quiz ch 2 and 3 Flashcards
company mission? (3)
unique purpose that sets a company apart from others of its type. identifies scope of operations. reflects values/priorities of firm’s strategic decision makers
three components of a mission?
specification of basic product or service, specification of primary market, and specification of principal technology for production or delivery
primary company goals (3)
survival, growth, profitability
which primary company goal is the mainstay goal of a business??
profitability. over long run, proves company can satisfy employees and stakeholders
what does growth essentially equal??
CHANGE. needed in dynamic business environment!!
company creed?
statement of company philosophy. reflects values, beliefs, and philosophical priorities to which strategic decision makers are committed
what is a company’s self-concept?
business must know itself and the impact it has on others or of others on it
newest trends in mission components? (3)
sensitivity to customer wants, concern for quality, and statements of company vision
is it important to focus on customer satisfaction? why?
yes, customer satisfaction = quality customer service, leads to competitive advantages
vision statement?
expresses aspirations of executive leadership, achieving desirable future
board of directors?
group of stockholder representatives and strategic managers responsible for overseeing creation and accomplishment of company mission
the three decisions boards of directors responsible for?
decisions that affect entire firm, commit firm and resources for long periods, and declare the firm’s sense of values
who is the board of directors elected by?
stockholders
agency theory?
set of ideas on org control based on belief that separation of ownership from management created potential for wishes of owners to be ignored
what do owners tend to seek in their company?
stock value maximization
agency costs?
cost of agency problems and cost of actions taken to minimize them
moral hazard problem? what is this also known as?
owners have limited access to company info, so executives free to pursue their own interests. aka shirking (self-interest combined with smile)
adverse selection?
agency problem caused by limited ability of stockholders to precisely determine competencies and priorities of executives at time they are hired
5 problems that can result from agency?
executives pursue growth in company size, executives attempt to diversify their corporate risk, executives avoid risk, managers act to optimize their personal payoffs, executives act to protect their status
3 solutions to agency problem?
owners could pay executives premium for their service, executives could receive backloaded compensation, creating teams of executives across diff units of corporation
4 perceived stakeholders of organizations?
customers/government. stockholders. employees. society
4 steps to incorporate interests of stakeholders in mission statement?
identify stakeholders. understand stakeholders’ specific claims. reconciliation of these claims and assignment of priorities to them. coordination of claims with other elements of company mission
corporate social responsibility?
firms must serve society in general as well as financial interests of stockholders
4 types of social commitment?
economic, legal, ethical, discretionary/social
is CSR important in business today?
yes, corporate social responsibility is priority in American business
three trends making businesses adopt CSR frameworks?
resurgence of environmentalism, increasing buyer power, and globalization of business
sustainable business?
business that takes long term approach to minimizing its negative impacts on the ecology, society, and economy
two areas of large scale investing?
guideline portfolio investing and shareholder activism
sarbanes-oxley act of 2002
establishes new auditing and accounting standards
social audit?
attempts to measure a company;s social performance against the social objectives it has set for itself
3 basic support options businesses have?
donations of cash or material. creation of functional operation within company to assist external charitable efforts. development of collaboration approach.
5 principles of successful collaborative social initiatives?
identify long term durable mission. contribute “what we do”. contribute specialized services to large-scale undertaking. weigh gov influence. assemble and value total package of benefits.
challenge for management in incorporating social responsibility efforts?
must meet company obligations to stakeholders without compromising need to earn fair return for owners
ethics?
moral principles that reflect society’s beliefs about the actions of an individual or group that are right and wrong
what is the most critical quality of ethical decision-making?
consistency
utilitarian approach?
judging appropriateness of particular action based on goal to provide greatest good for greatest amount of people
moral rights approach?
judging appropriateness of particular action based on goal to maintain fundamental rights and privileges of individuals and groups
social justice approach?
judging appropriateness of particular action based on equity, fairness, and impartiality in distribution of rewards and costs among individuals and groups
two principles social justice approach stems from?
liberty principle and difference principle
3 other important principles essential to social justice approach?
distributive-justice, fairness, and natural-duty principles
