Business, Ethics, and the Creation of Value #2

Friedman, Freeman, Stakeholder Theory, Carroll, John Mackey, Conscientious Capitalism

(1.) Milton __________________: Created Managerial Capitalism. Fiduciary responsibility to shareholders. Profit. Legal. (2.)Ed ________________ then created ______________ ________________: Our business decisions affect many groups or these groups affect our business. (3.)CSR ______________'s test 4 parts. (4.) Owner of Whole Foods ___________ _____________: Created ________________ _______________: (1.) Higher Purpose (2.) Stakeholders (3.) Conscious Leadership (4.) Conscious Culture. Be A good corporate citizen.

context

According to Michael Porter and the Lecture of Corporate Social Responsibility, a company such as General Electric (GE) has shown that economic prosperity and efficiency can go together through its Ecomagination strategy. The strategy is to build more efficient machines and other products that reduce environmental emissions (greener light bulbs). According to Porter and lecture, GE's Ecomagination is an example of: Creating Shared Value by reconceiving products and markets. Phillip Morris wants to create its own electronic cigarette and market the product to younger adults. However, the marketing department at Philip Morris recently learned that the government is contemplating regulating e-cigarettes. With regard to the Marketing Analysis, the impending regulations should be considered as part of: Analyzing the _______________ of the product. Which of the four explains the Airlines Industry? Oligopoly.

Walmart, Partnerships, organizational performance, differentiation, broad

According to Michael Porter's Competitive Positioning tool, which of the following companies serves a broad market and is a cost leader? ______________. If a company decides to buy the materials it needs to make its products from other suppliers and to use distributors to sell its products, which of the 4 P's of Operations is the most relevant to these decisions?_____________________. The main goal of Strategy is to maximize ______________ _______________ (most often conceived as firm profitability). Suppose Blueberry Computer, Inc. had a strategy of designing and selling laptop computers at above aveage prices (and thus they had higher than average costs for the industry) and targeted customers all over the United States. Which competitve position would describe them? _____________________ and ______________ market.

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Arguments Against CSR: Classical Economics: The classical economic view is that business's only goal is the maximizing of profits for owners. Business Not Equipped: Business is not equipped to handle social activities. Dilutes Business Purpose: It dilutes the primary purpose of business. Too Much Power Already: Businesses have too much power already. Global Competitiveness: It limits the ability to compete in a global marketplace. Arguments in Support of CSR: Enlightened self-interest: Businesses must take actions to ensure long-term viability. Warding off government regulations. This is one of the most practical reasons. Resources Available: Business has the resources and expertise. Let it try. Pro-action is better than Reaction. Pro-action is also less costly. Public supports: the public strongly supports CSR. Business Roundtable announced that the Purpose of business is not just to create value for shareholders, rather, it is to create value for all stakeholders - customers, employees, suppliers, communities and shareholders. 6 Reasons for Embracing CSR: 1.Innovation, 2.Cost savings, 3.Brand differentiation, 4.Long-term thinking, 5.Customer engagement 6.Employee engagement.

Audit, Nominating, Compensation, Responsibility, Sustainability, strategy, goals

Board of Directors Committees: ________ Committee: ensures the integrity of financial statements and assesses the adequacy of internal controls. _________________ Committee: ensures that competent and objective board members are selected. _________________ Committee: evaluates executive performance and recommends terms and conditions of employment. Corporate __________________/__________________ Committee: addresses issues of diversity, equal employment opportunity, environmental affairs, consumer affairs. The Role of the CEO: The Chief Executive Officer runs and manages the company day to day. Establishes the _____________ of the company. Serves as a role model for all employees. Sets financial and non-financial __________. Achieves results. Develops leadership talent.

outside, 19,500, Mixed-Blessing, media, promotion

Evan spiegel is the founder and CEO of Snap and at the same time, he is a board member of Facebook. With regard to facebook, Evan Spiegel is: An ____________ director. Nileesha and Sam started and ran a tutoring business during the summer of 2018 called Tutors-R-Us. The company reported the following amounts to its Income Statement: Total Revenues, $60,000; Operating Expenses, $25,000; Interest Expense, 8,000; and Income Tax Expense of $7,500. They also had an outstanding payment due for Inventories in the amount of $12,500. What is Tutors-R-Us' net income? $________________. From the perspective of Walmart, its employees are what type of Stakeholder? _______________________. In the case study on Coke and Pepsi in India, we read that Coke created a TV ad campaign using Aamir Khan, a popular Indian movie star, to claim that Coke's products were safe. The ad campaign with Aamir Khan helped Coke turn around its negative public relations image. This is an example of Coke finding an opportunity to build a relationship with which of the following secondary stakeholders. The ___________. In 2012, Grammy-winning rapper Lil Wayne made headlines after he sported a $1 million diamond-encrusted Beats headphones at an NBA All-Star game. This became a brilliant marketing tactic to highlight Beats' partnership with British jeweler Graff Diamonds. In terms of the Marketing Mix, this is and example of:____________________.

Supportive, involvement, Marginal, Monitor, Nonsupportive, defend, Mixed-Blessing, collaborate

Four Stakeholder Types: (1.) The ________________ Stakeholder: High potential for cooperation, low for threat. Strategy is __________________. (2.) The ________________ Stakeholder. Low potential for cooperation, low for threat. Strategy is to _____________. (3.) The ____________________ Stakeholder: Low Potential for cooperation, High potential for threat. Strategy is to ____________. (4.) The ___________________________ Stakeholder: High potential for cooperation, high potential for threat. Strategy is to _________________.

Primary, Nonsocial, Secondary nonsocial, Competitive Positioning

From the case study on Coke and Pepsi in India, we read that water carries a considerable significance to India. Bathing is viewed by many as a sacred act and some hold that one's death is not properly noted until one's ashes are scattered on the Ganges River. As such, water presents as what Category of Stakeholder? A ______________ _______________ stakeholder. Starbucks decided to stop using plastic straws after media reports showed that many sea turtles had plastic straws wedged in their noses. The Sea Turtle Conservancy, a non-profit organization which works to help sea turtles all over the world, exerted a lot of pressure on food companies to forgo plastic straws in their products. The Sea Turtle Conservancy is an example of what type of Stakeholder? ______________ _______________. Which of the following is an argument in support of Corporate Social Responsibility (CSR)? Consumers are willing to pay more for products and services that are provided by business committed to social and environmental change. Which strategy framework would be most helpful in answering the following question: What tradeoffs does a firm make with respect to market scope and firm costs and prices? ___________________ ____________________ Analysis.

Legal, LLC

Gina and Laya were the founders and co-owners of Taco, Taco, a taco food truck company based in Boston. The business became so successful that Gina and Laya grew the company to over 300 employees, took the company public and expanded locations of the food truck to all major cities in the Northeast. Its profits rose by 200% and the stock price increased by 50%. During this same time period, Taco, Taco's employees began striking because the company did not pay employees for hours that they actually worked in accordance with the wage and hour laws. Taco, Taco's suppliers threatened to cut business with the company and take it to court because Taco, Taco violates its supplier agreement. Taco, Taco is currently failing to meet which component of the Carroll Four-part Test? Its ___________ Responsibilities. Helen and Jim are co-owners, partners and board members of an interior design/architectural firm called KitKat. Helen is from Argentina and Jim is from Canada. Their business is to design and construct high-end kitchens for residential and commercial clients. They set up the business so that KitKat would not be separately taxed: each of them would pay individual taxes based on their income. Fortunately, they also chose a business form that would limit their individual liability if the other one did something careless. The business form that they chose is most likely a _________.

negative, pharmaceutical, low

Ginger Gooch is a Questrom graduate who owns and operates her own collegiate apparel company under the brand "Goochi". Goochi believes in being socially responsible so it manufactures all of its clothing in the U.S. and it pays its workers at a rate higher than state and federal minimum wage. Ginger has been able to run a successful business in part because she has invested her money in the stock market and it has given her high returns. When she first started investing, she told her investment manager that she specifically did not want her money to be invested in any company that outsources labor to other countries because this would go against her and her company's mission and values. In this regard, Ginger has used: A ______________ social screen. According to the Lecture on Strategy, in terms of Porter's 5 forces Analysis, in which of the following industries do buyers have the weakest force in squeezing into industry profits? The _________________________ industry. Service and manufacturing operations differ in a variety of ways. Unlike services, goods tend to be: More tangible, more durable, easier to inventory, and involve ______ levels of customer contact. Which of the following is NOT a benefit of the SWOT analysis in terms of assessing a firm's strategy? SWOT analysis does not tell us much about the external drivers of profits.

effective, guard, narrow, differentiation

If an operation's manager is rewarded purely for the degree to which her customers are satisfied, it is likely that: The operation will be _________________. Brady Beaks has seen a decline in profits and its stock price ever since its main competitor, Purdue, has been aggresively criticizing Brady's cage policies. In light of these tactics, Brady changed its cage policies to be cage-free and free range. When it comes to a competitor, what strategy or actions should a company take to best address challenges and opportunities in regards to stakeholder management? The best strategy is to be prepared and to __________ against them. Prior to being acquired by Apple, Beats sold all kinds of headphones, including wireless headphones and speakers such as the Pill. Beats Studio3 headphones can cost as much as $350 whereas you can purchase other brands for as little as $20. Which competitive position would best describe Beats? _______________ market, _________________________. In the starbucks case study, we read that after the Michael Brown incident in Ferguson, Missouri, Howard Schultz felt that Starbucks could not just remain silent after the nation was divided over race relations. Schultz went to the Starbucks board of directors and asked them to approve a Race Together campaign to inspire dialogue about race and racism. Starbucks' board of directors are what type of stakeholder. _______________ social.

Power, Ethical, 1, regulatory

In identifying stakeholder types, which of the following attributes refers to the ability or capacity of stakeholder(s) to produce an effect to get something done that otherwise may not get done? _____________. Her mother died of lung cancer and if CVS wanted to be known for improving health outcomes, it was a contradiction to continue selling tobacco. Removing tobacco meant that CVS lost $2 billion in revenue and selling tobacco is legal. Nevertheless, CVS' decision shows its commitment to which part of the Carroll 4-part test to CSR? Its ______________ responsibility. Mimi went into a hair salon to get a wash, cut and blow out. The task time for washing her hair was 20 minutes. The task time for cutting her hair was 40 minutes and the task time for blow drying and styling was 60 minutes. A different worker was assigned to each task. What is the hourly capacity of the process? ____ unit/hour. Coca Cola wants to start making and selling craft beer. In developing a strategy for the long-term success in this new industry, Coca Cola should consider the external environment, which includes the following factors: ________________ factors.

environment, future, Nonhuman, Environmental, Animal

Nonsocial stakeholders (Non people stakeholders). Primary nonsocial stakeholders: (1.) Natural __________________. (2.) ____________ generations. (3.) __________________ species. Secondary nonsocial stakeholders: (1.) ________________ interest groups. (2.) _____________ welfare organizations. Stakeholder Management: Five Key Questions: (1.) Who are our organization's stakeholders? (Generic categories, specific subcategories) (2.) What are our stakerholders' stakes? (Legitimacy, Power, Urgency) (3.) What opportunities and challenges do our stakeholders present to the firm? (Potential for cooperation? Potential for threat? (4.) What responsibilities (economic, legal, ethical, and philanthropic) does the firm have to its stakeholders? (5.) What strategies or actions should the firm take to best address stakeholder challenges and opportunities? (Deal directly? Indirectly? Take offense? Defense? Accommodate? Negotiate? Manipulate? Resist? Combination of Strategies?

Nonsupportive, Secondary social stakeholder, Five Forces

Now, Facebook is being investigated by the government and Zuckerberg had to testify before Congress several times. The government presents as what type of stakeholder for Facebook? __________________ stakeholder. The United Food and Commercial Workers Union (UFCW) was aggressively trying to unionize Walmart workers across the country. Yet, Walmart aggressively fought unionization attempts. What type of stakeholder is UFCW? ______________ __________ stake holder. True statements about the __________ ____________ Analysis: Concern whether supplier firms are strong enough to raise costs. Concern whether buyers are strong enough to place a downward pressure on prices. Concern whether firms in the industry compete so aggresively that they lower prices.

Stake, Stakeholder, Primary stakeholders, Secondary stakeholders

Origins of the Stakeholder Concept: ___________ - An interest or a share in an undertaking. Can be categorized as: An interest. A Right(->Legal Right->Moral Right). Ownership. __________________ -Any individual or group who can affect or is affected by the actions, decisions, policies, practices, or goals of the organization. Is a variant of the concept of stockholder. Who are Business's Stakeholders: Stockholders, Employees, Customers, Community, Competitors, Suppliers, Special-Interest Groups, Media, Society, General Public. ___________ ________________ - Have a direct stake in the organization and its success. ________________ ______________ - Have a public or special interest stake in the organization that is more indirect.

Sarbanes-Oxley Act

Outside Director Compensation: Paying board members is a recent idea. It has increased recently. Improving Corporate Governance: Legislative Efforts: ______________________ ______ of 2002 (SOX). Amends securities laws to protect investors in public companies. Enhances public disclosure to require reporting of off-balance sheet transactions and personal loans to executives. Limits the non-auditing services an auditor can provide to a firm it audits. Makes it unlawful for accounting firms to provide services where conflicts of interest exist. CEOs and CFOs must certify financials and are held responsible for financial representations. Applies to publicly traded companies, introduced major changes to the regulation of corporate governance and financial practice. To protect investors by improving the accuracy and reliability of corporate disclosures made pursuant to the securities laws, and for other purposes.

Government, Civic, Social pressure, Media, Trade,

Primary social stakeholders: (1.) Shareholders and investors (2.) Employees and managers (3.) Customers (4.) Local communities (5.) Suppliers and other business partners. Secondary social stakeholders: (1.) _________________ regulators (ex: FDA) (2.) __________ institutions (parks, libraries, city halls and cultural facilities) (3.) _________ ____________ groups (are collections of individuals who hold a similar set of values and beliefs. They take action to promote change)( (4.) ___________ and academic commentators (TV, newspaper) (5.) ____________ bodies (is an organization founded and funded by businesses that operate in a specific industry) (6.) Competitors.

Duty of loyalty, Duty of Care, Business Judgement Rule

Role of the Shareholders: Represent own interests as Investors. Attend annual meetings and elect board of directors and terms of compensation. Approve executive compensation plans. Approve external auditing firm. Approve significant transactions involving issuance of stock. Exert pressure to make companies more responsible through activism. Sue management for violations of a duty of care and duty of loyalty. / Role Of The Board of Directors: Governance and Oversight: Identify risk and oversee risk management. Hire and fire the executives. Ensure the integrity of published financial statements. Plan and set executive compensation. Protect the interests of shareholders. Protect the company's assets and reputation. Ensure compliance with all laws, regulations and code of conduct policies. / Fiduciary Duties of the board: _________ _____ ______________ - Represent interest of owners and act without a conflict of interest. __________ _____ ___________ -Understand the company—act in good faith; make informed decisions and observe business formalities. The ___________ ________________ _________ : A court of law will not hold a director personally liable for a business decision so long as the director is following a duty of loyalty and a duty of care.

shareholder, Sarbanes Oxley, Marginal, low, low

Roles of a ________________ in a company: Attend annual meetings. Exerting pressure to make companies more accountable through activism. Electing the board of directors. The following statements are true about the ___________ __________ Act. It is referred to as SOX. It limits the amount of non-auditing services that an auditor can provide. It requires audit committees to have at least one financial expert. American Express is a member of the Business Roundtable (BRT), a non-profit group professional association established to promote the interests of American businesses by lobbying and other supportive efforts. American Express recently signed the BRT's statement about the purpose of business is to create value for all stakeholders. The BRT is a ________________ stakeholder, with a _______ threat level and _______ cooperation level.

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Sasha and Shay are excited to try the new flavor at Pinkberry: Joanne Chang's Sticky Bun. The women are in a hurry to get to class on time, and when they walk into the shop they see eight people in line in front of them. In this Pinkberry, you place your frozen yogurt order (assume everyone is ordering frozen yogurt) with a server, the same server makes your order and hands it to you when it is finished, and then you pay another employee at the cash register. How can Shay determine the cycle time of this process? Track the time it takes from when one customer pays the cashier to when the next customer completes payment. Ina is a member of the Board of Directors for Clean Well, Inc., an environmentally friendly home cleaning products company. Ina is also a chemist who routinely provides consulting services for the research and development team at Clean Well. This month, Ina submitted to Clean Well a bill for $30,000 for her consulting services. Does this relationship raise any issues? Yes, this raises a conflict of interest for Ina.

sustainable development, Conscious Capitalism, John Mackey

Sustainability: Profits, People, Planet. Sustainability derived from ______________ ________________ —a pattern of resource use that aims to meet human needs while preserving environment so that these needs can be met not only in the present but also for future generations. Earlier versions of sustainability focused only on the environment. Recently it has become clear that it pertains to the natural environment, and other business environments as well. _______________ _________________ - A more complex form of capitalism that reflects and leverages the interdependent nature of life and all of the stakeholders in business. Four pillars: Higher purpose, Stakeholder orientation, conscious leadership, conscious culture. Created by _________ ____________-Co-Founder of Whole Foods.

duality

The Board's Relationship With The CEO: Boards are responsible for monitoring CEO performance and dismissing poorly performing CEOs. If a CEO also serves as Chairman of the Board, this __________ can affect their independence. It is best to separate these roles. Boards are also responsible for determining executive compensation. Issues Surrounding Compensation: CEO Pay-Firm Performance Relationship. Excessive CEO Pay. Executive Retirement Plans & Exit Packages. Outside Director Compensation. Transparency; SEC Rules (The U.S. Securities and Exchange Commission (SEC) is an independent federal government agency responsible for protecting investors, maintaining fair and orderly functioning of the securities markets, and facilitating capital formation). Excessive CEO Pay: Ratio of CEO pay to that of average worker - 1950: 20 to 1. 2014: 216 to 1. Say on Pay: Evolved from concerns over excessive executive compensation. Clawback provisions: Compensation recovery mechanisms that enable a company to recoup CEO pay, typically in the event of a financial restatement or executive's misbehavior. /Executive Retirement Plans and Exit Packages: In contrast, many of today's workers do not have a retirement plan.

Environmental, Social, Economic, John Mackey, legal, 2

The Triple Bottom Line theory focuses on which of the following performance measures? ____________________, _____________, and _______________. From the Starbucks case study, we read that founder Howard Schultz believes in business having a social conscience. He believes that business can be profitable and bring positive social change to society. In fact, Starbucks' vision included the words "social conscience". Which of the following individuals advocates for having a conscious culture within business? ___________ _____________. In reading the articles on Walmart, we learned that a class action discrimination lawsuit was filed by several female employees claiming that Walmart paid female employees less than male employees and failed to promote women. This shows that Walmart has not had the best reputation with regard to which of the Carroll's 4-part Test to Social Responsibility? __________ responsibility. The Copy Center had three separate steps for producing case packets-copy, collate and staple and with a different worker at each step. The worker who copies requires 15 seconds per job, the worker collates requires 20 seconds per job, and the worker who staples requires 30 seconds per job. The work always flows from step 1 to step 2 to step 3. If a second worker is added to Step 2, the Capacity for the whole process will be: ____ jobs per minute.

Dodd Frank, Consumer

The __________ __________ Wall Street and _______________ Protection Act of 2010: Established the Financial Stability Oversight Council to identify risks affecting the entire financial industry. Regulates risky derivatives like credit default swaps. Requires hedge funds to register with the SEC. Oversees credit rating agencies and regulates credit cards, loans and mortgages. Requires certain capital reserves for banks so that they do not become too leveraged. Bans banks from using customer funds to make risky bets for their our account (Volker Rule). (Response to the financial crisis). Improving Corporate Governance: Make Changes in Board of Directors: More board diversity. A greater ratio of outside directors to inside directors. Outside directors are independent from the firm and management. Inside directors are usually the top managers of a firm. Use Board Committees to: Ensure that financials are not misleading. Ensure that internal controls are adequate. Follow-up allegations of irregularities. Ratify the selection of an external auditor

Securities and Exchange Commission

The _____________ _______ ___________ _______________ (SEC) is a government agency that is responsible for protecting investor interests. The SEC requires public companies to make period filings and disclosures. The SEC is not perfect and critics believe it favors businesses. It failed to stop the Bernard Madoff Ponzi scheme before investors lost billions, although they had been warned of the scheme a decade earlier.

Legitimacy, Power, Urgency

What are our stakeholders' stakes? To identify them, consider- the nature and legitimacy of a group's stakes. the power of a group's stakes. subgroups within a generic group. Important Stakeholder Attributes: (1.)__________________ - Refers to the perceived validity or appropriateness of the stakeholder's claim to a stake. Do they have a legitimate reason to fight our company. Do they have a claim (2.)____________ - Refers to the ability or capacity of a stakeholder to produce an effect. _____________ - Refers to the degree to which the stakeholder's claim demands immediate attention or response.

Economic, Legal, Ethical, Philanthropic

What opportunities and challenges do stakeholders present? OPPORTUNITIES: Build productive working relationships with stakeholders. The potential for cooperation. CHALLENGES: Representative of how the firm handles its stakeholders. The potential for threat. What responsibilities does a firm have to its stakeholders? Apply Corporate Social Responsibility: Responsibilities are 1. ______________, (Required) 2. ____________, (Required) 3. _______________, (Expected) ___________________ (Desired/Expected). This is the stakeholder responsibility matrix. Stakeholders: owners, customers, employees, community, public at large, social activists.

Governing Philosophy, Values Statement, Measurement System

What strategies or actions should management take? Do we deal directly or indirectly with stakeholders? Do we take the offense or the defense in dealing with stakeholders? Do we accommodate, negotiate, manipulate, or resist stakeholder overtures? Do we employ a combination of the above strategies or pursue a singular course of action? Strategic steps toward global stakeholder management: (1.) ___________ ______________ - Integrate stakeholder management into the firm's " " " ". (2.)_______________ _____________ - Create a stakeholder-inclusive " ". (3.) ____________ ________________ - Implement a stakeholder performance measurement system.

Competitive Positioning Analysis, Corporate Citizenship

Which of the following strategic tools will allow Henry to do an internal assessment of how to price his essential oils and what type of market he should sell them in? The ________________ _______________ _____________. External factors in Amazon's decision to purchase Whole Foods? The demographic make up of Whole Foods' customers. The actions of competitors. Internal Factors: Amazon's capital resources. The intellectual property of Amazon. Which theory of Corporate Social Responsibility involves five different stages and seven dimensions to track the true committment of a firm to be transformative and transparent? ______________ _________________.

CSR Greenwashing, Triple Bottom Line, Economic, Social, Environmental

________ ____________________: Some companies convey an image of responsibility when in fact they are conducting business as usual. Companies attempt to make the public believe they are "green"—environmentally friendly—when they are not. It is intentionally seeking to convey the image of a socially responsible firm when the evidence of their practices does not support this conclusion. Business Must Attend to Three Key Spheres of Sustainability - _________ ______________ ________: (1.) Perspective: _____________ - creation of material wealth. (2.) __________ - Quality of people's lives and the community. (3.)____________________ - protection and conservation of the natural environment. The goal is corporate sustainability.

Corporate Governance, Shareholders, Board of Directors, Managers, Employees

_____________ ____________________ - Refers to the method by which a firm is being governed, directed, administered, or controlled, and to the goals for which it is being governed. Is concerned with the relative roles, rights, and accountability of such stakeholder groups as owners, boards of directors, managers, employees, and other stakeholders. Roles of four major groups: ____________________ - Own stock in the firm, giving them ultimate control (the shareholder-primacy model). ______________ _____ _______________ - Govern and oversee management of the business. _________________ - The individuals hired by the Board to manage the business on a daily basis. _________________ - Hired to perform actual operational work. The Corporation's: State Charter - Shareholders - Board of directors - Management - Employees.

Creating Shared Value, Socially Responsible, Social Screening, Negative, Positive

______________ __________ ____________ (CSV) Michael Porter and mark kramer. Business and society could be brought back together if business redefined the basic purpose as creating shared value—generating economic value in a way that also produces value for society. CSV CAN BE ACCOMPLISHED IN THREE WAYS: 1. Reconceiving products and markets; 2. redefining productivity in the value chain; and 3. Building supportive industry clusters. _____________ _________________ (ethical) Investing - Emerged in the 1970s. Nearly $7 trillion in socially responsible investments in the U.S.. Studies demonstrate that socially responsible funds perform competitively and slightly outperform non-socially responsible funds. __________ ________________ -A technique used to screen firms for socially-responsible investment purposes. ________________ screen: screening out or avoiding socially irresponsible firms like tobacco, gambling. _______________ screen: Actively screening in socially responsible firms.

Corporate Social Responsibility, Economic, Legal, Ethical, Philanthropic

______________ __________ ________________: CSR means seriously considering the impact of a company's actions on society. CSR requires the individual to consider his or her acts in terms of a whole social system, and holds him or her responsible for the effects of his or her acts anywhere in that system. ____________ Four-Part Definition of CSR: (1.)______________ (Required- Be profitable. Maximize sales, minimize costs.)(2.)_______________ (Required- Obey laws, adhere to regulations.)(3.)_______________ (Expected- Avoid questionable practices. Do what is right, fair, and just.) (4.)__________________ (Desired/Expected: Be a good corporate citizen. Give back.) . Expectations that society has of organizations at a given point in time.

Insider Trading, Material Information, tipper, tippee

______________ ______________ - The practice of buying or selling a security by an insider who has access to material, confidential information that is not available to the public. •"___________ _______________" is information that a reasonable investor might want to use and is likely to affect the price of the firm's stock. A "_________" provides that information. A "__________" receives the information. Executives and anyone who works for a firm may have inside information and are forbidden to trade on it. Equifax Example: Discover Data Breach: 143 million Americans vulnerable to identity theft - names, social security numbers, dates of birth, addresses, drivers license information and credit card numbers. 3 Equifax Senior Executives Sell $2 million worth of stock. Public Announcement: Stock Price Drops 15%. Former software engineer Sudhakar Reddy Bonthu pleads guilty to insider trading. When he learned of the breach in the summer of 2017, he bet against Equifax and made a profit from the shares of Equifax going down.