MGT 400 Quiz 3, MGT 400 Quiz 2, MGT 400 Quiz
Government Internet Censorship and Control: Iran
Since 2009, after contentious presidential elections that pitted various religious groups against each other, the elected Iranian government banned Facebook, Twitter, YouTube, and later Instagram. Based on the ruling party's religious-political stance and the country's official philosophy: "the media should be used as a forum for healthy encounter of different ideas, but they must strictly refrain from diffusion and propagation of destructive and anti-Islamic practices." The political hard-liners in that country argued that the country's president had not done enough to "stop the spread of the dec- adent Western culture."
The Right To A Secure Job
Since late 1800s, the legal basis for the employment relationship has been employment-at-will. Employment at will is a legal doctrine that means employees are hired and retain their jobs "at the will of" (i.e. at the sole discretion of) the employer. However, equal employment opportunity and other laws prevent discriminatory terminations. Many union contracts say employees can be fired only "for just cause," and workers have a right to appeal the employer's decision through the union grievance procedure. European countries and Japan have laws that extend "just cause" protections to all workers (not only for union members). Cultural values, traditions, and norms of behavior also play important roles. Social contract: the implied understanding between an organization and its stakeholders. This is not a legal contract, but rather a set of shared expectations.
Shareholder Activism - Social Investment
Social investment Refers to the use of stock ownership as a strategy for promoting social, environmental, and governance objectives. Stock screening Through selecting stocks according to various social criteria A growing number of mutual funds and pension funds use social screens to select companies in which to invest. Socially responsible investing has rapidly grown in Europe and beyond. Social criteria may also be used when selling stocks.
Key Issues In Global Supply Chains
Social issues / Ethical issues Environmental issues
Codes of Environmental Conduct
Some of the leading universal codes include the following: Business Charter for Sustainable Development - developed by the International Chamber of Commerce CERES Principles - developed by the Coalition for Environmentally Responsible Economies ISO 14000 - a series of voluntary standards developed by the ISO, an international group based in Switzerland The Greenhouse Gas Protocol - to help businesses measure and manage their greenhouse gas emissions Many executives are championing the idea that corporations have moral obligations to future generations
Normative
Stakeholder management is the right thing to do
The Benefits of Engagement
Stakeholder organizations bring a number of distinct strengths: Alert companies to emerging issues Give a firm access to information via networking Technical or scientific expertise in specific areas Better result in the eyes of the public Meet the society's expectations and generate good solutions Improve a company's reputation
Stakeholder Purpose
Stakeholders' Needs and Wants
Alternative Policy Approaches: Environmental standards
Standard allowable levels of various pollutants are established by legislation or regulatory action and applied by administrative agencies and courts. The traditional method of pollution control Also called command-and-control regulation because the government commands business firms to comply with certain standards and often directly controls their choice of technology. Can be an environmental quality standard or emission standard.
Insider Trading is illegal under SEC Act of 1934, meaning against the law to:
Steal nonpublic information and use it to trade a stock Trade a stock based on a tip from someone who had an obligation to keep quiet Pass information to others with an expectation of gain
Employee engagement
Sustainability leaders have found they are most effective when they involve line managers and employees from across the organization in the process of change.
The issue management process is a
Systematic process companies use when responding to public issues that are of greatest importance to the business
How can human society restore balance between Earth's carrying capacity and society's demands?
Technological innovation: Develop new technologies to produce energy, food, and other necessities of human life more efficiently and with less waste. Changing patters of consumption: Individuals and organizations concerned about environmental impact could decide to consume less or choose less harmful products and services. "Getting the prices right": Some economists have called for public policies that impose taxes on environmentally harmful products or activities
The self reinforcing feature of technology means that
Technology acts as a multiplier to encourage its own faster development
Government Internet Censorship and Control: China
The Chinese government operates one of the most sophisticated systems of Internet censorship in the world. It requires all China-based Web sites and blogs to register with the government and blocks access too many kinds of information. Passed new rules requiring Internet users: To provide their real names to service providers Required all Chinese video-streaming sites to receive approval from China's top broadcasting regulator or have the content banned
The Earth's Carrying Capacity
The Earth's rapid population growth, people's rising expectations, and the industrialization of developing countries are on a collision course with a fixed barrier: the limited carrying capacity of the Earth's ecosystem. The Earth's resource base is essentially finite, or bounded. If human societies use up resources faster than they can be replenished, and create waste faster than it can be dispersed, environmental devastation will be the inevitable result. Human society is already overshooting the carrying capacity of the Earth's ecosystem
The Role of Technology in Society
The Internet One of the most visible and widely used technological innovations over the past decade has been the Internet. Enable users to share information along multiple channels linking individuals and organizations. In 2008, China surpassed the United States with the most Internet users by country.
Ethical Challenges Involving Technology
The Loss of Privacy Free Speech Issues
Economic Power
The ability to grant or withhold transactions with the focal company.
Board of Directors
The centerpiece of corporate governance composed of inside and outside directors, who are elected by the shareholders to represent their interests Vary in size, composition, and structure Work through committees Compensation/ nominating/ CSR/ Audit plays a central role in corporate governance. an elected group of individuals who have a legal duty to establish corporate objectives, develop broad policies, and select top-level personnel to carry out these objectives and policies. also reviews management's performance to be sure the company is well run and all stakeholders' interests are protected, including those of shareholders. it also has its own interests, which it seeks to protect.
Environmental Regulation: Land pollution
The contamination of land by both solid and hazardous waste. Environmental justice: The effort to prevent inequitable exposure to risk, such as from hazardous waste, in disadvantaged communities. Superfund or CERCLA legislation passed in 1980 Established fund to clean up the most dangerous toxic waste sites in the U.S.
Environmental justice
The effort to prevent inequitable exposure to risk, such as from hazardous waste, in disadvantaged communities. example, Native American tribes in Utah, Nevada, and New Mexico have organized to block the construction of nuclear waste disposal facilities on their land, saying the facilities would threaten their health, culture, and economic viability Superfund or CERCLA legislation passed in 1980 Established fund to clean up the most dangerous toxic waste sites in the U.S.
Whistle Blowing Laws
The federal Sarbanes-Oxley Act, passed in 2002 Makes it illegal for employers to retaliate in any way against whistle-blowers who report information that could have and impact on the value of a company's shares. The Dodd-Frank Act of 2010 Requires the government to pay a reward to whistle-blowers who voluntarily provide information that leads to successful prosecutions for violations of federal securities laws. The U.S. False Claims Act 1986 (Lincoln Law) Allows individuals who sue federal contractors for fraud to receive up to 30 percent of any amount recovered by the government.
Which of the following is not a function of board committees?
The finance committee works closely with the Human Resources department to fund employee salaries
Which of the following is not true about the environmental standards?
The government rarely interferes in a business's choice of pollution technology
Intellectual property
The ideas, concepts, and other symbolic creations of the human mind Protected through a number of special laws and public policies, including copyrights, patents, and trademark laws Governments have protected individuals and companies' ideas-their intellectual property. In the United States, intellectual property is protected through a number of special laws and public policies, including copyrights, patents, and trademark laws. Not all nations have policies similar to those in the United States.
Shareholders
The legal owners of business corporations (also called stockholders or investors). By purchasing shares of a company's stock, they become owners. For this reason, they have a stake in how well the company performs
Voting Power
The legal right to cast a shareholder vote
Building Collaborative Partnerships
The need for collaborative partnerships is very apparent when dealing with community problems. One arena in which collaborative partnerships among business, government, and communities have been particularly effective is education. Companies rely on educational systems to provide them with well- trained employees equipped for today's high-technology workplace.
Community Relations
The organized involvement of business with the community Community relations departments are typically involved with a range of diverse issues including education, health care, and the arts. Companies had developed a specific focus on science, technology, engineering, and math (STEM) literacy. Other critical Issues: Poverty and hunger / Disaster relief / Environmental sustainability Community relations manager: interact with local citizens; develop community programs; manage donations of goods and services; work with local governments; encourage employee volunteerism
Drivers of Stakeholder Engagement
The participation of a business organization and at least one stakeholder organization is necessary. Engagement: both the company and its stakeholders both have: An urgent and important goal The motivation to participate The organizational capacity to engage with one another
Stakeholder engangement is:
The process of ongoing relationship building between a business and its stakeholders
Stakeholder engagement is
The process of ongoing relationship building between a business and its stakeholders.
Competitive Intelligence
The systematic and continuous process of gathering, analyzing, and managing external information about the organization's competitors that can affect the organization's plans, decisions, and operations With the need to comply with all applicable laws, and to follow the professional standards of fairness and honesty
Which of the following is not a benefit of managing diversity and inclusion effectively? Businesses with a diverse workforce boost innovation for the firm These businesses get tax breaks from the federal government These businesses can often more effectively serve customers These businesses are better able to attract and retain workers from a variety of backgrounds
These businesses get tax breaks from the federal government
incident-response plan for cyberattacks
These plans complement the effort to prevent access to information but also focuses on what to do when a breach occurs.
Which of the following statements is not true about shareholders?
They own equal shares of company assets
Social Responsibility Shareholder Resolutions
This is a resolution on an issue of corporate social responsibility placed before shareholders for a vote at the company's annual meeting Resolutions cannot deal with a company's ordinary business, such as employee wages or the content of advertising, since that would constitute unjustified interference with management's decisions When a social responsibility shareholder resolution is filed, several outcomes are possi- ble. In some cases, managers enter into a dialogue with shareholder activists and resolve an issue before the election. If no resolution is reached, the proposal will generally be submitted for a vote by shareholders. In 2014, such resolutions garnered, on average, around a fifth of all votes cast; executive compensation and corporate governance proposals were supported by more than a third of voters, a threshold at which many boards pay serious attention
Proxy
Those not attending are given an opportunity to vote by absentee ballot
Forces of Change Accelerating Ecological Crisis
Three critical factors have combined to accelerate the ecological crisis facing the world community and to make sustainable development more difficult: Population growth World income inequality Rapid industrialization of many developing nations
Effective Sustainability Management Shares a Number of Common Characteristics
Top management commitment Clear goals and metrics Employee engagement Alignment of rewards and incentives
A growing trend is for lead firms to work collaboratively with their suppliers to build capabilities and create shared value. True False
True
By setting a common standard for all firms, government can take the cost of pollution control out of competition
True
Competitive Intelligence enables managers in companies of all sizes to make informed decisions in all areas of the business
True
Consumer advocacy groups in the United States actively promote and speak for the interests of millions of consumers. True False
True
Corporate Social Responsibility is the idea that businesses interact with the organization's stakeholders for social goods while they pursue economic goals
True
Effective environmental management requires an integrated approach that involves all parts of the business organization
True
Employees in the United States have the right to organize and bargain collectively. True False
True
Employment-at-will is a legal doctrine that means employees are hired and retain their jobs at the sole discretion of the employer. True False
True
Shareholders have become an increasingly powerful and vocal stakeholder group in corporations. True False
True
Technology tends to ripple through society until it affects every community
True
The collection of large amounts of consumer data by business creates ethical issues of privacy and security
True
The responsibility of managing technology with many privacy and security issues for business organizations is entrusted to the CIO (Chief Information Officer)
True
The two main types of investors that own shares of stock in U.S. corporations are individuals and institutions. True False
True
Business Access to and Use of Stakeholders' personal data
Two major stakeholders targeted by business organizations for the collection of information: Employees (here in Connecticut, too!) Consumers Arguments: How much information companies should collect about their stakeholders and whether the collection of stakeholders' information benefits these stakeholders or not remain controversial?
Government Rules on Executive Compensation
Under U.S. rules, corporations must disclose top five executives' compensation and the rationale for it. Public companies are required to hold shareholder votes on executive compensation at least once every three years.
Arguments in favor of high executive pay
Well-paid top managers are simply being rewarded for outstanding High salaries provide an incentive for innovation and risk-taking High compensation reflects a shortage of labor; necessary to attract top talent Not many individuals are capable of running today's large, complex organizations
Social Reporting (CSR Reporting)
When a company decides to publicize information collected in a social audit
Transparency
When companies clearly and openly report their performance—financial, social, and environmental.
A prime social responsibility of business is to safeguard consumers: By supplying consumers with products at the lowest possible cost. By providing new technology. While continuing to supply them with goods and services they want. While maintaining high profit margins.
While continuing to supply them with goods and services they want.
Information Technology Challenges for Governments and Businesses
While scientists and technicians keep technology moving quickly, governments must try to keep pace, ensuring that the public is protected. One of the major obstacles to achieving the right balance between the enjoying the benefits of information technology and controlling its potential threats is that government and business often do not understand each other very well. Cooperation will be necessary if society is to able to reap the full benefits of technology without threat to people's security and safety.
When an employee believes their employer has done something that is wrong or harmful to the public, and he or she reports alleged organizational misconduct to the media, government, or high-level company officials, what has occurred?
Whistle-blowing.
Who protects these Shareholder rights?
Within a publicly held company, the board of directors bears a major share of the responsibility for making sure that the firm is run with the interests of shareholders, as well as those of other stakeholders, in mind. We turn next, therefore, to a consideration of the role of the board in the system of corporate governance.
Natural Capital
World's stocks of natural assets, including its geology, soil, air, water and all living things For human society to survive over time it must operate sustainably: in a way natural resources are preserved for future generations
Ecologically Sustainable Organization (ESO)
a business that operates in a way that is consistent with the principle of sustainable development In other words, an ESO could continue its activities indefinitely, without altering the carrying capacity of the Earth's ecosystem. Such businesses would not use up natural resources any faster than they could be replenished or substitutes found. They would make and transport products efficiently, with minimal use of energy. They would design products that would last a long time and that, when worn out, could be disassembled and recycled. They would not produce waste any faster than natural systems could absorb and disperse it. They would work with other businesses, governments, and organizations to meet these goals. Is an "ideal," absolute standard against which real organizations can be measured. Some visionary companies are trying to achieve this. No companies, including Interface, have yet become truly sustainable businesses, and it will probably be impossible for any single firm to become an ESO in the absence of supportive government policies and a widespread movement among many businesses and other social institutions. Supportive government policies and widespread movement among many businesses and other social institutions will be needed for ESOs to succeed.
Executive compensation
a governance mechanism that seeks to align the interests of managers and owners through salaries, bonuses, and long-term incentives such as stock awards and options Executive compensation has also been the subject of government regulations. Under U.S. government rules, companies must clearly disclose what their five top executives are paid, and lay out a rationale for their compensation. Companies must also report the value of various perks, from the personal use of corporate aircraft to free tickets to sporting events, which had previously escaped investor scrutiny. An important mechanism for aligning the interests of the corporation and its shareholders with those of its top managers is executive compensation. But recent events suggest that the system is not always doing its job.
Employment at will
a legal doctrine that means employees are hired and retain their jobs "at the will of" (i.e. at the sole discretion of) the employer. However, equal employment opportunity and other laws prevent discriminatory terminations. a legal doctrine that means that employees are hired and retain their jobs "at the will of"—that is, at the sole discretion of—the employer. However, over time, laws and court decisions have changed this. Today, employers' freedom to terminate workers has been dramatically curtailed. Some of the restrictions include the following: ∙ An employer may not fire a worker because of race, gender, religion, national origin, age, or disability. The equal employment and other laws that prevent such discrimina- tory terminations are further described in Chapter 16. ∙ An employer may not fire a worker if this would constitute a violation of public policy, as determined by the courts. For example, if a company fired an employee just because he or she cooperated with authorities in the investigation of a crime, this would be illegal. ∙ An employer may not fire a worker if, in doing so, it would violate the Worker Adjust- ment Retraining Notification Act (WARN). This law, passed in 1988, requires most big employers to provide 60 days' advance notice whenever they lay off a third or more (or 500 or more, whichever is less) of their workers at a work site. If they do not, they must pay workers for any days of advance notice that were missed. ∙ An employer may not fire a worker simply because the individual was involved in a union organizing drive or other union activity. ∙ An employer may not fire a worker if this would violate an implied contract, such as a verbal promise, or basic rules of "fair dealing." For example, an employer could not legally fire a salesperson just because he or she had earned a bigger bonus under an incentive program than the employer wanted to pay.
In business, systems theory provides
a powerful tool to help managers conceptualize the relationship between their companies and their external environments.
Commons
a shared resource, such as land, air, or water that a group of people use collectively
The eight strategic radar screens represent
a system of interrelated segments, each one connected to and influencing the others
Social audit
a systematic evaluation of an organization's social, ethical, and environmental performance.
Shareholder Activism
actions by large shareholders to protect their interests when they feel that managerial actions of a corporation diverge from shareholder value maximization increased activism of three shareholder groups: large institutions (including hedge funds and private equity firms), social investors, and owners seeking redress through the courts.
Good corporate citizens:
all of the above Strive to conduct all business dealings in an ethical manner. Make a concerned effort to balance the needs of all stakeholders. Work to protect the environment.
Stakeholder coalitions
alliances among a company's stakeholders to pursue a common interest are not static. Groups that are highly involved with a company today may be less involved tomorrow. Issues that are controversial at one time may be uncontroversial later; stakeholders that are dependent on an organization at one time may be less so at another. To make matters more complicated, the process of shifting coali- tions does not occur uniformly in all parts of a large corporation.
Preserving our common ecosystem is
an urgent imperative for governments, business, and society
Internal stakeholders
are employed by the firm Employees Managers work "inside" the firm and contribute their effort and skill to everyday operations.
external stakeholders
are not employed by the firm Suppliers Society Government Creditors Shareholders Customers may have important transactions with the firm, but are not on its payroll.
Stakeholders
are persons or groups that affect, or are affected by, a firm's decisions, policies, and operations.
Stakeholder engagement
at its core, a relationship
Business Responses to Invasions of Information Security
build strong defenses to protect information and ensure stakeholder privacy. Experts encourage companies to develop an incident-response plan for cyberattacks. These plans compliment the effort to prevent access to information but also focuses on what to do when a breach occurs. Reduce criminal intrusion of their sites by paying hackers, often called white hatters. Businesses use the white hatters' computer skills to identify weaknesses in the company's information systems.Whether businesses have adequately built protections against unwanted invasions of stakeholder privacy and breaches of information security remain to be seen. Many companies have institutionalized their attention toward protecting information by hiring managers trained in this field and able to implement strong safeguards within the company and its system. These managers are profiled next.
Technological Innovation
can lead to imaginative new methods for reducing pollution and increasing efficiency. they produce innovations that can win new customers, penetrate new markets, or even be marketed to other firms as new regulations spur their adoption.
Business depends on the community for: a. Education. b. Public services. c. Transportation systems. d. All of the above.
d. All of the above.
Which of the following is a good way for a business to express its commitment to corporate citizenship? a. By establishing community relations programs .b. By behaving responsibly toward all its stakeholders. c. By correcting problems associated with its operations. d. All of the above.
d. All of the above.
Which of the following is a reason for businesses to get involved in the community ?a. To win local support for business activity. b. To build social capital. c. To meet stakeholder demands. d. All of the above.
d. All of the above.
Workforce Diversity
diversity among employees of a business or organization Represents both a challenge and an opportunity for businesses. Diversity: variation in the important human characteristics that distinguish people from one another. Primary dimensions: age, ethnicity, gender, mental or physical abilities, race, sexual orientation Secondary dimensions: characteristics such as communication style, family status and first language Today, the U.S. workforce is as diverse as it ever has been. Consider the following workforce diversity trends: Immigration has profoundly reshaped the workplaceBy 2023, more than one in seven residents are expected to be foreign-born; they are concentrated in the U.S. West and South. Ethnic and racial diversity is increasing Asians are now the fastest-growing segment of the labor force. The workforce will continue to get older Between 2006 and 2016, the number of persons aged 65 to 74 who are still working is expected to jump 84 percent. Millennials are entering the workforce Managers find Millennials to be quick learners and more technologically adept than their seniors, but also narcissistic (self-centered) and hard to retain.
Tragedy of Commons
freedom in a commons brings ruin to all
Resource Scarcity: fresh water, Arable Land
fresh water, Arable Land
Internet Censorship
government attempts to control internet traffic, thus preventing some material from being viewed by a country's citizens
Paradox of the commons
if all individuals attempt to maximize their own private advantage in the short term, the commons may be destroyed, and all users, present and future, lose. The only solution is restraint, either voluntary or through mutual agreement
Skilled Based Volunteerism
in which employee skills are matched to specialized needs. For example, American Express established a consulting program that sent expert teams into nonprofits to solve organizational problems, free of charge. At the Lower East Side Tenement Museum in New York City, AMEX consultants helped the museum learn how to better manage its relationships with visitors, significantly improving their engagement and loyalty.
A stake is an interest
in-or claim on-a business.
social environment
includes cultural patterns, values, beliefs, trends, and conflicts among the people in the societies where the organization conducts business or might conduct business. Issues of civil or human rights, family values, and the roles of spe- cial interest groups are important elements in acquiring intelligence from the social environment
economic environment
includes information about costs, prices, international trade, and any other features of the economic environment
Competitor environment
includes information on the number and strength of the orga- nization's competitors, whether they are potential or actual allies, patterns of aggressive growth versus static maintenance of market share, and the potential for customers to become competitors if they "insource" products or services previously purchased from the organization
legal environment
includes patents, copyrights, trademarks, and considerations of intellectual property, as well as antitrust considerations and trade protectionism and organizational liability issues
customer environment
includes the demographic factors, such as gender, age, marital status, and other factors, of the organization's customers as well as their social values or preferences, buying preferences, and technology usage
technological environment
includes the development of new technologies and their applications affecting the organization, its customers, and other stakeholder groups
political environment
includes the structure, processes, and actions of all levels of government—local, state, national, and international. Awareness of the stability or instability of governments and their inclination or disinclination to pass laws and reg- ulations is essential environmental intelligence for the organization
Types of shareholders
individual and institutional
Free Speech Issues
individuals have certain ethical rights, including the right to free speech. However, this right is not absolute and must be weighed against its consequences for the community. For example, an individual is not permitted to yell "fire" in a crowded movie theater, even though some might see this as an expression of free speech, since the potential harms caused by panicked moviegoers outweighs the right of free expression. The issue of free speech was at the core of Elonis v. United States, a case scheduled to be heard by the U.S. Supreme Court in 2015. Examples: check out this example (Yelp!) Other free speech issues have appeared recently, such as the Yelp, Inc. v. Hadeed Carpet Cleaning, Inc. case. Joe Hadeed, owner of a carpet cleaning company, argued that his business dropped 30 percent after two negative posts appeared on Yelp. How much power does a Yelp review have? (2013) How Review Sites Can Affect Your Business (And What You Can Do About It) (2018) These issues raised the ethical and legal question whether anyone can post anything they want on a social media site, even if untrue or unsubstantiated and negative consequences occur due to the posting. In some cases it appears acceptable, but not in other situations.
Business and society together form an
interactive social system
Volunteerism
involves the efforts of people to assist others in the commu- nity through unpaid work. Many companies encourage their employees to volunteer by publicizing opportunities, sponsoring specific projects, and offering recognition for ser- vice. Offering such opportunities can benefit companies by attracting young employees, as new research shows.
Inequality
is an environmental problem Countries and people at either extreme of income tend to behave in more environmentally destructive ways than those in the middle
A final source of pressure on the Earth's resource base
is the rapid industrialization of many countries Advantage: Reducing poverty and slowing population growth. Disadvantage: Economic development has also contributed to the growing ecological crisis
material sustainability issues
issues that are particularly relevant to an evaluation of a particular company or industry's sustainability practices refer to those that are particularly relevant to an evaluation of a particular company or industry's sustainability management.
But stakeholder analysis involves more than simply identifying stakeholders
it also involves understanding the nature of their interests, power, legitimacy, and links with one another.
Most shareholders do not vote their proxies, either, however; currently,
just 30 percent of all shareholders and just 13 percent of individual shareholders—cast their ballots
Strict Liability
manufacturers are responsible for injuries resulting from use of their products, whether or not they were negligent or breached a warranty. May be held liable, whether or not they knowingly did anything wrong. Product liability systems of other nations differ significantly from that of the United States. In Europe, judges (not juries) hear cases Punitive damages are not allowed Victims' health expenses are not an issue as they are covered by national health insurance
Emission standard
manufacturing have a limit to the amount that they can put into the air
The world's income is
not distributed equally In 2015, the income of the average American was 31 times the income of the average Vietnamese and 85 times that of the average Tanzanian
Another method some businesses use is to reduce criminal intrusion of their sites by paying hackers
often called white hatters and discussed earlier in this chapter. Businesses use the white hatters' computer skills to identify weaknesses in the company's information systems.
The key to business survival is
often this ability to adapt effectively to changing conditions.
License To Operate
or right to do business—from society. In communi- ties where democratic principles apply, citizens have the right to exercise their voice in determining whether a company will or will not be welcome, and the result is not always positive for business. Another specific reason for community involvement is to win local support for busi- ness activity. Communities do not have to accept a business. They sometimes object to the presence of companies that will create too much traffic, pollute the air or water, or engage in activities that are viewed as offensive or inappropriate.
Business
organizations engaged in making a product or providing a service for profit.
Individual shareholders
people who directly own shares of stock issued by companies. These shares are usually purchased through a stockbroker and are held in brokerage accounts.
Environmental-quality standard
polluters control their emissions to maintain air quality
Companies demonstrate their corporate citizenship by
proactively building stakeholder partnerships discovering business opportunities in serving society transforming a concern for financial performance into a vision of integrated financial and social performance
Descriptive
realistic description of how companies really work
geophysical environment
relates to awareness of the physical surroundings of the organization's facilities and operations, whether it is the organization's headquarters or its field offices and distribution centers, and the organization's dependency and impact on natural resources such as minerals, water, land, or air
global commons
resources shared by all nations. Five global problems that will have major consequences for business and society are climate change, ozone depletion, resource scarcity, decline of biodiversity, and threats to the world's oceans
social investment
sometimes also called socially responsible investment or sustainable, responsible, and impact investment (both of which terms use the acronym SRI). refers to the use of stock ownership as a strategy for promoting social, environmental, and governance objectives. This can be done in two ways: through select- ing stocks according to various social criteria, and by using the corporate governance pro- cess to raise issues of concern.
Instrumental
stakeholder consideration key for effective corporate strategy
Stakeholder power
the ability to use resources to make an event happen or to secure a desired outcome. Stakeholders have five different kinds of power: voting power, eco- nomic power, political power, legal power, and informational power.
Environmental Intelligence
the acquisition of information gained from analyzing the multiple environments affecting organizations
Corporate Citizenship
the actions they take to put their commitments to corporate social responsibility into practice.
ecological footprint
the amount of land and water a human population needs to produce the resources it consumes and to absorb its wastes, given prevailing technology
Corporate Power refers to
the capability of corporations to influence government, the economy, and society, based on their organizational resources
Corporate power refers to:
the capability of corporations to influence government, the economy, and society, based on their organizational resources
interactive social system
the closely intertwined relationships between business and society
Omnichannel
the idea that every distribution channel must work together to deliver a unified and consistent customer experience.
An emerging trend in corporate reporting is
the integration of legally required financial information with social and environmental information into a singleintegrated report.
Product Liability
the legal responsibility of a firm for injuries caused by something it made or sold. In U.S. and some other countries, consumers have right to sue and collect damages if harmed by unsafe products. Consumer advocates and trial attorneys have supported these legal protections. By contrast, some in the business community have argued courts and juries have unfairly favored plaintiffs and have called for reform.
Stakeholder interests
the nature of each stakeholder group, its concerns, and what it wants from its relationship with the firm
Corporate Governance
the process by which a company is controlled, or governed. A system of mechanisms to direct and control an enterprise in order to ensure that is pursues its strategic goals successfully and legally Just as nations have governments that respond to the needs of citizens and establish policy, so do corporations have systems of internal governance that determine overall strategic direction and balance sometimes divergent interests.
Stakeholder is NOT
the same as stockholder (or shareholders).
The complex auditing and forecasting techniques used by these firms help
them anticipate a wide range of external influences on the firm, not just ecologi- cal influences.
Wide-angle planning helps
these companies foresee trends—new markets, materials, technologies, and products.
Business is a part of society Therefore
they cannot ignore social issues. - Businesses have the resources to tackle social issues. - Businesses can create a stable environment for long-term profitability. - It prevents increased government intervention. and society penetrates far and often into business decisions. In a world where global communication is rapidly expanding, the connections are closer than ever before. Throughout this book we discuss examples of organizations and people that are grappling with the challenges of, and helping to shape, business-society relationships.
Clear goals and metrics
they set measurable sustainability goals and regularly assess and report their performance. By setting specific goals, these firms hold themselves accountable (and allow their stakeholders to do so).
The purpose of the firm is not simply to make a profit, but
to create value for all its stakeholders - a successful business must meet both its economic and social objectives.
The goal of a global citizenship management system is
to integrate corporate responsibility and citizenship concerns into a company's values, culture, operations and decisions at all organizational levels.
Business and society operate
within constraints of the planet and its resources
The duties assigned to a CIO
• Establishing an innovative language to enable everyone throughout the organization to be clear of the objectives, processes, and timetables for any project that involves technology or information. • Providing structure to welcome inventive thinking and creating protocols for testing and reviewing these novel ideas. • Educating others in the organization to help open the eyes of organizational members to what is possible or what is not regarding technological initiatives or information. • Applying marketing knowledge to ensure that innovative ideas reach the proper stakeholders inside and outside of the organization and have a meaningful impact. • Acting as the lead security officer to protect information and data integrity by overseeing all functions of information technology in the organization. • Participating in organizationwide committees and projects to maintain a clear emphasis on the value of information, as well as protect against threats to information. In the past decade, since the creation of the CIO position within most business organizations, the CIO role has evolved from primarily being focused only on the collection and protection of information to a senior executive role essential to all business functions and operations.
Major Legal Rights of Stockholders
- To receive dividends, if declared - To vote on 'Members of board of directors 'Major mergers and acquisitions 'Charter and bylaw changes 'Proposals by stockholders - To receive annual reports on the company's financial condition - To bring shareholder suits against the company and officers - To sell their own shares of stock to others They have the right to share in the profits of the enterprise if directors declare dividends. They have the right to receive annual reports of company earnings and company activities and to inspect the corporate books, provided they have a legitimate business purpose for doing so and that it will not be disruptive of business operations. Many of these rights are exercised at the annual shareholders' meeting, where directors and managers present an annual report and shareholders have an opportunity to approve or disapprove management's plans. Typically only a small portion of shareholders vote in person, however
Stages of Corporate Citizenship
1. Elementary 2. Engaged 3. Innovative 4. Integrated 5. Transforming
Reasons for community involvement
1. Major way to carry out corporate citizenship mission 2. To win local support for business activity, be granted an informal "license to operate" in the community
Consumer Rights
1. The right to be informed: to be protected against fraudulent, deceitful, or grossly mis- leading information, advertising, and labeling, and to be given the facts to make an informed purchasing decision. 2. The right to safety: to be protected against the marketing of goods that are hazardous to health or life. 3. The right to choose: to be assured, wherever possible, access to a variety of products and services at competitive prices; and in those industries in which competition is not workable and government regulation is substituted, to be assured satisfactory quality and service at fair prices. 4. The right to be heard: to be assured that consumer interests will receive full and sym- pathetic consideration in the formulation of government policy and fair and expeditious treatment in the courts. 5. The right to privacy: to be assured that information disclosed in the course of a com- mercial transaction, such as health conditions, financial status, or identity, is not shared with others unless authorized.
Eight Strategic Radar Screens
1. customer environment 2. competitor environment 3. economic environment 4. technological environment 5. social environment 6. political environment 7. legal environment 8. geophysical environment
Stages of Corporate Environmental Responsibility
1. pollution prevention: minimize waste before it is create 2. product stewardship: managers focus on all environmental impacts associate with the life cycle of a product 3. clean technology: businesses innovate new technologies that support sustainability
Technology
A broad term referring to the practical applications of science and knowledge to commercial and organizational activities. Change is the dominant feature of technology The dominant feature of technology is change and then more change. Sometimes the pace of change is so fast and furious that it approaches the limits of human tolerance. Technology's effects are widespread reaching far beyond the immediate point of technological impact in unpredictable ways Ripples through society until every community is affected. Technology is self-reinforcing Acts as a multiplier to encourage its own faster development. It acts with other parts of society so that an invention in one place leads to a sequence of inventions in other places. Thus, invention of the microprocessor led rather quickly to successful generations of the modern computer, which led to new banking meth- ods, electronic mail, bar-code systems, global tracking systems, and so on.
The Business, Community Relationship: Community
A company's area of local business influence Whether a business is small or large, local or global, its relationship with the community or communities with which it interacts is one of mutual interdependence. There are expectations on both sides.
Consumer Privacy
A consumer's right to be protected from the unwanted collection and use of information about that individual for use in marketing. Taken together the consumer protection laws are safeguards that reflect the goals of government policymakers and regulators in the context of the 5 rights of consumers. The role of government protecting consumers is extensive in the United States as well as many other nations. Rapidly evolving information technologies have given new urgency to the broad issue of consumer privacy. Shoppers have always been concerned that information they reveal in the course of a sales transaction—for example, their credit card or driver's license numbers—might be misused. But in recent years, fast-changing technologies have increasingly enabled businesses to collect, buy, sell, and use vast amounts of personal data about their customers and potential customers. The danger is not only that this information might rarely be used fraudulently, but also that its collection represents a violation of privacy and might lead to unanticipated harms.
Stock Screening
A growing number of mutual funds and pension funds use social screens to select companies in which to invest Most evidence shows that socially screened portfolios provide returns that are competitive with the broad market Growth has been driven, in part, by government rules requiring pension funds to disclose the extent to which they use social, environmental, or ethical criteria in selecting investments. It has also been influenced by growing demand by inves- tors who want to align their investment choices with their values
Supplier Development And Capability Building
A growing trend is for lead firms to work collaboratively with their suppliers to help them improve their social, ethical, and environmental performance. The term supplier development refers to activities undertaken by companies to improve the performance of firms in their supply chains. Rather than terminate or punish a supplier, a lead firm may choose instead to invest time and resources to build the supplier's capabilities. Such an approach starts from the premise that many suppliers wish to comply, but simply lack the managerial skill, technical knowledge, or resources to do so. Why would lead firms decide to engage in capability building, rather than simply give their contracts to someone else—or even do the work themselves? One reason is that the cost of switching suppliers may be too high. A supplier may have critical capabilities, such as technical expertise in making a specific product, or other attributes that the lead firm values, such as relationships with other firms farther upstream in the supply chain. The lead firm may feel a moral obligation to the workers and local community not to cause job loss. Or, other suppliers may not be readily available to take over the contract. For many reasons, then, a lead firm may find it preferable to work with a supplier to improve its performance. Supplier development may take several forms, including training, joint problem solv- ing, and investing in equipment or infrastructure. Sometimes, technical assistance can be of great help. Some companies have invested directly in improving the lives and professional skills of their suppliers' workers. Research shows that when companies invest in suppliers and their employees, exchange knowledge, and collaborate on improvements, they create shared value that benefits both parties. Effective supplier development often involves careful study to determine the underlying cause of repeated violations of particular code requirements or standards. This is known as root cause analysis. Some forward-thinking companies have directly addressed this problem. They have developed organizational mechanisms to resolve differences in priorities internally, and they have tried to communicate expectations more clearly to suppliers. One trend is the use of integrated supplier scorecards that rate suppliers on multiple dimensions, includ- ing both traditional measures (such as cost, quality, and timeliness) and newer measures of social, ethical, and environmental performance. Research shows that when companies invest in suppliers and their employees, exchange knowledge, and collaborate on improvements, they create shared value that benefits both parties. A growing trend is for companies to engage collaboratively with suppliers to build capability. This benefits both the firm and supplier, creating shared value. Suppli- ers are more likely to engage with lead firms with which they have stable, long-term relationships.
Decline of Biodiversity
A leading cause: Destruction of rain forests, particularly in the tropics. (commercial logging, cattle ranching, and conversion of forest to plantations to produce cash crops.
Population Explosion
A major driver of environmental degradation is the exponential growth of the world's population
Which of the following is not an instance of insider trading
A marketing executive briefing stock analysts on the company's sales performance
Environmental Analysis
A method managers use to gather information about external issues and trends to develop an organizational strategy that minimizes threats and takes advantage of new opportunities.
Ecological Footprint
A method to measure the Earth's carrying capacity and how far human society has overshot it It refers to the amount of land and water a human population needs to produce the resources it consumes and to absorb its wastes, given prevailing technology
Stakeholder Expectations
A mixture of people's opinions, attitudes, and beliefs about what constitutes reasonable business behavior
World Income Inequality and Economic Development
A second important cause of environmental degradation is the inequality between rich and poor. Although economic development has raised living standards for many, large numbers of the world's people continue to live in severe poverty. inequality can be measured in two ways, by wealth and income
What continues to hold women and minorities back—in the executive suite and on boards of directors?
A study in the Harvard Business Review reported that one primary obstacle is glass walls: fewer opportunities to move sideways into jobs that lead to the top. Female and minority managers are often found in staff positions, such as public relations or human resources, rather than in line positions in such core areas as marketing, sales, or production where they can acquire the broad management skills necessary for promotion. Another problem is that in filling top positions, recruiters rely on word-of-mouth—the old boys' network from which women and persons of color are often excluded. Sometimes women voluntarily choose to step off the career track to care for children or elderly rel- atives. Other causes include a company's lack of commitment to diversity and too little accountability at the top management level for equal employment opportunity. However, recent advances by both women and minorities in the executive suite suggest that the glass ceiling may finally be cracking.
Environmental Auditing and Reporting
A way for leading companies to track their progress toward meeting sustainability goals companies that proactively manage environmental issues will tend to be more successful than those that do not. Effective sustainability management confers a competitive advantage in five different ways, as follows. Cost Savings Brand Differentiation Technological Innovation Reduction of Regulatory and Liability Risk Strategic Planning
Privacy In The Workplace: Employee Drug Use And Testing
Abuse of drugs, both illegal drugs such as heroin and methamphetamine and legal drugs such as Oxycontin or Xanax when used inappropriately, can be a serious problem for employers. Drug abuse costs U.S. industry and taxpayers an estimated $193 billion a year. This figure includes the cost of lost productivity, medical claims, rehabilitation services, and crime and accidents caused by drugs. One way business has protected itself from these risks is through drug testing. About two-thirds of companies test employees or job applicants for illegal substances, according to a 2015 study. Significant drug testing first began in the United States following passage of the Drug-Free Workplace Act of 1988, which required federal contractors to establish and maintain a workplace free of drugs. At that time, many companies and public agencies initiated drug testing to comply with government rules. The use of drug tests has fallen somewhat in the past decade, as fewer people have tested positive. (The one class of drugs whose use has recently risen is prescription opiates—medicines such as hydroco- done that are used to treat pain.) Typically, drug testing is used on three different occasions. ∙ Preemployment screening. Some companies test all job applicants or selected appli- cants before hiring, usually as part of a physical examination, often informing the appli- cant ahead of time that there will be a drug screening. ∙ Random testing of employees. This type of screening may occur at various times through- out the year. In many companies, workers in particular job categories (e.g., operators of heavy machinery) or levels (e.g., supervisors) are eligible for screening at any time. ∙ Testing for cause. This test occurs when an employee is believed to be impaired by drugs and unfit for work. It is commonly used after an accident or some observable change in behavior. Employee drug testing is controversial. Although businesses have an interest in not hiring, or getting rid of, people who abuse drugs, many job applicants and employees who have never used drugs feel that testing is unnecessary and violates their privacy and due process rights. In general, proponents of testing emphasize the need to reduce potential harm to other people and the cost to business and society of drug use on the job. Opponents challenge the bene- fits of drug testing and emphasize its intrusion on individual privacy.
Corporate Social Responsibility
Act in a way that enhances society and its inhabitants and be held accountable. Acknowledge any harm to people and society and correct it if possible. May forgo some profits if its social impacts hurt its stakeholders or if its funds are usable for a positive social impact.
Which statement is not correct about the business society interdependence Business activities impact other activities in society Business is separated from the rest go society by clear boundaries Actions by governments rarely affect businesses Business is a part of society
Actions by government rarely affect business
Which statement is not correct about the business society interdependence?
Actions by governments rarely affect business
Political Power
Actions taken through legislation, regulations, or lawsuits
Stakeholder Materiality
Adaptation of an accounting term to prioritize the relevance of the stakeholders and their issues to the company
The Role of Social Media in Stakeholder Engagement
Address public issues and engage stakeholders. Identify and solve problems faster. Share information better among their employees and partners. Bring customers' ideas for new product designs to market earlier. Platforms to engage with multiple stakeholders, communication has become faster and more effective
Advantages and Disadvantages of Alternative Policy Approaches to Reducing Pollution: Market-based mechanisms
Advantages Cap-and-trade systems • Gives businesses more flexibility • Achieves goals at lower overall cost • Saves jobs by allowing some less-efficient plants to stay open • Permits the government and private organizations to buy allowances to take them off the market • Encourages continued improvement Emissions fees and taxes Taxes bad behavior (pollution) rather than good behavior (profits) Government incentives • Rewards environmentally responsible behavior • Encourages companies to exceed minimum standards Disadvantages Cap-and-trade systems • Gives business a license to pollute • Permit levels are hard to set • May cause regional imbalances in pollution levels • Enforcement is difficult. Emissions fees and taxes Fees are hard to set• Taxes may be too low to curb pollution Government incentives Incentives may not be strong enough to curb pollution
Advantages and Disadvantages of Alternative Policy Approaches to Reducing Pollution: Environmental standards
Advantages • Enforceable in the courts • Compliance mandatory Disadvantages • Across-the-board standards not equally relevant to all businesses Requires large regulatory apparatus Older, less-efficient plants may be forced to close Can retard innovation Fines may be cheaper than compliance Does not improve compliance once compliance is achieved
In the United States, the federal government regulates which of the following major areas of environmental protections
Air Pollution Water Pollution Land Pollution All of the above
Privacy In The Workplace: Alcohol Abuse At Work
Alcohol use and addiction causes twice the problems of all illegal drugs combined. U.S. businesses lose an estimated $88 billion per year in reduced productivity directly related to alcohol abuse. Employee Assistance Programs (EAPs) - offer counseling, rehabilitation programs, and follow up.
Both large and small businesses have adopted sustainable practices to what advantage
All of the Above Cost savings from operational efficiency. Opportunity to serve emerging economies. Reduction of regulatory risk.
Which of the following statements is (are) correct about stakeholders' power?
All of the Above: Different stakeholders have different types and degrees of power. Stockholders' voting power is limited to the percentage of stock owned by the stockholder. It uses resources to achieve a desired decision or outcome.
Stakeholder groups can include
All of the Above: Stockholders The Media Environmental Activist
The growing diversity in the U.S. workforce is due to: Immigration from other countries Shifting patterns of work and retirement Millennials entering the workforce All of the above
All of the above
Cybersecurity experts recommend including which essential elements for an incident response plan for cyberattacks?
All of the above Focus on how to respond to a breach Involvement by all functional departments Support from executive leadership.
Social investors seek to eliminate from their investment portfolios companies that:
All of the above Make dangerous products like tobacco or weapons Pollute the environment Discriminate against employees
Chief Sustainability Officer (CSO)
An emerging role at many leading firms is the Interpersonal skills—being able to work effectively with people across the organization—are critical to success.
Privacy In The Workplace
An important right in the workplace as elsewhere, is privacy. Privacy rights: primarily protecting an individual's personal life from an unwarranted intrusion by the employer. Key workplace issues where privacy dilemmas often emerge include electronic monitoring, office romance, drug and alcohol abuse, and honesty testing. Electronic Communications Privacy Act of 1986 protects email privacy (requires warrant or subpoena if after 180 days); however, USA PATRIOT Act of 2001 has weakened this protection Freedom of Information Act and Hawaii Unifterm-36orm Information Practice Act also reduces email privacy
Suppliers
An organization that provides goods or services to another organization. Suppliers are also known as vendors or contractors. They are an important market stakeholder of business. They provide critical inputs. They often manufacture entire products that companies then sell to customers under their own brand. Major transnational firms can have an enormous number of suppliers. Example: Intel has 16,000 suppliers in 100 countries Most suppliers share an interest in obtaining orders that will enable them to: Make money Use their productive capacity efficiently Build long-term, stable relationships with business customers Suppliers may have both economic and informational power. A supplier that is a sole source for a key component or natural resource naturally has more leverage than one which is not. Suppliers that control critical worker skills, technical know-how, or relevant manufacturing infrastructure have more leverage than others. Lead firms often categorize their suppliers according to tier, or level. Tier-1 suppliers (sometimes called contractors) are hired to manufacture products and provide them directly to the company. These may in turn work with tier-2 suppliers (sometimes called subcontractors), who may in turn work with even more distant suppliers. In the automobile industry, for example, there may be six to ten levels of suppliers between the automaker and the source of raw materials, and a company may not even be aware of some of the parties that contribute at some point to the finished product.
Privacy In The Workplace: Romance In The Workplace
Another issue that requires careful balancing between legitimate employer concerns and employee privacy is romance in the workplace. People have always dated others at work. In fact, a 2013 survey showed that 38 percent of workers said they had dated a coworker at least once during their careers, and of these relationships almost a third had led to marriage. In fact, workplace dating has probably become more common as the average age of marriage has risen. (For women, that age is now around 27; for men, around 29.) When one person in a relationship is in a position of authority, he or she may be biased in an evaluation of the other's work, or others may perceive it to be so. For many years, most businesses had a strict policy of forbidding relationships in the workplace outright. They assumed that if romance blossomed, one person—usually the subordinate—would have to find another job. Today, however, companies are more likely to draw distinctions, permitting some kinds of office relationships, and not others. A small proportion of companies (about 5 percent) require their managers to sign a document, sometimes called a consensual relationship agreement, stipulating that an office relationship is welcome and voluntary—to protect against possible harassment lawsuits if the people involved later break up.
Public Issue
Any issue that is of mutual concern to an organization and one or more of its stakeholders
Which of the following is a key feature of effective boards of directors?
Appoint an independent lead director and hold regular meetings without the CEO present.
Environmental Issues
Arise when a supplier of raw materials, parts, or finished goods contributes to climate change, dumps toxic chemicals, emits air pollution, or reduces biodiversity This can threaten the reputation of companies at the top of the supply chain. Some companies have responded to environmental concerns by: Local sourcing: seeking to source from nearby suppliers where practical Improve efficiency in their supply chains
Shareholder Activism - Rise of Institutional Investors
As shown earlier, holdings have increased significantly; have become more assertive in promoting interests of their members Have large blocks of stock not easy to sell if become dissatisfied strong incentive to work to change management policy Research shows involvement of institutional investors can improve company performance.
Transforming Prevailing Business Models
As technology changes the shopping experiences for customers, businesses, too, must understand how they need to change to accommodate and better serve their customers. Ethical Challenges Involving Technology 71 percent of shoppers expect to view in-store inventory online 50 percent want to be able to buy online and pick up at a brick-and-mortar store Smartphones are also changing how businesses must accommodate consumers. According to a Forrester Research survey, 38 percent of consumers used their mobile devices to check inventory availability while on their way to a store and 34 percent used a mobile device to research products while in a store. These new trends gave rise to the notion of omnichannel, the idea that every distribution channel must work together to deliver a unified and consistent customer experience. Busi- nesses are adjusting and attempting to serve the multiple needs of their consumers.
Reasons For Private Regulation
As the manufacturing supply chain has become increasingly globalized, its regulation has become more fragmented and ineffective. New institutions have arisen to fill the void created by the inability of governments in both developed and developing countries Lack of jurisdiction of home country governments Weak regulatory capacity in developing countries Limited enforcement power of transnational institutions
Right to be forgotten
Ask to remove from internet search results some personal information which is believed was damaging. Governments have stepped in to protect individuals and their personal information. Ex) google - EU Privacy Removal request
Sustainable development
Balances economic and environmental considerations
Arguments for Corporate Social Responsibility
Balancing corporate power with responsibility. Discourages government regulations Promotes Long - term profits for business Improve stakeholders relationships Enhance business reputation
Alternative Policy Approaches: Market-based mechanisms
Based on the idea that the market is a better control than extensive standards that specify precisely what companies must do. Cap-and-trade: allows businesses to buy and sell the right to pollute, a process. →Example: European Union's tradable permits Emissions charges or fees→Example: green taxes or eco-taxes Each business is charged for the undesirable waste that it emits, with the fee varying according to the amount of waste released. The result is, "The more you pollute, the more you pay." In this approach, polluting is not illegal, but it is expensive, creating an incentive for companies to clean up. Government incentives
Which of the following is the result of the inseparable relationship between business and society?
Both A and B, but not C. A. All business decisions have a social impact. B. The vitality of business depends on society's actions and attitudes.
Why is income inequality and environmental problem?
Both A and B, not C People in the richest countries consume many natural resources People in the poorest countries often misuse natural resources
Which of the following statements is true about corporate social responsibility
Both A and C, but not B Businesses should monitor and prevent social problems in advance of their becoming major issues Corporations should be accountable for any actions that affect people, their communities and the environment
Which of the following statements is true about corporate social responsibility?
Both A and C, but not B. A. Businesses should monitor and prevent social problems in advance of their becoming major issues. C. Corporations should be accountable for any actions that affect people, their communities, and the environment.
Companies demonstrate global corporate citizenship by:
Both B and C, but not A 1) Building reactive stakeholder partnerships. 2) Finding business opportunities that serve society
Investors may receive an economic benefit from the ownership of stock by receiving: Interest Dividends Capital Gains Both B and C, not A
Both B and C, not A Dividends Capital Gains
When companies develop a reputation for environmental excellence, and they produce and deliver products and services designed to attract environmentally aware customers, this is called:
Brand differentiation
Stakeholder Dialogue
Business and its Stakeholders come to face-to- face conversations Core interest and concerns, common definition of a problem Understandings and concerns of all parties Invent innovative solutions and implement them
Threats to the Earth's Ecosystem
Businesses now face: Limited supplies of critical resources Unpredictable weather changes But business also have great opportunities: Established firms and innovative entrepreneurs who can figure out how to address environmental challenges can both help society and enjoy great commercial success
The role of the Chief Information Officer (CIO)
Businesses often entrust the responsibility for managing information technology and its many privacy and security issues to the _______________ or individuals with other similar titles such as chief security officer or chief technology officer. Many firms have elevated the role of their data processing managers by giving them the title of chief information officer. Recently this role has expanded even more to include broader responsibilities and greater influences on corporate policies and practices. In today's technology driven world, the CIO plays a critical role. Along with reporting to the highest levels within the business came additional responsibilities. The CIO's role was changing dramatically, becoming more integrated into the overall strategic direction of the firm. "CIOs themselves are in the midst of a make-or- break personal change-management project: CIOs who can only take orders, who can't speak the language of the business, who can't step out of the proverbial back-office and into the front lines of customer service, social media or supply chain management will soon go the way of the ancient tech gear," warned Thomas Wailgum of CIO Magazine. Whether businesses have adequately built protections against unwanted invasions of cyberattacks on their stakeholders' privacy remains to be seen. Clearly efforts are being made given the increasing costs of cyberattacks and the growing amount of information being collected and used by business organizations. almost half (47%) of the CIOs surveyed reported that they have broadened their responsibilities beyond the traditional CIO-only role a job title commonly given to the most senior executive in an enterprise responsible for the information technology and computer systems that support enterprise goals.
Alignment of rewards and incentives
Businesspeople are most likely to consider the environmental impacts of their actions when their organizations acknowledge and reward this behavior. The most sustainable organizations tie the compensation of their managers, including line managers, to environmental achievement and take steps to recognize these achievements publicly.
Which of these statements is not true about supply chain transparency? A. A firm's social, ethical, and environmental responsibility is revealed. B. Technology is enhancing supplier transparency. C. Brand loyalty among consumers is reduces by a firm's revelations D. Recent audits and certifications are publicized.
C. Brand loyalty among consumers is reduces by a firm's revelations
Corporate Power
Capability of corporations to influence government, the economy, and society, based on their organizational resources. The tremendous power of the world's leading corporations has both positive and negative effects.
Failure to understand the beliefs and expectations of stakeholders
Cause the performance expectations gap to grow larger
Ozone Depletion
Causes: chlorofluorocarbons (CFCs), manufactured chemicals formerly widely used as refrigerants, insulation, solvents, and propellants in spray cans.
climate change
Changes in the Earth's climate caused by increasing concentrations of carbon dioxide and other pollutants produced by human activity. global warming
Six dynamic forces powerfully shape the business and society relationship
Changing societal expectations Growing emphasis on ethical reasoning and actions Globalization Evolving government regulations and business response Dynamic natural environment Explosion of new technology and innovation
Which pattern of consumption is recommended to reduce humanity's global footprint?
Choosing less harmful products
Life Cycle Analysis involves
Collecting information regarding the lifelong environmental impact of a product, from extraction to disposal
Consumer Movement / Consumerism
Collective efforts by consumers in many countries to safeguard their own rights in many nations. Examples: U.S. advocacy organizations include Consumer Federation of America, National Consumers League, and the American Association for Retired People
A shared resource, such as land, air, or water, that a group of people uses collectively is a(n)
Commons
Nonmarket stakeholders
Community, government, business support groups, etc. People or groups who—although they do not engage in direct economic exchange with the firm—are affected by or can affect its actions.
Cost Savings
Companies obtain significant cost savings by reducing pollution and hazardous waste, recycling materials, and operating with greater energy efficiency. Many companies have found they are able to obtain significant cost savings by more efficiently managing their real estate portfolios.
Reduction of Regulatory and Liability Risk
Companies that are proactive with respect to their environmental impacts are often better positioned than their competitors to respond to new government mandates. Similarly, proactively managing for sustainability can avoid expen- sive fines and lawsuits
Strategic Planning
Companies that cultivate a vision of sustainability must adopt sophisticated strategic planning techniques to allow their top managers to assess the full range of the firm's effects on the environment If managing for sustainability confers a competitive advantage, it follows that it should have a measurable impact on financial performance.
Brand Differentiation
Companies that develop a reputation for environmental excellence distinguish their brand and attract like-minded customers. Sustainable products and services can attract environ- mentally aware customers. In general, promoting particular products or services based on their environmental attributes, a practice sometimes known as green marketing, has not been particularly effective. No specific eco-labeled product has captured more than 2 percent of its market. what consumers do respond to is a company's over- all reputation for environmental responsibility and the credibility of its communications with stakeholders.
Some researchers believe that business firms moving towards ecological sustainability results in
Competitive advantages
Reason for consumer movement
Complex products complicate the choices consumers need to make when they go shopping. Services and products have become more specialized and difficult to judge. When businesses try to sell both products and services through advertising, claims may be inflated or they may appeal to emotions. Technology has permitted businesses to learn more than ever about their customers— potentially violating their privacy. Some businesses have ignored product safety.
E-business
Consists of buying and selling goods and services between businesses, organizations, and individuals electronically via Internet- based systems. electronic business exchanges between businesses and between businesses and their customers emerged. E-business revenue has increased at a faster pace than that of traditional, or non-electronic, business. E-business has become a way of life, from large compa- nies and smaller start-up businesses to individuals interested in shopping online. As tech- nology became more affordable and easier to use, small and medium-sized businesses committed investment dollars to e-business and technology systems.
Business Access to and Use of Stakeholders' personal data: Consumers
Consumers' shopping habits are also a rich source of data for businesses. Companies tracking big data, sometimes called meta-data, can pick out specific details about an individuals' shopping habits, preferences or tendencies. The collection of consumer information raises important ethical issues of privacy and security. Another important consumer issue involving the ethical use of information technology includes the collection and use of patients' medical records. The questions of how much information companies should collect about their stake- holders and if the collection of stakeholders' information benefits these stakeholders or not remain controversial. Whether businesses have adequately built protections against unwanted invasions of stakeholder privacy and breaches of information security remain to be seen.
When working well, the issue management process
Continuously cycles back to the beginning and repeats.
When working well, the issue management process:
Continuously cycles back to the beginning and repeats.
Phases of Corporate Social Responsibility
Corporate Social Stewardship (1950 - 1960s) Corporate Social Responsiveness (1960s - 1970s) Corporate/ Business Ethics (1980s - 1990s) Corporate/ Global Citizenship (1990s - 2000s)
Stakeholder partnerships, high-tech communication networks, and sustainability audits are examples of:
Corporate/ global citizenship
Stakeholder Theory of the Firm
Corporations serve a broad public purpose: to create value for society. Profit is necessary for survival, but is not the only purpose of the firm. Corporations have multiple obligations and need to consider all stakeholders.
Companies that reduce pollution and hazardous waste, reuse or recycle materials, and operate with greater energy efficiency achieve a competitive advantage mainly due to
Cost savings
Citizenship as an opportunity to
Create value for their organization Gain a competitive advantage Help address some of the world's biggest challenges
As a stakeholder, suppliers' interests include: A. Earning income. B. Utilizing productive capacity efficiently. C. Building short-term, but profitable, business relationships. D. Both A and B, but not C.
D. Both A and B, but not C.
Which argument says that stakeholder management realistically depicts how companies really work?
Descriptive argument
Sustainable Development
Development that "meets the needs of the present without compromising the ability of future generations to meet their own needs." Sustainable development requires that human society use natural resources at a rate that can be continued over an indefinite period. Two core ideas: Protecting the environment will require economic development that alleviates poverty but does so while conserving and regenerating the Earth's resources for future generations Sustainable development is about fairness
Which of the following is an argument in favor of corporate social responsibility?
Discourage government regulation
Which of the following is an argument in favor of corporate social responsibility
Discourages government regulation
The buying and selling of goods and services electronically is called
E - Business
The Role of Technology in Business
E-business
Being able to continue their activities indefinitely, without altering the carrying capacity of the earth's ecosystem, is a characteristic of
Ecologically sustainable organizations
Privacy In The Workplace: Employee Theft And Honesty Testing
Employees can irresponsibly damage themselves, their coworkers, and their employer by stealing from the company. Employee theft has emerged as a significant economic, social, and ethical problem in the workplace. Many companies in the past used polygraph testing (lie detectors) as a preemployment screening procedure or on discovery of employee theft. In 1988, the Employee Polygraph Protection Act became law. This law severely limited polygraph testing by employers and prohibited approximately 85 percent of all such tests previously administered in the United States. In response to the federal ban on polygraphs, many corporations have switched to written psychological tests that seek to predict employee honesty on the job by asking questions designed to identify desirable or undesirable qualities. The use of honesty tests, however, like polygraphs, is controversial. The American Psy- chological Association noted there is a significant potential for these tests to generate false positives, indicating the employee probably would or did steal from the company even though this is not true. Critics also argue that the tests intrude on a person's privacy and discriminate disproportionately against minorities. In all these areas—monitoring employees electronically, policing office romance, test- ing for drugs, and conducting psychological tests—businesses must balance their needs to operate safely, ethically, and efficiently with their employees' right to privacy.
Right To Organize And Bargain Collectively
Employees have a fundamental legal right to organize labor unions and to bargain collectively with employers. Workers have a right to hold an election to decide which union will represent them. Labor unions: Organizations that represent workers on the job. Labor unions have the right to negotiate wages, working conditions, and other terms of employment. Employers are required to bargain with unions in good faith. If agreement cannot be reached, a strike might occur.
Workplace Rights
Employees in the United States enjoy important legal guarantees. They have the right to: Organize and bargain collectively A safe and healthy workplace Job security
The primary reason that governments try to keep pace with technology is to
Ensure that the public is protected
Corporate Governance involves the exercise of control over a company's
Entire corporate direction
Stakeholder groups can include
Environmental activists, shareholders, business support groups
The Right To Safe And Healthy Workplace
Ergonomics: adapting the job to the worker, rather than forcing the worker to adapt to the job. Annually, slightly more than 3 million workers in private industry are injured or become ill while on the job (U.S. Department of Labor). Occupational Safety and Health Act, passed in 1970, gives workers the right to a job "free from recognized hazards that are causing or likely to cause death or serious physical harm." This law is administered by the Occupational Health and Safety Administration (OSHA). Since the agency's creation in 1970 the overall workplace death rate has fallen by more than two-thirds.
The most significant motivator of corporate social reporting is
Ethical concerns
Institutions (institutional investors)
Examples: pension funds, mutual funds, insurance companies, and university endowments These institutions are sometimes called "Wall Street" investors. For obvious reasons, institutions usually have more money to invest and buy more shares than individual investors. Since the 1960s, growth in the numbers of such institutional investors has been phenomenal. In 2010, institutions accounted for 63 percent of the value of all equities (stocks) owned in the United States, worth a total of about $15 trillion—about eight times the value of institutional holdings two decades earlier. Although people of every age, race, and socioeconomic status own stocks, ownership tended to be higher among some groups than others. The affluent (with household incomes of $75,000 or more) (80 percent) owned stocks as a higher rate than lower-income people (with household incomes of less than $30,000) (15 percent). Age also made a difference: 57 percent of people between550 and 64 years old owned stocks, compared with just 24 percent of young adults under 30. The growing influence of the institutional sector of the market over the past four decades, with an apparent reversal of the overall trend following the financial crisis.
The directors of a company are a central factor in corporate governance because they
Exercise formal legal authority over company policy
Threats to Marine Ecosystems
Exploitation of fish populations / Decline of coral reefs / Coastal development in ecologically fragile areas / Ocean acidification
The idea that companies have a continuing responsibility for the environmental impact of their products or services, even after they are is called?
Extended product responsibility
Supply Chain Risk
Failure to manage social, ethical, and environmental risk in supply chains can be very costly, managers have learned. Impact on stock prices of disruptions in companies' supply chains. Operating income, return on sales, and return on assets were all adversely impacted and firms did not recover quickly.
A public issue exists when there is agreement between the stakeholders' expectations of what a business firm should do and the actual performance of the business firm
False
A public issue exists when there is agreement between the stakeholders' expectations of what a business should do and the actual performance of that business firm
False
Consumers make less rational choices when they have accurate information about a product. True False
False
Governments and businesses understand each other's needs and cooperate fully to manage the benefits and threats of newly introduced technology
False
Institutional investors have little incentive to hold their shares and organize to change management policy. True False
False
Investors always choose to invest in the stock of companies that pay high dividends.
False
It is illegal in the United States to offer stock trade tips to clients based on public information. True False
False
Shareholders must rely exclusively on the board of directors to protect their interests. True False
False
The activism of institutional shareholders has often worsened company performance
False
The doctrine of strict liability extends only to the retailer who is involved in selling the product, not the manufacturer. True False
False
The paradox of the commons is that if all individuals attempt to maximize their own private advantage in the short term, the commons will still be plentiful in the long run.
False
The stakeholder theory of the firm's sole purpose is to create value for its shareholders
False
The term pay gap refers to the inequitable concentration of a group, such as minorities or women, in a particular job category. True False
False
The term "glass walls" refers to:
Fewer opportunities to move sideways into jobs that lead to the top.
Whistle blowing and free speech in the workplace
Free speech in the workplace U.S. Constitution protects free speech; however, does not specifically protect freedom of expression in the workplace. Employees are not generally allowed to speak out against their employers, due to legitimate interests of the business. Whistle-blowing: when an employee believes his/her employer has done something that is wrong or harmful to the public, and he/she reports the alleged misconduct to the media, government, or high-level company officials.
Digital divide
Gap between those that have technology and those that do not People in developing countries often have less Internet access than people in developed countries Problem: less advantaged individuals and societies may not enjoy the same benefits of technology as others. By 2013, nearly 98 percent of American homes were able to access the Internet on some sort of high-speed broadband network, either at home or work. Some experts argued that the most important issue going forward was not access, but educating Americans on how the Internet could be a valuable aid for job hunting, acquiring health insurance, and accessing government services and other benefits.
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
Social Issues
Global supply chains have many social impacts. Prominent among them are the wages, working conditions, and health and safety of employees in supplier factories Low wages are one of the main reasons that brands contract with suppliers in developing countries. They reduce overall costs and enable brands to price their products more competitively. However, if a company's customers believe that its products are made in sweatshops, its reputation can be harmed. Sweatshops—a derogatory term referring to factories where workers toil long hours, at low wages, and under unsafe conditions The challenge for businesses: Terms and conditions of work varies across cultures and economies To assure that their suppliers pay wages that are perceived as fair To permit workers and their families to achieve a decent standard of living Minimum wages established by law may not be sufficient Finding the right balance can be a challenge For example, should excessive overtime be permitted, if workers want this? Child labor Worker health and safety in supplier factories
Stakeholders(s) Stakeholder engagement
Goal: To change corporate behavior on an issue of concern Motivation: Governmental campaigns, protest perceived as inadequate to change corporate behavior Organizational capacity: Experienced staff; core group of activists committed to dialogue with business
Company Stakeholder engagement
Goal: To improve corporate reputation; to earn a license to operate; to win approval of society Motivation: Needs stakeholder involvement because of their expertise or control of critical resources Organizational capacity: Top leaders committed to engagement; well-funded department of external (stakeholder) affairs
Fueling Technological Growth
Government investment has helped launch many new technologies, including the Internet, and these trends continue. Business investment: • Business firms have invested directly in technology through their research and development (R & D) operations. • Benefited the business and produced innovations that have moved industries forward. The combination of government, private investor, and business investment in technology has continued to drive innovation forward.
Government interventions
Governments play various and sometimes conflicting roles with respect to information and ideas. In some countries, particularly in nondemocratic regimes, governments censor and restrict citizen access to information. In democratic countries, the role of government is more likely to look out for the public good and protect intellectual property; that is, the private ownership of certain kinds of information. Governments intervened to restrict their citizens' access to information and various Internet and social media sites To suppress political dissent To impose particular religious or ideological views In all of these instances, governments intervened to restrict their citizens' access to information and various Internet and social media sites, generally to suppress political dissent or to impose particular religious or ideological views. In most democratic, Western nations, such interventions would not be tolerated. Yet, how Western countries intervene when it comes to information technology has varied. Sometimes a government accesses information for the public good and limits individual rights; while at other times, govern- ments support individuals' control over their personal information or protect the individu- al's intellectual property.
Informational Power
Having access to valuable data, facts, or details
6 Benefit of Social audits by Simon Zadek
Help businesses know what is happening within their firm Understand what stakeholders think about and want from the business Tell stakeholders what the business has achieved Strengthen the loyalty and commitment of stakeholders Enhance the organization's decision making Improve the business's overall performance
Which of the following arguments opposes the idea of high executive pay?
High salaries divert resources that could be used to invest in the business
Society
Human beings and the social structures they collectively create.
Ethical Issues
Human trafficking: the illegal recruitment and movement of people against their will, usually to exploit them for economic gain. Example: Of the estimated 2.5 million victims of trafficking in the world, about 80 percent are women and girls forced into prostitution Companies that set up operations in countries with anti-democratic, repressive regimes can be caught up in violations of human rights. Some governments require foreign firms to partner with state-owned companies in order to do business there, adding another level of risk.
The Issue Management Process
Identify Issue: Anticipating emerging concerns, or "horizon" issues Analyze Issue: Organizations must understand how the issue is likely to evolve, and how it is likely to affect them Generate Options: Requires complex judgments that incorporate ethical considerations like the company's reputation Take Action: Once an option is chosen, the organization must design and implement a plan of action Evaluate Results: Must assess results of the program and make adjustments if necessary
Shareholder Activism - Stockholder Lawsuits
If shareholders think they have been damaged by actions of company officers or director, they have a right to bring lawsuits. Shareholder lawsuits maybe initiated to check abuses. Example: Insider trading Timely disclosure of material information The outcome can be very expensive for companies.
The Origins of Corporate Social Responsibility
In the United States, the idea of corporate social responsibility appeared around the start of the 20th century. Corporations under attack for being too big, too powerful, and guilty of antisocial and anticompetitive practices. To use their power and influence voluntarily for broad social purposes rather than for profits alone. → Example: Steelmaker Andrew Carnegie, Henry Ford
Executive Compensation
Incentives instead of fixed salary Alining the interests of the corporation and its shareholders with those of its top managers (Pay - for Performance approach.
The purpose of the right to be forgotten is to:
Increase protection of privacy and personal information
The Loss of Privacy
Individuals are under a technology microscope with vast amounts of data collected each minute and available to be analyzed in great detail. In 2014, a law was introduced in the U.S. that would require car owners to control the data collected on the device called the event data recorder, commonly known as a black box. Smartphones are another common device that can capture vast amounts of information. Apple and Google announced that they were creating a new operating system to prevent law enforcement agencies from retrieving the data stored on a locked phone. Invasions of individual privacy come from many different directions. Automobiles are becoming smarter, with global positioning systems, Internet connections, data recorders, and high-definition cameras. While automakers say they are only responding to consumer demands for more technology, the new technologies increase the number of people with access to this data. Ethical challenges on how this information is collected and analyzed are becoming increasingly salient.
The digital divide describes the gap between those:
Individuals who have technology and those who do not
Arguments against high executive pay
Inflated executive pay hurts the ability of firms to compete with foreign rivals High executive pay causes mid- and lower-level employees to feel they are not receiving their fair share Empirical evidence finds weak relationship between executive pay and company success
Breaking The Glass Ceiling
Invisible barrier that exists in reaching these higher levels has been named the glass ceiling. Recent advances show some cracking of the ceiling. Although women and minorities are as competent as white men in management, they rarely attain the highest positions in corporations. Recent studies have shown: Companies with a higher proportion of women on their boards were less likely to be involved in corruption and earned higher scores for management of carbon emissions, toxic releases. Adding even a single woman to a board of directors improved corporate governance practices, with a particularly strong effect in traditionally male-dominated industries like mining and energy.
A reason for institutions (Institutional investors) becoming more assertive in promoting the interest of their member investors is:
It is difficult for institutions to sell their holdings
Legal Power
Lawsuits filed against the focal company for harm caused by the firm
Voluntary Business Initiatives
Life cycle analysis (LCA) Involves collecting informationon the lifelong environmental impact of a product, from extraction of raw material to manufacturing to its distribution, use, and ultimate disposal. E.g. AUDI's LCA information Industrial ecology Refers to designing factories and distribution systems as if they were self-contained ecosystems. Extended product responsibility Occurs when companies take continuing responsibility for the environmental impact of the products and services, even after they are sold Carbon neutrality An organization or individual produces net zero emission of greenhouse gases; this is usually accomplished by a combination of energy efficiencies and carbon offsets. Technology cooperation Sustainable development through long-term partnerships between companies in developed and developing countries to transfer environmental technologies
Arguments against Corporate Social Responsibility
Lower economics efficiency and profit Imposes unequal costs among competitors Imposes hidden costs passed on to stakeholders Requires skills business may lack Places responsibility on business rather than individuals
Good corporate citizens
Make a concerted effort to balance the needs of all stakeholders Strive to conduct all business dealings in an ethical manner Work to protect the environment all of the above
Which of these statements is true about ecologically sustainable organizations
Making and transporting products using minimal energy
The principle agent problem (agency problem) arise when:
Managers act in their own interest, rather than in the interest of shareholders
Top management commitment
Managers in an organization strongly supporting corporate entrepreneurship
The process of firms buying and selling the right to pollute is an example of which type of environmental regulator
Market based
Why would adding women to boards improve performance?
More diverse boards avoid a rush to consensus and realistically consider alternative courses of action. Women bring different life experiences to the table and are more likely to raise multiple stakeholder concerns. Having more diverse boards also signals to the public a company's commitment to diversity and inclusion.
Business Access to and Use of Stakeholders' personal data: Employees
Most state governments ruled that businesses have the right to monitor their employees at work. Businesses need to ensure that the time employees spend on the job is productive, since wasting time can result in significant economic losses. While high-tech monitoring may feel like a violation of privacy to some workers, others argue that it is necessary to ensure and improve workplace safety and productivity. Technology can also reduce employee theft, protect the company's intel lectual property and secrets, and be used to investigate claims of harassment or discrimination at work. Only two states, Delaware and Connecticut, require employers to tell workers that their electronic communications—anything from e-mails to instant mes- sage to texts—are being monitored. "It is not a question of whether companies should monitor," said Lewis Maltby, founder of the National Workrights Institute, which promotes employee privacy. "It's a question of how."
Privacy In The Workplace: Electronic Monitoring
New technologies enable companies to gather, store, and monitor information about employees' activities. A company's need for information, particularly about its workers, may be at odds with an employee's right to privacy. Management justifies the increase in employee monitoring for a number of reasons: Employee efficiency Preventing industrial espionage
Employee Duties/ Employer Rights
No drug or alcohol abuse No actions that would endanger others Treat others with respect and without harassment of any kind Honesty; appropriate disclosure Loyalty and commitment Respect for employer's property and intellectual capital
Private Regulations Of The Business Supplier Relationship
Non-governmental institutions that govern, enable and constrain economic activities It also called as private governance. It occurs when companies set rules of behavior for themselves and their business partners. Private regulation often takes the form of company and industry- wide codes of conduct Establish standards governing labor, human rights, environmental, and related practices within global supply chains. In the absence of effective public regulation, many companies and industries have established rules for their suppliers through their own voluntary supply chain codes of conduct.
Which of the following is not a major legal right of shareholders?
None of the above or To vote on who will become CEO
Which one of the following is considered to be a non market stakeholder of business?
Nongovernmental organizations
Government Internet Censorship and Control: North Korea
North Korea is one of the world's most recognized censors of the Internet But its government made an unprecedented move in 2013 when it allowed Internet searches on mobile devices and laptops by foreigners--but not by its citizens.
Insider Trading
Occurs when a person gains access to confidential information about a company's financial condition Uses that information, before it becomes public knowledge, to buy or sell the company's stock for a profit Since others do not know what an inside trader does, the insider has an unfair advantage. cases The courts have generally interpreted this to mean that it is against the law to trade stock (or stock options) based on material, nonpublic information. This includes company officials, of course, who may have inside information based on their work. But it also includes also other individuals who obtain such infor- mation through a "breach of trust," that is, a tip from someone who has an obligation to keep the information confidential. The tipper can also be guilty, if he or she benefits from the exchange. It is not, however, illegal to trade based on information developed from publicly available sources. Insider traders are not necessarily high-placed executives, wealthy individuals, or household names. Insider trading is contrary to the logic underlying the stock markets: All stock buyers and sellers ought to have access to the same information.
Environmental Regulation: Air pollution
Occurs when more pollutants are emitted into the atmosphere than can safely be absorbed and diluted by natural processes. Results from human activity, especially industrial processes and motor vehicle emissions. A special problem of air pollution is acid rain. The efforts of the U.S. government to reduce acid rain illustrate some of the difficult trade-offs involved in environmental policy. →Example: high-sulfur coal vs. low- sulfur coal
Environmental Regulation: Water pollution
Occurs when more wastes are dumped into waterways than can be naturally diluted and carried away. Failure to comply with clean water laws can be very expensive for business. The main U.S. law governing water pollution is the Water Pollution Control Act, also known as the Clean Water Act. Goal is to restore or maintain the integrity of all surface water in the United States.
The idea that every distribution channel must work together to deliver a unified and consistent customer experience is called
Omnichannel
One emerging trend is
One emerging trend is the consolidation of corporate citizenship efforts
General Systems Theory (GST)
Organisms do not exist in isolation but can only be understood in relationship to their surroundings. Businesses are embedded in a broader social environment with which they constantly interact.
Stakeholder Engagement:Stages in the Business-Stakeholder Relationship
Over time, the nature of business's relationship with its stakeholders often evolve through a series of stages. Inactive: Companies ignore stakeholder concerns Reactive: Companies act only when forced to do so, and then in a defensive manner Proactive: Companies try to anticipate stakeholder concerns Interactive: Companies actively engage stakeholders in an ongoing relationship of mutual respect, openness, and trust
Ownership Purpose
Owner's Needs and Wants Share Value
Government Internet Censorship and Control: Pakistan
Pakistan. In 2010, the Pakistani government, with the support of conservative Islamic groups, broadened an existing ban on social networking sites to include YouTube, some Flickr and Wikipedia sites, and about 450 individual web pages, because of what it described as "growing sacrilegious content." (The ban followed one day after a Pakistani court ruled that access to the Facebook site should be temporarily suspended for 12 days, citing offensive drawings of the Prophet Muhammad.) Despite the objections of many Pakistani citizens, who included nearly 25 million Internet users, the Pakistan Telecommunications Authority said in a statement that the ban was "in line with the Constitution of Pakistan, the wishes of the people of Pakistan." After YouTube removed offensive material, the ban on this site was lifted
Failure to understand stakeholder concerns and to respond appropriately will
Permit the performances-expectations gap to grow. The larger the gap, the greater the risk of stakeholder backlash or of missing business opportunity
Another term for corporate giving is corporate:
Philanthropy
Positives and Negatives of Corporate Power
Positive More Resources Lower cost production New products Technologies Negatives Disproportionate political system Dominate public course Divide markets Squash competition
Environmental justice is a movement to
Prevent inequitable exposure to risk, such as from hazardous waste
Which of these factors has accelerated the current ecological crisis?
Rapid Expansion
Firms that generally act only when forced to do so, and then in a defensive manner are:
Reactive companies
The most successful global business in coming years will be those companies that:
Recognize the imperative for sustainable development as an opportunity both for competitive advantage and ethical action
global corporate citizenship
Refers to putting an organization's commitment to social and environmental responsibility into practice worldwide.
Measuring The Return On Social Investment
Return on social investment: The benefits that accrue to business and society Companies are using standard business tools to measure the outcomes of their investments in the community. Return on social investment is often more difficult to measure than other kinds of return. Nevertheless, community relations and corporate giving professionals have made significant advances in developing appropriate metrics as shown on the next slide. Inputs: The resources companies provide They may include cash contributions, employee time, products and services, or logistics support. Corporate Resources. Outputs: Measures of the activities that took place Usually numerical counts of people and communities served. Number of people/ communities served Impacts: The difference the program made - the actual benefits that accrued to the people and communities served It is similar to outputs, except that it tries to capture the actual results of the gift. Differences the program made. Value creation: The benefits to the business of the program This is similar to the concept of enlightened self-interest. Benefits to the business
Employee Rights/ Employer Duties
Right to organize and bargain Right to a safe and healthy workplace Right to privacy Duty to discipline fairly and justly Right to blow the whistle Right to equal employment opportunity Right to be treated with respect for fundamental human rights Right to fair and decent wages
Rapid economic development is often accompanied by:
Rising incomes, bringing higher rates of both consumption and waste
Ownership Theory of the Firm
Sees the firm as property of owners (shareholders). Owners' interests take precedence over interests of others. The purpose of the firm is to maximize its long-term market value and money for its shareholders.
Principles of Good Governance
Select outside directors to fill most positions Hold more open elections for members of the board Appoint an independent lead director (= non executive chairman of the board) Align director compensation with corporate performance Evaluate the Board's performance on a regular basis 1. No more than two directors are current or former company executives. 2. The audit, compensation, and nominating committees are made up solely of outside directors. 3. Each director owns a large equity stake in the company, excluding stock options. 4. Each director attends at least 75 percent of all meetings. 5. The board meets regularly without management present and evaluates its own performance annually. 6. The CEO is not also the chairperson of the board. 7. There are no interlocking directorships (where a director or CEO sits on another director's board).
Which is the following is not an example of fulfilling social objectives through stock ownership?
Selling stock of companies with a below market rate of return
A firm subscribing to the ownership theory of the firm would mainly be concerned with providing value for its
Shareholders
Shareholders and the Corporation
Shareholders have become an increasingly powerful and vocal stakeholder group in corporations Provide capital Monitor corporate performance Assure the effective operation of stock markets Bring new issues to the attention of management Play a very important role in making the business system work
Market stakeholders
Shareholders, suppliers, employees, etc. They engage in economic transactions with the company as it carries out its primary purpose of providing society with goods and services.
