy more to dilute it
What are golden parachutes
Provision in an employment contract in which a corporation agrees to make payments to key officers in the event of a change in control of the corporation
What is insider trading?
Buying/selling info that is not available to the public
What is the Sarbanes Oxley Act of 2002
Improves financial reporting in the company
What are the principal monitoring committees?
Audit committee, nominating committee, and compensation committee
What is the role of the audit committee
Responsible for assessing the adequacy of internal control systems and the integrity of financial statements
What is the role of the nominating committee
Composed of outside directors, has the responsibility of evaluating executive performance and recommending terms and conditions of employment
What is the role of the compensation committee
Has the responsibility of evaluating executive performance and recommending terms and conditions of employment
What is the risk committee
Provides oversight about risks regarding strategy and tactics across operational, financial, and compliance areas
What is CEO duality?
When someone is the CEO and sits on the board of directors
What is a ponzi scheme
Lures investors in with fake promise of profit but actually pays earlier investors with later investors money
What is the shareholder primacy model
Maximizing share value is the ultimate goal and increase corporate governance by decreasing board power and maximizing sh power
what is the director primacy model
based on the idea that a corporation is not owned but is independent and owns itself
what is shareholder engagement
a strategy and set of formal procedures for opening communication between sh and a company on a variety of issues
Why do we have committees
Ensure there is no misleading financials and follow up on any irregularities
What are the 9 red flags that there are board problems
Company restates earnings Poor employee moral Adverse SOX 404 opinion Poor customer satisfaction MGT misses strategic performance goals Company is target of employee lawsuits Stock price decrease Quarterly financial results miss analysis expectations Low corporate governance quotient rating
What are the 3 components to the democracy movement for SH
1 - majority vote
2 - banning classified/staggered boards
3 - proxy access
What are the 9 steps to repair a board
Spread risk oversight over committees Seek outside help to ID risks Deepen involvement in corp strategy Align board size and skill mix strategy Revamp executive compensation Pick compensation committee members who will question the status quo Use independent compensation consultants Evaluate CEO on grooming potential replacers Know what matters to your investors
What is strategic mgt
overall mgt process that strives to ID corporate purpose and position in a firm to succeed in its market environment by achieving competitive advantage
Corporate public policy
A firms posture, stance, strategy, or position regarding the environmental, social, global, and ethical aspects of stakeholders and corporate functioning
What is corporate public affairs
public affairs mgt
What are the four key strategy levels of strategic mgt (list)
Enterprise level
Corporate level
Business level
Functional Level
Defin enterprise level strategy
The books fav strategic mgt strategy that poses basic questions and encompasses the development and articulation of corporate public policy
Define corporate level stratgey
A strategic mgt strategy - defining business questions of the firm
define bus level strategy
A strategic mgt strategy that asks - how should we compete in a given business or industry
define functional level strategy
A strategic mgt strategy that asks how should a firm integrate its various subfunctional activities and how should they be related to changes taking place in the diverse firm areas
What is social entrepreneurship
one in which the mission of societal value creation is central to the business - start w/sustainable social values and then continuously pursue and innovate ways to achieve it
What is BOP (bottom of the pyramid)
largest and poorest socioeconomic group of people
What are B Corporations
organizations that pursue SH and social welfare maximization and SH wealth max due to missions in society
What are the 6 steps to the strategic mgt process
goal formulation strategy formulation strategy evolution strategy implementation strategic control environmental analysis
Define responsive CSR
address generic social impacts through good corporate citizenship and value chain social impacts by mitigating them
Define strategic csr
transform value chain social impacts into actions that benefit society and reinforce corporate input
What is the Porter and Kramer Framework - steps
Inside-out vs outside-in link (company -> society)
categorize issues (gen, value chain, etc)
Split into 2 models - responsive vs strategic CSR
Integrate inside out and outside in
Create social dimension to value proposition
Sustainable reporting/social responsibility reports/social audits/integrated reporting
measure firms overall value creation and spur integrated thinking
What is ceres
An NGO national network of investors, environmental organizations, and other public interest groups that work with us to address sustainability challenges and promote sustainable reporting
global reporting initative
more than 300 global organizations that want to standardize IR
Define public affairs mgt
umbrella term used to describe management process that focuses on the formulization and institutionalization of corporate public policy
what is the future of public affairs ? 3 options
PA develop value-based enterprises
PA assert as thought leaders of company and engage with outside
PA can seek alternate areas of resolution and broader issues
Define Issue MGT
Process by which organization IDs issues in the SH environment, analyze and prioritize those issues in terms of their relation to the organization, plan responses to the issues and then evaluate and monitor the results
Define Crisis MGT
MGT of issues that have become major threats
Define Risk MGT
Efforst to keep issues from arising
List the three types of risks
preventable, strategic, external
Define preventable risks
internal and forseeable - no strategic benefit
define strategic risks
risks taken to achieve greater returns
Define external risks
External threats that cannot be controlled
How to prep for strategic risks
can decrease probability of risk occurring and develop capacity to manage the risk
How to prep for external risks
Scenarios and war gaming
What is Risk shifting
places the risk of the firm onto the consumers
What is the portfolio approach
issue mgt idea that experience with prior issues will ikely influence future issues
What is an emerging issue
terms not clearly defined matters of conflicting values and interest, no automatic resolution stated in value-laden terms and trade offs are inherent
List the steps of the issue management process
ID of issues Analysis of issues Ranking and prioritizing issues Formulation of issue response implementation of issue responses Evaluating, monitoring, and controlling results
what are the steps to the issue development process
felt need
media coverage
leading political jurisdictions adopt policy, federal government attention, legislation and regulation
regulation and litigation
List the types of crises
economic physical personnel criminal informational reputational natural disasters
Examples of economic crises
recessions, hostile takeovers, stock market crashes
ex of physical crises
industrial accidents, product failures, supply breakdown
ex of personnel crises
strikes, exodus of key employees, workplace violence
ex of criminal crises
product tampering, kidnapping, acts of terrorism
ex of informational crises
thefot of proprietary info, cyber attacks
ex of reputational crises
rumor mongeirng/slander, logo tampering
ex of natural disasters
earth quakes, floods, fires, tornados
What are the 4 crises stages
prodromal- warning
acute - actual crisis stage where event has occured
chronic - lingering period
crisis resolution - whole again and learn moving forward
Steps to manage business crisis
ID areas of vulnerability - scenarios, risk analysis Develop a plan for dealing with threats forming crisis teams simulating crisis drills learning from experience
Crisis communcation
VERY important key to crisis management –> have a trained group and knowledgeable spokesperson to know the audience, ID key messages to comm to key groups, and redirect the storm
