Lesson 1 Flashcards
What are the four important aspects of decision-making that managers need to consider?
Agency, options, outcomes, and context.
What is a stakeholder?
Anyone who affects or is affected by business decisions.
Who are organisational stakeholders?
Managers, employees, and investors responsible for governing the organisation.
Who are market stakeholders?
Customers, suppliers, and competitors.
Who are societal stakeholders?
Community groups, government, physical environment, those who represent the interests of the physical environment, and non-governmental organisations.
Who are the core stakeholders (Matten and Moon, 2020)?
Customers, owners/shareholders, suppliers, local communities, employees, regulators, societies.
How do businesses interact with their stakeholders through markets?
Through customers, suppliers, employees (labor markets), and owners/creditors (financial markets).
How is economics often described?
As the study of how society allocates its scarce resources.
What does the cost-benefit principle state?
Evaluate the full set of costs and benefits of any choice and only pursue those whose benefits are equal or greater than their costs.
What is economic surplus?
The difference between the benefits and costs flowing from a decision.
What are opportunity costs?
The next best alternative you have to give up to get something.
Why should sunk costs be ignored in decision-making?
Sunk costs are incurred and cannot be reversed, so they are not opportunity costs.
Why does the vendor engage in the business of selling oranges?
The benefits she gets (income) are greater than her opportunity costs.
What is the role of control in business law and give an example?
Law acts as a regulatory tool, informing businesses of what they can and cannot do.
Example: The Modern Slavery Act 2018 (Cth) requires businesses with AU$100 million or more in revenue to submit annual modern slavery statements.
What is the concept of liability in business law?
Liability extends into torts law, company law, and consumer law. It involves duty of care, breach, causation, and remoteness of damage.
What does ownership in business law protect?
Ownership protects tangible and intangible assets, including intellectual property (IP) such as trademarks, designs, and patents.
What is the difference between an agreement and a contract?
An agreement is a mutual understanding, while a contract is a legally enforceable agreement with six key elements.
What is the normative approach to decision making?
The normative approach focuses on doing what is ethically right based on widely accepted standards and principles, such as human rights, justice, and fairness.
For example, a company may implement fair trade practices to ensure fair compensation and working conditions for their suppliers, guided by ethical standards rather than direct impact on profits.
What is the instrumental approach to decision making?
The instrumental approach centers on the effectiveness of decisions in achieving specific business objectives such as financial performance, competitive advantage, and regulatory compliance.
For instance, a business might invest in fair trade practices to enhance its brand image and reputation as a socially responsible business, serving as a market differentiator.
