Week 1 - Introduction to Business Decision Making

Question 1

The purpose of corporate responsibility?

Answer 1

Corporate Responsibility = Corporate Social responsibility (CSR)

• CSR reflects company’s commitment to sustainability and responsible practices.
• CSR goes beyond profit maximisation, shareholder value and legal compliance
• CSR is an active effort to make make positive outcomes for stakeholders, environment and larger society

Question 2

What tools do you use to solve the economic problem?

WHAT is the economic problem?

Answer 2

Economic problem: Unlimited demand but limited supply

Modals and Empirical tools (methods to gain data) such as surveys or experiments

Question 3

Why is legislation important to business decision making?

Answer 3

Acts as the guide rails for business decisions yet also the safeguards for consumers:

Examples being:
- The Corporation Act 2001 (ASIC)
- Consumer and Competition Act 2010 (ACC + ACL)

Question 4

Types of stakeholders:

Answer 4

Primary stakeholders:
Those with a formal and direct relationship with a company (e.g suppliers)

Secondary stakeholders:
Those without direct, formal relationship with a company. (e.g environment)

Different macro categories of stakeholders
‣ Society
‣ Market
‣ Organisations

Question 5

Who are stakeholder?

Answer 5

They affect corporate decisions, and can be affected by corporate decisions.

Aim: They wish for the business to sustain its value and work with the interests of stakeholder

• Stakeholders may be past, present and future
• both human and non-human, tangible and intangible (e.g gender equality or labour issues)

Question 6

Who are shareholders

Answer 6

Shareholders is a person or entity that owns shares of a company. Shareholders are part-owners of the company, and have certain rights and responsibilities.

Aim: They wish to see maximise shareholders value
- Increase dividends and raise the stock price of the company in order to increase their ROI.

Question 7

Normative approach:

Answer 7

Business decision focuses upon what is ethically right based of societal values, norms and principles

• Human rights
• Fairness, equality and equity
• Justice

Increasingly more popular with consumers

Integrating both instrumental and normative for maximum efficiency

Question 8

Instrumental approach:

Answer 8

Centres effectiveness of decisions in achieving specific business objectives.

• Financial performance
• Competitive advantage
• Regulatory compliance
• Strategic goals

Integrating both instrumental and normative for maximum efficiency