Business Ethics ch 1

What is Interactive Social System?

The closely intertwined relationship between business and society. Each needs the other.

A stakeholder map is a useful tool because:

- It enables mangers to see quickly how stakeholders feel about an issue. - It allows managers to evaluate what outcomes are likely regarding an issue.

A firm subscribing to the ownership theory of the firm would mainly be concerned with providing value for its: A) Shareholders. B) Customers. C) Board of Directors. D) Community.

A) Shareholders.

A Stakeholder Coalition is?

An alliance among a company's stakeholder to pursue a common interest.

What kind of power might a local community use to influence a company's decisions? A. Publicizing an issue. B. Lobbying government policy makers for regulations. C. Challenging whether a business activity should continue to operate. D. All of the above.

D. All of the above.

Which of the following is the result of an inseparable relationship between business and society? A. All business decisions have a social impact. B. The vitality of business depends on society's actions and attitudes. C. The survival of business is independent of society. D. Both A and B, but not C.

D. Both A and B, but not C.

Which argument says that stakeholder management is a more effective corporation strategy?

Instrumental argument

What is the instrumental argument about?

Its a more effective corporate strategy.

Which argument says that stakeholder management is the right thing to do?

Normative argument

What is Ownership Theory of the Firm (aka. property/finance theory)?

Seen as the property of its owners. Purpose of the firm is to maximize long-term market value. To make the most money for shareholders who own stock.

Whats a Boundary-spanning department?

They are departments, or offices, within an organization that reach across the dividing line that separates the company from groups and people in society.

What is the Normative argument about?

Stakeholder management is the RIGHT THING TO DO.

What is Salience?

Stands out from a background; is seen important. Based on the stakeholder's power, legitimacy, and urgency.

Who's a Non-market Stakeholder?

Are people and groups who-although they do NOT engage in direct economic exchange with the firm-are nonetheless affected by or can affect its actions.

Who's a Market Stakeholder?

Are those that engage in economic transactions with the company as it carries out its purpose of providing society with goods and services.

What is the General Systems Theory?

Argues that all organisms are open to, and interact with , their external environments. They can not be understood in isolation, but only IN a relationship to their surroundings.

What is the Stakeholder Theory of the Firm?

Argues that corporations serve a broad public propose: to create value for society.

Which of the following statements is not true about the interactive social system? A) Business and society need, as well as influence, each other. B) The boundary line between business and society is clear and distinct. C) Business is a part of society, and society penetrates far and often into the business. D) Business and society are both separate and connected.

B. The boundary line between business and society is clear and distinct.

Stakeholder groups can include: A. Stockholders. B. The media. C. Environmental activists. D. All of the above.

D. All of the above.

The fiduciary duty of managers benefits a firm's: A. Stockholders. B. Customers. C. Employees. D. All of the above.

D. All of the above.

Which argument says that stakeholder management realistically depicts how companies really work?

Descriptive argument

Core arguments for Stakeholder Theory of the Firm are...

Descriptive, Instrumental and Normative.

Managers can us the salience concept to develop a ______________ _______.

Stakeholder Map

A number of European countries require public companies to include employee members on their boards of directors, so:

That their interests will be explicitly represented.

The five types of stakeholders' power recognized by most experts are:

Voting, economic, political, legal, and informational power