Bus 100 midterm
Integrity-based ethics programs:
Combines concern for the law with an emphasis on employee responsibility
Which of the following examples does not show a company guided by enlightened self-interest?
Company breaking past records by maximizing quarterly profits
The board committee that administers and approves salaries and benefits of high-level managers in a company is called the:
Compensation Committee
When attempting to build ethical safeguards into the company, businesses can take the following specific approaches:
Compliance and Integrity
Which of the following is not an instance of "insider trading"?
A marketing executive briefing stock analysts on the company's sales performance.
Which statement is not correct about the business-society interdependence?
Actions by governments rarely significantly affect business.
The core components upon which a company's ethical performance depends include
All of the above The personal character of the managers and employees, the values and virtues of the managers, the traditions, attitudes, and business practices built into a company's culture
What kind of power might a local community use to influence a company's decisions?
All of the them: - Publicizing an issue. - Lobbying government policy makers for regulations. - Challenging whether a business activity should continue to operate.
By law, the financial records of publicly held companies are required to be:
Audited by a certified professional accounting firm
All of the following values are present in most ethical decisions except:
Be Cruel
Customers can exercise economic stakeholder power by:
Boycotting products if they believe the goods are too expensive
What are business ethics, why do business ethics matter, and how can businesses make ethical decisions?
Business ethics are morals about what is right and wrong in a business. Business ethics matter and is important because businesses that do follow business ethics are protected, they save money, and less government involvement. Business can make ethical decisions by making ethical decisions that are good for society and the business as a whole.
Contemporary issue management:
Is an interactive, forward thinking process
Which of the following examples best illustrate an ethics issue based on cross-cultural contradictions?
Legally marketing a pesticide abroad that has been banned in the U.S.
The "agency problem" arises when:
Managers act in their own interest, rather than in the interest of shareholders.
Most ethics or compliance officers are generally entrusted to:
Reduce the risks to the company of employee misconduct.
The information strategy tool most used by business is:
lobbying
Corporations that run their operations according to the stakeholder theory of the firm create value by:
- Innovating new products. - Increasing their stock price. - Developing their employees' professional skills. All of the above.
Companies demonstrate global corporate citizenship by:
- proactively BUILDING STAKEHOLDER RELATIONSHIPS - DISCOVERING BUSINESS OPPORTUNITIES IN SERVING SOCIETY - transforming a concern for financial performance into a vision of integrated financial and social performance
What role does government play in society and with business?
-government actions: if there are legal issues w/ your business(with or without a contract), the gov. will decide whether it is a criminal case or a civil case -govt pays role in our economic system -> Help expand businesses, help regulate consumer affairs and helps promote economic growth -govt provides Safe working conditions & protect employees from discrimination
What is corporate governance? How does it improve or change the nature of executive and managerial decision-making?
Board of directors are on top. They are elected officials who have the legal duty to establish corporate objectives, develop broad policies, and select top-level personnel to carry out objectives and policies Corporate governance is the system of rules, practices and processes by which a firm is directed and controlled. Corporate governance essentially involves balancing the interests of a company's many stakeholders, such as shareholders, management, customers, suppliers, financiers, government and the community. It is a formal system of oversight, accountability, and control for organizational decisions and resources They will have to make more conscious decisions because they can't do whatever they want.
What is corporate social responsibility and what are the arguments for and against it?
Corporate social responsibility is the expectation of businesses to act in a way that enhances society and its inhabitants, as well as acknowledge any harm to people and society that it causes and correct it if possible. As Economist Milton Friedman would argue, "the business of business is business," meaning that business has no responsibility aside from focusing on increasing its own profit. Others would argue, such as CEO Pearson of Valeant Pharmaceuticals, that the primary responsibility of the business is to remember that business' focus should always be on the shareholders, the customers, and the wellbeing of the general public as a whole
Cross-cultural contradictions arise due to:
Differences between home and host countries' ethical standards
Investors may receive an economic benefit from the ownership of stock by receiving:
Dividends. Capital gains. Both B and C, but not A.
When a government orders companies not to conduct business in another country because of a war, human rights violations, or lack of a legitimate government; these orders are called
Economic sanctions
Which of the following is not a constituency-building strategy tool?
Expert witness testimony
The issues management process is a
Five-step process where managers identify the issue, generate options, take action, and evaluate results
Dark money refers to:
Funds given to nonprofit organizations that can receive unlimited donations from corporations, individuals, and unions
When a company puts its commitment to social and environmental responsibility into practice worldwide, not only locally or regionally it is called:
Global Corporate Citizenship
Under the Sarbanes-Oxley Act, corporations are required to:
Have executives vouch for the accuracy of a firm's financial reports
Which of the following arguments supports the concept of high executive compensation?
High salaries provide an incentive for innovation and risk-taking.
The main drawback to utilitarian reasoning is that:
It is difficult to accurately measure both costs and benefits
To influence government policymakers' actions, an information strategy involves
Lobbying, or the act of trying to directly shape or influence a government official's understanding and position on a public policy issue
When the market fails to adjust for the full costs of a firm's behavior, this is called
Market failure
Different kinds of stakeholders
Market: Those that engage in economic transactions w/ company as it carries out purpose of providing society with goods/services. — Stockholders invest in firm, creditors loan money, employees contribute skills for wages - ex über: drivers , uber employees, Customers (riders), shareholders Nonmarket: not engaged in direct economic exchange with firm, but affected by or can affect its actions. — Community, media, government, non-governmental organizations, competitors, general public, business support groups - ex) über: Taxi companies -> more regulations, driving test, mechanical inspections..., Ride sharing companies: lyft, General public, Government -> public safety, Insurance companies, Consumer attorney, High tech trade associations -> app Internal: Employees and managers who are` employed by firm. External: not directly employed by firm
Proactive companies are:
Much less likely to be blindsided by crises and negative surprises.
Social investors seek to eliminate from their investment portfolios companies that:
Pollute the environment, Discriminate against employees, Make dangerous products like tobacco or weapons All of the above
How are directors (members of corporate boards) selected?
Shareholders elect the directors from a list of candidates.
What rights do shareholders have?
Shareholders have right to elect board of directors, right to share in profit, hold management for their actions, and they can sell their stocks.
Define stakeholder. What is the difference between primary and secondary stakeholders? Why is it important for companies to make this distinction?
Stakeholder: Person or groups that affect or are affected by a firm's decisions policies and operation. A stakeholder is an interest in or claim on a business. (Is NOT the same as a stockholder/shareholder) Primary stakeholders are those who have a direct interest in a company, secondary stakeholders are those who have an indirect interest. Primary Examples: Shareholders, Investors, Employees, Managers, Customers, Local Communities, and Suppliers.Primary: coca cola- water: villagers, government, environmental activist Secondary Examples: Government, Regulators, Civic Institutions, Social Secondary: drink - pesticides, customers Who is more salient - important bc who can affect the outcome of business/addressing the problem Ex: i am a stakeholder of amazon bc i have shopped w them before
What is the relationship between business and society? Who are stakeholders and why are they important?
Stakeholders are persons or groups that affect or are affected by, a firm's decisions, policies, and operations. All stakeholders have different salience, or importance, in the eyes of a company, which is when a stakeholder map becomes highly valuable to make the most informed decision for a business' wellbeing. Stakeholders hold power over businesses because market stakeholders engage in economic transaction with the business (they provide the business with business) and nonmarket stakeholders hold power in society as the general public to hurt the reputation of the business.
Which of the following statements is not true about the interactive social system?
The boundary between business and society is clear and distinct.
Corporate power refers to:
The capability of corporations to influence government, economy, society based on their organizational resources
Stakeholder engagement is:
The process of ongoing relationship building between a business and its stakeholders.
Define crisis management. What should a company facing crisis do to satisfy its stakeholders and protect its reputation?
The purpose of issue management is to identify potential problems early and develop proactive plans to work towards planned outcomes which are positive for the organization. Find out the problem and who is affected. Hold yourself accountable and find a solution.
Cooperation between business and government often occurs when:
They encounter a common problem or enemy.
Which of the following statements is not true about shareholders?
They own equal shares of company assets.
Over time, the nature of business's relationship with its stakeholders often:
Through a series of stages -Inactive -Reactive -Proactive -Interactive
How are large corporations governed?
To foster economic success, aid in quality of life of its citizens, and fulfill these duties, local, state, and national governments pass laws to protect and regulate business.
Which of the following is not a legal right of shareholders?
To vote on who will become chief executive officer (CEO).
Deregulation is often:
a politically popular idea
Past decisions of the courts, the original basis for the U.S. legal system, are called
common law
How, in the United States, do businesses influence government? Why do businesses influence government?
government has a profound influence on business - bus tried to influence policy makers Freedman believes government should not impede on what businesses do - bc limits business ex) Enron: did wrong things & went away -> Not thinking about everyone who suffered
The mission of the Securities and Exchange Commission (SEC) is to:
protect stockholders' rights by making sure that the stock markets are run fairly and that investment information is fully disclosed
Good corporate citizens:
strive to conduct all business dealings in an ethical manner, make a concerted effort to balance the needs of all stakeholders, and protect environment
Businesses promote an information strategy by inviting government leaders to:
visit local plant facilities, attend company award ceremonies, give speeches to employees (all of the above in the quiz)
