quiz ch 2 and 3

Question 1

company mission? (3)

Answer 1

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

Question 2

three components of a mission?

Answer 2

specification of basic product or service, specification of primary market, and specification of principal technology for production or delivery

Question 3

primary company goals (3)

Answer 3

survival, growth, profitability

Question 4

which primary company goal is the mainstay goal of a business??

Answer 4

profitability. over long run, proves company can satisfy employees and stakeholders

Question 5

what does growth essentially equal??

Answer 5

CHANGE. needed in dynamic business environment!!

Question 6

company creed?

Answer 6

statement of company philosophy. reflects values, beliefs, and philosophical priorities to which strategic decision makers are committed

Question 7

what is a company’s self-concept?

Answer 7

business must know itself and the impact it has on others or of others on it

Question 8

newest trends in mission components? (3)

Answer 8

sensitivity to customer wants, concern for quality, and statements of company vision

Question 9

is it important to focus on customer satisfaction? why?

Answer 9

yes, customer satisfaction = quality customer service, leads to competitive advantages

Question 10

vision statement?

Answer 10

expresses aspirations of executive leadership, achieving desirable future

Question 11

board of directors?

Answer 11

group of stockholder representatives and strategic managers responsible for overseeing creation and accomplishment of company mission

Question 12

the three decisions boards of directors responsible for?

Answer 12

decisions that affect entire firm, commit firm and resources for long periods, and declare the firm’s sense of values

Question 13

who is the board of directors elected by?

Answer 13

stockholders

Question 14

agency theory?

Answer 14

set of ideas on org control based on belief that separation of ownership from management created potential for wishes of owners to be ignored

Question 15

what do owners tend to seek in their company?

Answer 15

stock value maximization

Question 16

agency costs?

Answer 16

cost of agency problems and cost of actions taken to minimize them

Question 17

moral hazard problem? what is this also known as?

Answer 17

owners have limited access to company info, so executives free to pursue their own interests. aka shirking (self-interest combined with smile)

Question 18

adverse selection?

Answer 18

agency problem caused by limited ability of stockholders to precisely determine competencies and priorities of executives at time they are hired

Question 19

5 problems that can result from agency?

Answer 19

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

Question 20

3 solutions to agency problem?

Answer 20

owners could pay executives premium for their service, executives could receive backloaded compensation, creating teams of executives across diff units of corporation

Question 21

4 perceived stakeholders of organizations?

Answer 21

customers/government. stockholders. employees. society

Question 22

4 steps to incorporate interests of stakeholders in mission statement?

Answer 22

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

Question 23

corporate social responsibility?

Answer 23

firms must serve society in general as well as financial interests of stockholders

Question 24

4 types of social commitment?

Answer 24

economic, legal, ethical, discretionary/social

Question 25

is CSR important in business today?

Answer 25

yes, corporate social responsibility is priority in American business

Question 26

three trends making businesses adopt CSR frameworks?

Answer 26

resurgence of environmentalism, increasing buyer power, and globalization of business

Question 27

sustainable business?

Answer 27

business that takes long term approach to minimizing its negative impacts on the ecology, society, and economy

Question 28

two areas of large scale investing?

Answer 28

guideline portfolio investing and shareholder activism

Question 29

sarbanes-oxley act of 2002

Answer 29

establishes new auditing and accounting standards

Question 30

social audit?

Answer 30

attempts to measure a company;s social performance against the social objectives it has set for itself

Question 31

3 basic support options businesses have?

Answer 31

donations of cash or material. creation of functional operation within company to assist external charitable efforts. development of collaboration approach.

Question 32

5 principles of successful collaborative social initiatives?

Answer 32

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.

Question 33

challenge for management in incorporating social responsibility efforts?

Answer 33

must meet company obligations to stakeholders without compromising need to earn fair return for owners

Question 34

ethics?

Answer 34

moral principles that reflect society's beliefs about the actions of an individual or group that are right and wrong

Question 35

what is the most critical quality of ethical decision-making?

Answer 35

consistency

Question 36

utilitarian approach?

Answer 36

judging appropriateness of particular action based on goal to provide greatest good for greatest amount of people

Question 37

moral rights approach?

Answer 37

judging appropriateness of particular action based on goal to maintain fundamental rights and privileges of individuals and groups

Question 38

social justice approach?

Answer 38

judging appropriateness of particular action based on equity, fairness, and impartiality in distribution of rewards and costs among individuals and groups

Question 39

two principles social justice approach stems from?

Answer 39

liberty principle and difference principle

Question 40

3 other important principles essential to social justice approach?

Answer 40

distributive-justice, fairness, and natural-duty principles