MGMT 5440 Test 1
strategic management process
(1) goal formulation, (2) strategy formulation, (3) strategy evaluation, (4) strategy implementation, (5) strategic control, and (6) environmental analysis.
transparency executive pay
-Exec compensation packages may include deferred pay,Severance, pension benefits, & other perks over $10,000. -SEC Rules require disclosure of executive compensation -Such disclosures may have a moderating impact prior to implementation.
normative value
-Gives intrinsic value to stakeholders and implies or imposes ethical obligations to these stakeholders. -The Answer to the Question: How does a company incorporate CSR into its management practices?
stakeholder corporation
-The ultimate goal of stakeholder management, in which a company has developed a sense of inclusiveness and symbiosis among its many stakeholders -central element is stakeholder inclusiveness -Hypothesis: Development of loyal relationships with customers, employees, shareholders, and other stakeholders will become one of the most important determinants of success.
stakeholder typology
-dangerous- anonymous -dominant- Ford owners, things going their way -dependent- NFL players with CTE -definitive- activist shareholders, owner companies, fire CEOs, etc.
affluence and education
-refers to the level of wealth, disposable income, and standard of living of the society. -As a society becomes more prosperous and better educated, higher expectations of its major institutions, such as business, naturally follow. •Create higher expectations of major institutions. •Growing public awareness through television, movies, and the Internet.
crisis crisis management
-turning point for better or worse, emotionally significant event, decisive moment -step above issue management, deals with extremely serious situations, • Economic crises (recessions, hostile takeovers, stock market crashes) • Physical crises (industrial accidents, product failures, supply breakdown) • Personnel crises (strikes, exodus of key employees, workplace violence) • Criminal crises (product tampering, kidnappings, acts of •A crisis can rip the foundation of an organization to shreds if top management does not respond quickly, effectively, and decisively. •A strong and effective response can strengthen an organization in the long run. •A crisis is an extreme event that may threaten your very existence. At the very least, it causes substantial injuries, deaths, and financial costs, as well as serious damage to your reputation. •An organizational crisis is a low-probability, high-impact event that threatens the viability of the organization and is characterized by ambiguity of cause, effect, and means of resolution, as well as by a belief that decisions must be made swiftly.
red flags signaling board problems (ranked)
1. company has to restate earnings 2. poor employee morale 3. negative risk assessment from auditor 4. poor customer satisfaction track record 5. management misses strategic performance goals 6. company is target of employee lawsuits 7. stock price declines 8. quarterly financial results miss analysts' expectations 9. low corporate governance quotient rating
seven principles of customer service
1.*Keeping your word* is where it begins. 2.Always *be honest* and tell it like it is. 3.Always think proactively, looking around the corner. 4.Deal with problems as best you can yourself, never *passing the buck*. 5.*Do not argue* with a customer because it is a lose/lose situation. 6.*Accept your mistakes*, learn from them, and do not repeat them. 7.*Consistency* is the name of the game for lasting success.
safety principles
1.Build safety into product design. 2.Do product safety testing for all foreseeable hazards. 3.Keep informed about and implement latest developments in product safety. 4.Educate consumers about product safety. 5.Track and address products' safety performance. 6.Fully investigate product safety incidents. 7.Report product safety defects promptly. 8.If a defect occurs, promptly offer a comprehensive recall plan. 9.Work with the Consumer Product Safety Commission to make sure your recall is effective. 10.Learn from mistakes—yours and others'.
ten steps of crisis communications
1.Identify your crisis communication team 2.Identify key spokespersons, authorized to speak for the company. 3.Train your spokespersons. 4.Establish communications protocols. 5.Identify and know your audience. 6.Anticipate crises. 7.Assess the crisis situation. 8.Identify key messages to communicate to key groups (speak first to internal stakeholders). 9.Decide on communication methods. 10.Be prepared to ride out the storm.
steps for board repair
1.Spread risk oversight among multiple committees 2.Seek outside help in identifying potential risks 3.Deepen involvement in corporate strategy 4.Align board size and skill mix with strategy 5.Revamp executive compensation 6.Pick compensation committee members who will question the status quo 7.Use independent compensation consultants 8.Evaluate CEO on grooming potential successors 9.Know what matters to your investors
fcpa (foreign corrupt policies act)
1977 statute forbidding US companies from bribing government officials or political candidates in other nations. Differentiations grease payments from bribes grease payment: (facilitation payments) legal payments to speed up or ensure performance of normal government duties (different from bribes)
family smoking prevention and tobacco control act
2009; granted the FDA the authority to regulate the manufacture, distribution sale, labeling, advertising and promotion of tobacco products to protect public health
issue management
4. Applying concepts from Ch. 6, when Gioia entered the picture as Ford's product recall coordinator, Gioia had the opportunity to manage and even resolve gas-tank fires that inevitably occurred as a result of Ford's flawed design decisions by having the Pinto recalled and appropriate changes made to the vehicle. Gioia's involvement as product recall coordinator put him at the center of Ford Motor Co.'s failed __________. *
ATCA (Alien tort claims act)
A 1789 law permitting foreign citizens to litigate, in a federal court, wrongful actions occurring anywhere in the world that violate international law or U.S. treaties. •Efforts to sue transnational companies for violations of international law in countries outside the U.S. •Efforts by foreign individuals to sue U.S. firms in U.S. courts for the actions of their companies abroad. ØIn 2013, the U.S. Supreme Court held that the law cannot be applied to actions that take place overseas, but only to actions which take place in the United States.
triple bottom line
A business strategy that includes social, economic, and environmental criteria. The goal is corporate sustainability
value shift
A change in a company's core values, such as from integrating ethical and social considerations into its financially driven strategic plans
outsourcing
A decision by a corporation to turn over much of the responsibility for production to independent suppliers.
board of director
A group of people elected by the stockholders of a corporation to set the policies for the corporation. Changes in boards of directors - •More Board diversity •A greater ratio of outside board members to inside board members •Use of board committees to: •Ensure that financials are not misleading •Ensure that internal controls are adequate •Follow-up allegations of irregularities •Ratify the selection of an external auditor
age compression
A phenomenon also referred to as "kids getting older younger," in which marketers target younger children with products once meant for older children or teenagers
paternalism
A policy of treating subject people as if they were children, providing for their needs but not giving them rights.
rights movement
A social trend that emphasizes what rights to which groups and individuals are entitled. A right is something owed someone such as a legal or moral right. A right is sometimes seen as an entitlement.
special interest society
A society that is characterized by tens of thousands of special-interest groups, each pursuing its own focused agenda.
shareholder resolutions
A vehicle by which shareholder activists communicate their concerns to management groups; resolutions, after obtaining a certain required number of signatures, appear on proxy statements so that they may be voted on by all shareholders
UN global compact
A voluntary corporate citizenship initiative endorsing 10 key principles that focus on four key areas of concern: the environment, anticorruption, the welfare of workers around the world, and global human rights.
shareholder activism
Activities undertaken by shareholders to influence executive decision making in areas ranging from strategic planning to social responsibility
outcomes of major crises
After major crises, companies reported: •The crises escalated in intensity •The firm was subjected to media and government scrutiny •The crises interfered with normal business operations •The crises damaged the companies bottom line •Resulted in major power shifts; those who handled the crisis well, rose; those who fumbled, lost
credit card act of 2009
Amendments to the Truth-in-Lending law that include requirements for cosigners who applicants under 21 years of age
ethical impact statements
An attempt to assess the underlying moral justifications for corporate actions and the consequent results of those actions.
MNC (multinational corporation)
An organization that manufactures and markets products in many different countries and has multinational stock ownership and multinational management
green watchdogs
Companies that verify the claims of ads by other companies
green fatigue
Consumers getting sick of green ads and lying
bullet dodging
Delaying of a stock option grant until right after bad news.
ladder of stakeholder engagement
Depicts a number of steps from low engagement to high engagement, has been set forth as a continuum of engagement postures that companies might follow. *interaction with stakeholders* must be integrated into every level of decision making in the organization
instrumental value
Gives managers tools to take effective action based on the stakeholder concepts in order to maximize profitability and shareholder value
anglo-american model
Having outside directors, following common law, with market oriented and shareholder-centered governance
crisis management
How NOT to manage a crisis: •When Tiger Woods crashed his Cadillac into a tree in his community, the media converged. Allegations of serial infidelity arose, and the crisis escalated into an organizational crisis for his billion dollar empire. Woods said nothing for days, then spoke vaguely regarding the accusations. Rules of crisis management: 1.Don't wait. 2.Don't run from the truth. 3.Don't hide. Be First -Get the message out first to control accuracy and content. Be Right -Say and do the right thing. Be Credible - Be open, honest, and speak with one consistent voice. 1.Identify areas of vulnerability 2.Develop a plan for dealing with threats 3.Form crisis teams 4.Simulate crisis drills 5.Learn from experience
ad creep
If advertising is disrespectful and intrusive, we will all complain about ad creep. If the public finds the unconventional work entertaining, then it will be effective. The way that advertising can increasingly be found everywhere one looks.
socially responsible, sustainable, or ethical investing movement
Investors seeking to put their money into socially responsible firms want to screen out those firms they consider to be socially irresponsible or to actively screen in those firms they think of as socially responsible or sustainable. Socially responsible investing can be traced back to the early 1900s, when church endowments refused to buy so-called "sin" stocks—then defined as shares in tobacco, alcohol, and gambling companies.
hypernorms
Managers will need to decide which ethical standards should transcend national boundaries Master ethical principles that underlie all other ethical principles. All variations of ethical principle must conform to them.
Four Crisis Stages
Prodromal (warning stage-suggests that crisis is coming), Acute (crisis has actually occurred), Chronic (lingering period-investigations, audits, or in-depth news stories), Crisis Revolution Stage (Crisis is resolved)
food and drugs act of 1906
Prohibits interstate commerce in misbranded and adulterated foods, drinks, and drugs
shareholder democracy
Proponents of shareholder democracy argue that if shareholders are not able to select their own representatives, the board is likely to become a self-perpetuating oligarchy. They contend that increased shareholder power and involvement will lead to improved firm performance. Opponents counter that shareholders are not "owners" in the traditional sense of the word because they can exit their ownership relatively easily by simply selling their shares. They contend that increased shareholder power will lead to inefficient and short-term-oriented decision making, as well as infighting among competing interests.
excessive CEO pay
Ratio of CEO pay to that of average worker - •1980, 42-1 •2000, 531-1 •2011, 380 to 1 Generally viewed as overpaid •Robert Nardelli became the poster boy for this view after he received $210 million when he was ousted from Home Depot by shareholders. - exec retirement plans are millions while employees get little
global corporate citizenship
Refers to putting an organization's commitment to social and environmental responsibility into practice worldwide. •Multinational enterprises are expected to: •be good corporate citizens in the countries in which they do business. •tailor their initiatives to conform to the cultural environment. •International academics and business people around the world are now researching and advocating CSR and corporate citizenship concepts. •Convergence in global CSR approaches will continue as the world economic stage becomes the common environment within which businesses function.
CFPB (consumer financial protection bureau)
Regulatory agency charged with overseeing financial products and services offered to consumers An independent bureau within the Federal Reserve that helps consumers make financial decisions.
tax gross up
Reimbursement for taxes one would have to pay on medical benefits or other such costs.
activist shareholders/corporate gadflies
Shareholders that will clamour for greater dividends and may mobilise other shareholders to oppose the management
delayed manifestation cases
Situations in which delayed reactions to products appear years later after consumption of or exposure to the product
The Corporation's Hierarchy of Authority
State Charter Shareholders Board of Directors Management Employees
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The Issue of Quality - •Product quality means different things to different people. •Service quality usually means that the service was performed as expected and on time. •Interest is driven by an increase in family income and intense global competition. The Issue of Safety - •Nearly all consumer products or services entail some small degree of risk. •Interest about safety is driven by the public's concern with safety and risk-free products- and business' responsibility to address this concern.
stakeholder inclusiveness
The degree to which a company has developed relationships with its many stakeholders
transnational economy
The expansion of the marketplace beyond national borders; the global economy
BOP (bottom of the pyramid)
The largest but poorest socioeconomic group of people in the world. live on less than $2 per day.
CPSIS (consumer product safety improvement act)
The law enacted in 2008 requiring safety testing for children's toys and products, controversial for its impact on small businesses and secondhand stores.
corporate public affairs
The management function responsible for monitoring and interpreting the governmental environment of the corporation or industry and for managing the responses necessary to protect the interests of the corporation or industry.
CRM (Consumer Relationship Management)
The overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction
offshoring
The practice of exporting U.S. jobs to lower paid employees in other nations.
proximity
The spatial distance between the organization and its stakeholders is a relevant consideration in evaluating stakeholders' importance and priority.
victimization philosophy
This philosophy or mentality holds that people are not responsible for what has happened to them but that they are a "victim" of society's institutions
say on pay movement
This term refers to the right of shareholders to have a direct vote regarding executive compensation •Dodd-Frank Act •Evolved from concerns over excessive executive compensation. •Advisory vote by shareholders on senior executive pay. - clawback provisions more popular
prioritization of issues
Two essential questions - 1.How likely is the issue to affect the organization? 2.What kind of impact will the issue have on the organization? •These questions enable prioritization of issues based on importance and relevance to the organization. •Those listed at the top will receive the most attention and resources; those at the bottom may be removed from consideration. •Companies should continually evaluate the results of their responses to issues. •Ensure that actions are kept on track. •Includes careful monitoring of stakeholder opinions. •A form of stakeholder audit (similar to a social audit) can be used. •Information from this stage helps firms to make adjustments to the process as needed.
product liability / tort reform
Verdicts and costs affect International competitiveness Congress has made efforts to make laws uniform restatement (3rd) is proposed Business need to focus on prevention
stakeholder view of the firm
View of a firm that sees multilateral relationships among various stakeholder groups in the firm's internal and external environments
ethical imperialism
View that ethical standards in one's home country should be applied to one's behavior across the world
GBS codex
Was not intended to be a model code of conduct or global business, but a benchmark for companies wanting to develop their own world-class code. Researchers studied 5 well-known global codes put together by international organizations and 14 codes of the world's largest companies. They analyzed the codes to determine the underlying ethical principles the different codes had in common. The researchers found eight principles, representing worldwide ethical standards, that they thought were basic to the codes studied. The eight principles identified and described standards of conduct in the following categories: fiduciary, property, reliability, transparency, dignity, fairness, citizenship, and responsiveness.
personal liability out of pocket liability
When board members must pay liability costs from their personal funds instead of drawing from company funds issue of board members paying personal liability costs from their personal funds.
revolution of rising expectations
a belief or an attitude that each succeeding generation ought to have a standard of living higher than that of its predecessor. •Creates a social problem, a gap between societal expectations for social conditions and social realities. This can lead to: •Entitlement mentality •Rights movement •Victimization philosophy
golden parachute
a contract in which a corporation agrees to make payments to key officers in the event of a change in the control of the corporation
market share liability
a court can hold each manufacturer responsible for a percentage of the plaintiff's damages that is equal to the percentage of its market share
pluralism pluralistic society
a diffusion of power among society's many groups and organizations. there is a wide decentralization and diversity of power concentration •Prevents power from being concentrated in the hands of a few. •Maximizes freedom of expression and action, and strikes a balance between monism, on the one hand, and anarchy on the other. •Creates a widely diversified set of loyalties to many organizations, and minimizes the danger that a leader of any one organization will be left uncontrolled. •Provides a built-in set of checks and balances, in that groups can exert power over one another with no single organization (business or government) dominating and becoming overly influential.
legitimation
a dynamic process by which business seeks to perpetuate its acceptance.
issue issue management
a gap between a firm's actions and stakeholder expectations the process used to close that gap, step above risk management •identify issues in the stakeholder environment, •analyze and prioritize them in terms of their relevance to the organization, •plan responses to the issues, and then •evaluate and monitor the results.
social problem
a gap between society's expectations of social conditions and the current social realities.
stakeholder map
a graphical representation of the relationship of stakeholder salience to a particular issue
stages of corporate citizenship
a model that helps illustrate that the essence of corporate citizenship is how companies deliver on their core values in a way that minimizes harm, maximizes benefits, is accountable and responsive to key stakeholders and supports strong financial results
FLA (fair labor association)
a nonprofit organization of clothing firms, unions, and human rights groups focused on the worldwide elimination of sweatshops.
GRI (global reporting initiative)
a prominent framework that companies have adopted to report their social and sustainability progress Ceres launched the GRI in conjunction with the UN Environment Program (UNEP) with the mission of developing globally applicable guidelines for reporting on the economic, environmental, and social performance of corporations, governments, and non-governmental organizations
social contract
a set of reciprocal understandings that characterize the relationship between major institutions—in our case, business and society.
separation of ownership from control
a situation in a corporation in which the top management, rather than the shareholders, controls day-to-day operations
consumerism
a social movement seeking to augment the rights and powers of buyers in relation to sellers.
functional level strategy
addresses the question, "How should a firm integrate its various subfunctional activities and how should these activities be related to changes taking place in the diverse functional areas (finance, marketing, human resources, and operations)?" Companies need to ascertain that their functional areas conduct themselves in ways that are consistent with the values for which the firm stands.
corporate level strategy
addresses what is often posed as the most defining business question for a firm, "In what business(es) should we be?" Thus, mergers, acquisitions, and divestitures, as well as whether and how to participate in global markets, are examples of decisions made at this level.
ambient advertising
advertising content appearing in nontraditional venues
TQM (total quality management)
all of the functions of the business are blended into a holistic, integrated philosophy built around the concepts of quality, teamwork, productivity, customer under- standing, and satisfaction.
clawback provision
allow shareholders to regain compensation from executives who have fallen short of the mark in some way, such as financial performance or ethical behavior
stakeholder engagement
an approach by which companies successfully implement the transactional level of strategic management capability. Companies may employ different strategies in terms of the degree of engagement with their stakeholders, but best practices suggest that interaction with stakeholders must be integrated into every level of decision making in the organization.
sustainability/integrated report
an effort to measure a firm's overall value creation and to spur integrated thinking that recognizes the intercon- nections of the range of business functions, as well as the multiple business bottom lines.
CPSC (consumer protection safety commission)
an independent regulatory agency that was created by the Consumer Product Safety Act of 1972. Works to reduce the risk of injuries and deaths from consumer products by: 1. developing voluntary standards with industry, 2. issuing and enforcing mandatory standards, 3. banning consumer products if no feasible standard would adequately protect the public, 4. obtaining the recall of products or arranging for their repair, 5. conducting research on potential product hazards, and 6. informing and educating consumers through the media, state and local governments, private organizations, and by responding to consumer inquiries.
stake stakeholders stakeholder management
an interest in or a share in an undertaking. individuals or groups with which business interacts who have a "stake," or vested interest, in the firm. processes to identify the people, groups, or organizations, that could impact or be impacted by the project, analyze their expectations and impact, and develop strategies for engaging them and managing conflicting interests
SMC (stakeholder management capability)
an organization's integration of stakeholder thinking into its processes and it may reside at one of three levels of increasing sophistication: rational, process, transactional 1. Rational Level: company identifying who their stakeholders are and what their stakes happen to be. This is the level that would enable management to create a basic stakeholder map 2. Process: develop and implement processes—approaches, procedures, policies, and practices—by which the firm may scan the environment and gather pertinent information about stakeholders, 3. Transactional: highest and most developed of the three levels. This is the highest goal for stakeholder management—the extent to which managers actually engage in transactions (relationships) with stakeholders
doctrine of strict liability
anyone in the value chain of a product is liable for harm caused to the user if the product, as sold, was unreasonably dangerous because of its defective condition. This applies to anyone involved in the design, manufacture, or sale of a defective product. Beyond manufacturing, courts have ruled against defendants representing a broad array of functions, such as selling, advertising, promotion, and distribution.
shareholder primacy model
asserts that maximizing share value is the ultimate firm goal and that improving corporate governance entails reducing board power, maximizing shareholder power, and tying incentives to share price
corruption bribery questionable payments
attempts to influence the outcomes of decisions wherein the nature and extent of the influence are not made public. the practice of offering something (usually money) in order to gain an illicit advantage. •Relatively large amounts of money given for the purpose of influencing officials to make decisions or take actions that they otherwise might not. •Money given, often to high-ranking officials, to get them to purchase goods or services. those not easily categorized; they may be "grease" payments (allowed), or bribes (not permitted)
managerial view of the firm
business firms began to see their responsibilities toward other major constituent groups to be essential if they were to be successful
sustainability sustainable development
business's ability to survive and thrive over the long term a pattern of resource use that aims to meet current human needs while preserving the environment so that these needs can be met not only in the present but also for future generations.
insider trading
buying or selling corporate stock by a corporate officer or other insider on the basis of information that has not been made public and is supposed to remain confidential • those in relationships that include a duty of confidentiality may have inside information, including spouses, parents, children, friends.
director primacy model (of corporate governance)
challenging the status quo and asking whether the balance of power in corporate governance should favor shareholders or board members.
cultural relativism
characterized by foreign direct investors such as MNCs following the host country's ethical standards. This is the posture reflected in the well-known saying, "When in Rome, do as the Romans do."
exaggerated claims
claims that simply cannot be substantiated by any kind of evidence. An example of this would be a claim that a pain reliever is "50 percent stronger than aspirin" or "superior to any other on the market."
social intrapreneurship
companies that did not have a specific social agenda as part of their initial formation but later developed a highly visible social agenda or program
CTA (Children's Television Act of 1990)
comprehensive FCC regulating television broadcast intended for audience composed largely of children: • limits number of minutes of advertising per hours in children's television to 10.5 on weekends and 12 on weekdays (before, during and after programming meant for children 12 years and older) • requires broadcasters to serve the educational needs of children including positive development (FCC stipulated 3 hours per week of edu. programming for children up to 17) • outlaws program length commercials (when a product associated with the program is advertised in the program or attached at the end) • established safe harbor for broadcasting indecency now at 10 p.m. - 6 a.m.
business level strategy
concerned with the question, "How should we compete in a given business or industry?" Thus, a company whose products or services take it into many different businesses, industries, or markets will need a ____ ____ strategy to define its competitive posture in each of them.
self regulation self discipline pure self regulation co-opted self regulation negotiated self regulation mandated self regulation
control of business conduct and performance by the business itself, or business associations, rather than by government or by market forces firm itself controls its own advertising industry (one's peers) control advertising industry, on its own involves non-industry stakeholders the industry voluntarily negotiates the development, use, and enforcement of standards with some outside body where the industry is ordered or designated by the government to develop, use, and enforce norms, whether alone or in concert with other bodies.
UNCAC (UN convention against corruption)
created the opportunity to develop a global language about corruption and a coherent implementation strategy. A multitude of international anticorruption agreements already exist; however, their implementation has been uneven and only moderately successful. The UNCAC gives the global community the opportunity to address both of these weaknesses and begin establishing an effective set of benchmarks for effective anticorruption strategies.
risk management
deals with potential issues, step below issue management All efforts designed to preserve assets and earning power associated with a business. •concerns potential issues; it addresses an issue that has not yet occurred, and tries to keep the issue from arising. •A "rules" approach to risk management can help prevent internal risks, but not those that stem from firm strategy or risks in the external environment.
core values
deeply ingrained principles that guide all of a company's actions and decisions, and they serve as cultural cornerstones. •Serve as cultural cornerstones. •Having a set of core values that are not followed will do no good. •To be effective, firms need to weave core values into everything they do. •If a firm's core values are not upheld, they become hollow, and do more harm than good.
Consumer stakeholder satisfaction model
depicts how product and service quality and safety lead to consumer satisfaction, and the consequences for the firm's profitability, reputation, and continued purchasing by consumers.
psychological appeals
designed to persuade on the basis of human emotions and emotional needs rather than reason.
clear information accurate information adequate information
direct and straightforward and on which neither deception nor manipulation relies truths, not half truths. Avoids exaggeration and innuendo enough information to make the best choice among the options available
comparative advertising
directly comparing a firm's product with the product of a competitor. Some classic examples of past high-profile comparative campaigns are Coke versus Pepsi,
shared value
economic and social goals are not mutually exclusive—business can pursue profit while also promoting the common good.
stakeholder culture
embraces the beliefs, values, and practices that organizations have developed for addressing stakeholder issues and relationships
managerial approach
emphasizes three main themes that are of vital importance to managers and organizations today: business ethics, sustainability, and stakeholder management. •Managers are practical, and have begun to deal with social and ethical concerns in ways similar to those they use to manage traditional business functions such as marketing, finance, operations, & risk management. •As a result, managers have been able to convert seemingly unmanageable concerns into ones that can be dealt with in a balanced and impartial fashion. •At the same time, managers have had to integrate traditional economic and financial considerations with ethical and social considerations.
CSR (Corporate social responsibility)
encompasses the economic, legal, ethical, and discretionary (philanthropic) expectations that society has of organizations at a given point in time as a competitive advantage: •Generic social issues (firm's operations do not affect society and issue is not material to firm's long-term competitiveness) •Value chain social impacts (a firm's normal operations significantly affect society) •Social dimensions of competitive context (social issues affect the underlying drivers of a firm's competitiveness)
puffery
euphemism for hyperbole or exaggeration that usually refers to the use of general superlatives. Is Budweiser really the "King of Beers"? Normally, a claim of general superiority is considered this and is allowable. However, companies walk a fine line when engaging in this. They need to be certain that no direct comparison is being made.
stakeholder dialogue
exchanging communications with stakeholder groups and thus it is one form of engagement.
portfolio approach
experience with prior issues likely influences future issues
social costs view
extends beyond contractual theory and due care theory to suggest that, if a prod- uct causes harm, the firm should pay the costs of any injury, even if the firm had met the terms of the contract, exercised all due care, and taken all reasonable precautions. This perspective serves as the underpinning for strict liability and its extension into absolute liability,
social entrepreneurship
firms began their CSR initiatives at the very beginning of their founding and strategically carried them forward. • Adopting a mission to create and sustain social value (not just private value) • Recognizing and relentlessly pursuing new opportunities to serve that mission • Engaging in a process of continuous innovation, adaptation, and learning • Acting boldly without being limited by resources currently in hand • Exhibiting heightened accountability to the constituencies served and for the outcomes created •Social entrepreneurship has as its reason for being a mission of societal value creation. •The creation of wealth is a means to achieve the goal of creating societal value. • Social entrepreneurship's central focus is the alleviation of poverty, but it may address a range of societal goals, including education, the environment, and the arts.
social environment
focuses on demographics, lifestyles, culture, and social values of the society. Of particular interest here is the manner in which shifts in these factors affect the organization and its functioning.
contractual theory
focuses on the contractual agreement between the firm and the customer. Firms have a responsibility to comply with the terms of the sale, inform the customer about the nature of the prod- uct, avoid misrepresentation of any kind, and not coerce the customer in any way.
economic environment
focuses on the nature and direction of the economy in which business operates. Variables of interest include such indices as gross national product, inflation, interest rates, unemployment rates, foreign exchange fluctuations, national debt, global trade, balance of payments, and various other indices of economic activity.
political environment
focuses on the processes by which laws get passed and officials get elected and all other aspects of the interaction between firms, political pro- cesses, and government. Of particular interest to business in this segment are the regula- tory process and the changes that occur over time in business regulation of various industries, products, and various issues.
due care theory
focuses on the relative vulnerability of the customer, who has less infor- mation and expertise than the firm, and the ethical responsibility that places on the firm. Customers must depend on the firm providing the product or service to live up to the claims about it and to exercise due care to avoid customer injury.
social audits / social responsibility repots / environmental impact reports
formal procedures that identify and evaluate all company activities that relate to social issues such as conservation, employment practices, environmental protection, and philanthropy
BSR (Business for Social Responsibility)
formed to fill an urgent need for a national business alliance that fosters socially responsible corporate policies. In 2012,BSR celebrated its twentieth anniversary and reported among its member-ship such recognizable firms as Apple, Inc., Bristol-Myers Squibb, Coca-Cola, and hundreds of others. The mission statement of BSR is succinct: "We work with business to create a just and sustainable world."1Today many of the world's leading corporations have a high echelon officer who is responsible for the firm's corporate social responsibility or sustainability.2
food safety modernization act
gave the FDA a mandate to develop a science-based food safety system that addresses hazards from farm to table—putting greater emphasis on prevention of foodborne illness. The FSMA has been said to be the most sweeping reform in food safety laws in 70 years and was signed into law in January 2011.
spring loading
granting of a stock option at today's price but with the inside knowledge that something good is about to happen that will improve the stock's value.
supportive stakeholders
has a high potential for cooperation and a low potential for threat. This is the ideal stakeholder. To a well managed organization, these people might include its board of directors, managers, employees, and loyal customers.
nonsupportive stakeholder
has a high potential for threat but a low potential for cooperation. Examples of this group could include competing organizations, unions, federal or other levels of government, and the media. Special-interest groups often fall in this category. The recommended strategy is to defend.
primary social stake holders secondary social stake holders
have a direct stake in the organization and its success and, therefore, are most influential may be extremely influential as well, especially in affecting reputation and public standing, but their stake in the organization is more indirect.
inside directors
have ties of some sort to the firm. They can be top managers in the firm, family mem- bers, or others with a professional or personal relationship to the firm or to the CEO. To varying degrees, each of these parties is "beholden" to the CEO and, therefore, might be hesitant to speak out when necessary. Since the implosion of Enron and its aftermath, changes in public policy and public opinion have led to an increase in the percentage of independent directors. - board independence from management is crucial to good governance
mixed blessing stakeholder
high on both potential for threat and potential for cooperation. Examples of this group, in a well- managed organization, might include employees who are in short supply, clients, or customers. Recommend strategy is to collaborate.
business judgement rule
holds that courts should not challenge board members who act in good faith, making informed decisions that reflect the company's best interests instead of their own self-interest. Defense is applicable if: 1.Made in good faith, 2.Based on adequate information, and 3.In the company's best interests, and not the directors' own interests. •Good Faith is central to the defense •The argument in favor of the Business Judgment Rule is that Board members need to be free to take risks without fear of liability.
product liability
includes the liability of any or all parties in the chain of manufacture of a prod- uct for any damage caused by that product. This includes the manufacture, assembly, wholesaling and retailing of the product. Products containing defects that result in harm to a consumer or someone to whom the product was loaned or given are the subjects of product liability lawsuits
strategic management
incorporates environmental, ethical, and social concerns, with the realization that the long-term viability of a corporation is linked inextricably with its impact on the economy, society, and the environment—it requires that firms operate very differently from the way that many do. •For business ethics to have any meaning beyond pompous moralizing, it should be linked to corporate strategy. •Corporate strategy can be revitalized because the linkage permits addressing management issues in ethical terms.
outside directors
independent from the firm and its top managers. They can come from a variety of backgrounds (e.g., top managers of other firms, academics, former government officials) but the one thing they have in common is that they have no other substantive relationship to the firm or its CEO. - board independence from management is crucial to good governance
material information
information that a reasonable investor might want to use and that is likely to affect the price of a firm's stock once that information is released to the public
warranties implied warranty express warranty full warrant limited warranty extended warranty Magnuson Moss Warranty Act 1975
initially used by manufacturers to limit the length of time they were expressly responsible for products. Over time, they came to be viewed by consumers as mechanisms to protect the buyer against faulty or defective products. an unspoken promise that there is nothing significantly wrong with the product and that the product can be used for the purposes intended. explicitly offered at the time of the sale. The nature of express warranties can range from advertising claims to formal certificates, and they may be oral or written. all parts/services included certain parts of the product or certain types of defects were excluded from coverage, service plans that lengthen the warranty period and are offered at an additional cost set standards for what must be contained in a warranty, and its ease of being understood.
poison pill
intended to discourage or prevent a hostile takeover. They work much like their name suggests—when an acquirer tries to swallow (i.e., acquire) a com- pany, the poison pill makes the company very difficult to ingest. Poison pills can take a vari- ety of forms but, typically, when a hostile suitor acquires more than a certain percentage of a company's stock, the poison pill provides that other shareholders be able to purchase shares, thus diluting the suitor's holdings and making the acquisition prohibitively expensive (i.e., difficult to swallow).
principles of stakeholder management/Clarkson principles
intended to provide managers with guiding precepts regarding how stakeholders should be treated. The key words in the principles are action words that reflect the kind of cooperative spirit that should be used in building stakeholder relationships: acknowledge, monitor, listen, communicate, adopt, recognize, work, avoid, and acknowledge conflicts.
private securities litigation reform act of 1995
intended to rein in excessive levels of private securities litigation and the trend is downward. Filings also decreased in the first half of 2012, so it is possible things are settling down until another issue appears.
agency problems
interests of the shareholders were not aligned with the interests of the manager, and the manager (who is a hired agent with the responsibility of representing the owners' best interests) began to pursue self-interest instead of the owners' best interests. •A corporate executive is an employee—an agent of the corporation's owners. •As such, the executive is the agent of shareholders and he has a fundamental obligation to maximize profits for the benefit of those who hired him. •Any diversion of shareholder money to "social responsibilities" adversely and unjustly affects the owners to whom managers owe their allegiance.
preventable risks strategic risks external risks
internal risks that offer no strategic benefits risks taken to achieve greater returns external risks that cannot be controlled
Caux Round Table Principles
international network of business leaders who are committed to promoting the concept of moral capitalism
plot placement
involve situations in which the brand is actually incorporated into the story itself in a substantive manner
issue buying
involves top managers adopting a more open mind-set for the issues that matter to their subordinates. In short, internal organization members and their assessments of what matters to the organization significantly affect the issue identification process.
marginal stakeholders
is low on both potential for threat and potential for cooperation. For large organizations, these stakeholders might include professional associations of employees, inactive consumer interest groups, or shareholders—especially those that hold few shares and are not organized.
charter
issued by the state, giving the corporation the right to exist and stipulating the basic terms of its existence.
ethics business ethics
issues of fairness and justice focused on ethical issues that arise in the commercial realm
fragile mandate
legitimacy is constantly subject to ratification; and it must realize that it has no inherent right to exist.
caveat emptor caveat venditor
let the buyer beware •This doctrine assumed that the buyer had as much knowledge of the product as the seller, but this was not correct. -historical let the seller beware •But how safe should a product be? -modern day
ponzi scheme
lures investors in with the fake promise of profit but actually pays earlier investors with later investors' money until the scheme collapses.
classical economics
management has one responsibility— to maximize shareholder wealth.
bribe payers index
nks leading exporting countries in terms of the degree to which international companies with their headquarters in those countries are likely to pay bribes to senior public officials in key emerging market economies. In that sense, the BPI measures the supply side of bribery in the countries where the bribes are paid.
SAI (social accountability international) SA8000
non-governmental, multi-stakeholder organization whose mission is to advance the human rights of workers around the world. designed to piggyback on the ISO8000 quality-auditing system of the International Standards Organization (ISO).An effort to improve sweatshop conditions created by Social Accountability International (SAI): 1.Child Labor 2.Forced Labor 3.Health and Safety 4.Freedom of Association & Collective Bargaining 5.Discrimination 6.Discipline 7.Working Hours 8.Compensation 9.Management Systems
economic responsibilities legal responsibilities ethical responsibilities philanthropic responsibilities
objective to produce goods and services that society wants and to sell them at fair prices—prices that societal members think represent the value of the goods and services delivered and that provide business with profits sufficient to ensure its survival and growth and to reward its investors. businesses responsibility to comply with laws embody the full scope of norms, standards, values, and expectations that reflect what consumers, employees, shareholders, and the community regard as fair, just, and consistent with respect for or protection of stakeholders' moral rights. not responsibilities in the literal sense of the word, these are perceived as responsibilities because they reflect current expectations of business by the public. The amount and nature of these activities are voluntary or discretionary, guided only by business's desire to engage in social activities that are not mandated, not required by law, and not generally expected of business in an ethical sense. Nevertheless, the public has an expectation that business will give back
(stock option) backdating
occurs when the recipient is given the option of buying stock at yesterday's price, resulting in an immediate and guaranteed wealth increase. This puts the stock option "in the money" rather than "at the money," which is where an option should be granted.
enterprise level strategy
overarching strategy level that poses such basic questions as, "What is the role of the organization in society?" and "For what do we stand?" •What is the role of our organization in society? •How is our organization perceived by our stakeholders? •What principles or values does our organization represent? •What obligations do we have to society at large, including to the world? •What are the broad implications for our current mix of businesses and allocation of resources?
shareholders
own stock in the firm and, according to the shareholder-primacy model, that makes them the firm's owners and gives them ultimate control over the corporation. A Majority Vote •The requirement that board members be elected by a majority of votes cast, rather than by a plurality.
production view of the firm
owners thought of stakeholders as only those individuals or groups that supplied resources or bought products or services.
Dodd frank wall street reform and consumer protection act
passed in the wake of the global financial crisis and signed into law on July 21, 2010. At this writing, it is still being put into place and so some time will have to pass before we truly know its costs and benefits. This comprehensive legislation covers a range of areas including banks, credit card companies, credit rating agencies, insurance companies, hedge funds, and futures trading.
product placement
practice of embedding products in movies and TV shows. Critics call this "stealth advertising."
concealed facts
practice of not telling the whole truth, or deliberately not communicating information the consumer ought to have access to in order to make an informed choice. Another way of stating this is to say "a fact is concealed when its availability would probably make the desire, purchase, or use of the product less likely than its absence."
tipper tippee
provides information receives information
descriptive value
provides language and concepts to describe effectively the corporation or organization in inclusive terms.
proxy access
provides shareholders with the opportunity to propose nominees for the board of directors.
corruption perception index
ranks more than 175 countries by their perceived levels of corruption, as determined by expert assessments and opinion surveys. The result of the ranking is a list of countries in the world ranging from "highly clean" (least corrupt) to "highly corrupt."
stakeholder symbiosis
recognizes that all stakeholders depend on each other for their success and financial well-being.
power
refers to the ability or capacity to produce an effect—to get something done that otherwise may not be done. ability/capacity of a stakeholder to produce an effect
urgency
refers to the degree to which the stakeholder claim on the business calls for the business's immediate attention or response.
FDA (food and drug administration)
regulates: •Foods •Human prescription and non-prescription drugs •Vaccines, blood products, and other biologics •Medical devices •Electronic products •Cosmetics •Veterinary products •Tobacco products
issue selling
relates to middle managers exerting upward influence in organizations as they try to attract the attention of top managers to issues salient to them and the organization. In other words, they have to sell top management on the importance of the issue.
nominating committee
responsibility of ensuring that competent, objective board members are selected. The function of is to nominate candidates for the board and for senior management positions. The suggested role and responsibility of this committee notwithstanding, in most companies, the CEO continues to exercise a powerful role in the selection of board members.
compensation committee
responsibility of evaluating executive performance and recommending terms and conditions of employment. This committee should be composed of outside directors.
audit committee
responsible for assessing the adequacy of internal control systems and the integrity of financial statements.
stock options
rights to buy a certain number of shares of stock at a specified price
Regulation FD (fair disclosure)
set limits on the common com- pany practice of selective disclosure. When companies disclose meaningful information to shareholders and securities professionals, they must do so publicly so that small inves- tors can enjoy a more level playing field.
full disclosure/transparency
should be made at regular and frequent intervals and should contain information that might affect the investment decisions of shareholders. This information might include the nature and activities of the business, financial, and policy matters; tender offers; and special problems and opportunities in the near future and in the longer term.
information asymmetry
situation in which one party is more informed than another because of the possession of private information
ambiguous advertising
something about the product or service is not made clear because it is stated in a way that may mean several different things.
SEC rule 10b5-1 10b5-2
specifies that if a trader is aware of material nonpublic information, that trader is assumed to be trading on that information except in very specific circumstances. Proving intent would be difficult and so prosecution is based on timing and the onus is on the person being charged. expands that definition beyond the insider who works for the com- pany. People in relationships that include a duty of confidentiality can also be considered insiders. For example, a spouse, parent, child, sibling, or friend would generally be considered to have a duty of confidentiality.
CSP (corporate social performance) model
suggests that what really matters is what companies are able to achieve—the results or outcomes of their acceptance of social responsibility and the adoption of a responsiveness viewpoint. Performance is a bottom-line concept.
weasel words
terms or phrases intended to mislead listeners by implying something they don't actually say
business power
the capacity or ability to produce an effect or to bring influence to bear on a situation or people.
business
the collection of private, commercially oriented (profit-oriented) organizations, ranging in size from one-person proprietorships (e.g., DePalma's Restaurant, Gibson's Men's Wear, and Taqueria la Parrilla) to corporate giants(e.g., Coca-Cola, Microsoft, Apple, Google, Delta Airlines, and UPS). Between these two extremes are many medium-sized proprietorships, partnerships, and corporations.
Corporate Citizenship
the extent to which businesses meet the legal, ethical, economic, and voluntary responsibilities placed on them by their stakeholders Benefits to the business: •Improved employee relations (improves recruitment, retention, morale, loyalty, etc.) •Improved customer relationships (increases customer loyalty; a tiebreaker) •Improved business performance (positively impacts bottom-line returns, increases competitive advantage) •Enhanced marketing efforts ( helps create a positive company image)
entitlement mentality
the general belief that someone is owed something (e.g., a job, an edu- cation, a living wage, or health care) just because she or he is a member of society.
management
the group of individuals hired by the board to run the company and manage it on a daily basis.
bhopal tragedy
the leakage of methyl isocyanate gas caused what many have termed the "worst industrial accident in history." The gas leak killed more than 2,000 people and injured 200,000 1. To what extent should MNCs maintain identical standards at home and abroad regardless of how lax laws are in the host country? 2. How advisable is it to locate a complex and dangerous plant in an area where the entire workforce is basically unskilled and uneducated, and where the populace is ignorant of the inherent risks posed by such plants? 3. How wise are laws that require plants to be staffed entirely by local employees? 4. What is the responsibility of corporations and governments in allowing the use of otherwise safe products that become dangerous because of local conditions? (This question applies to the infant formula controversy also.) 5. After reviewing all the issues, should certain kinds of plants even be located in developing nations?
corporate governance
the method by which a firm is being governed, directed, administered, or controlled and to the goals for which it is being governed. •Is concerned with the relative roles, rights, and accountability of such stakeholder groups as owners, boards of directors, managers, employees, and other stakeholders. •ENRON disaster is viewed first and foremost as a failure of corporate governance.
legitimacy
the perceived validity or appropriateness of a stakeholder's claim to a stake. •A condition that prevails when there is a congruence between an organization's activities and society's expectations.
consumer's magna carta
the right to safety, the right to be informed, the right to choose, and the right to be heard
internationalization
the tendency of companies to systematically increase the international dimension of their business activities
technological environment
the total set of technology-based advancements taking place in society and the world. This segment includes new products, processes, materials, and means of communication (social networking, for example), as well as the status of knowledge and scientific advancement.
team production model
the work of a corporation requires the combined input of two or more individuals or groups. From this perspective, corporations are cooperative teams charged with the responsibility of not only creating new wealth but also attending to the interests and needs of stakeholders—and boards should be reflective of that cooperative team.
employees
those hired by the company to perform the actual operational work. Managers are employees, too, but in this discussion, we use the term employees to refer to nonmanagerial employees.
classified/staggered boards
those that elect their members in staggered terms. For example, in a board of 12 members, 4 might be elected each year, and each would serve a three-year term. It would then take three years for the entire board slate to be replaced. Some argue that board members need a longer time frame.
public affairs strategy / management
umbrella terms companies use to describe the management processes that focus on the formalization and institutionalization of corporate public policy. T
stakeholder thinking
undergirds stakeholder management and is the process of always reasoning in stakeholder terms throughout the management process, and especially when organizations' decisions and actions have important implications for others. Some managers continue to think in shareholder terms because it is simpler.
TI (transparency international)
vision: a world in which gov, politics, business, civil society, and the daily lives of people are free from corruption • The enterprise shall prohibit bribery in any form, whether direct or indirect. • The enterprise shall commit to implementing a program to counter bribery.
CEO duality
when the CEO serves the dual function of CEO and chairman of the board.
emerging issue
• The terms of the debate are not clearly defined. • The issue deals with matters of conflicting values and interest. • The issue does not lend itself to automatic resolution by expert knowledge. • The issue is often stated in value-laden terms. • Trade-offs are inherent.
investor relations
•A majority of corporate boards now communicate with their major investors •Public corporations have obligations to current and potential shareholders, including Full disclosure (Transparency), and the duty to provide information that might affect investment decisions. •Management is also responsible for communicating with shareholders. •CEO Warren Buffet calls his annual shareholder meeting a "Woodstock weekend for capitalists."
absolute liability
•A manufacturer could be held strictly liable for failure to warn of a product hazard, even if the hazard was scientifically unknowable at the time of manufacture and sale.
business challenges in a multinational environment
•A multinational corporation (MNC) or multinational enterprise (MNE) seeks to be accepted into an unfamiliar society. Two major challenges: 1.Achieving corporate legitimacy in an unfamiliar society. 2.Differing philosophies between MNCs and host countries. •In less-developed countries (LDCs), because there are no government regulations, the temptation is to lower or reject standards.
responsive CSR
•Addresses generic social impacts through good corporate citizenship and value chain social impacts by mitigating harm.
board's relationship with CEO
•Boards are responsible for monitoring CEO performance and dismissing poorly performing CEO •Formerly, CEOs were protected; no more; firings of CEOs are up significantly •If CEO also serves as Chairman of the Board, this duality can offer some protection to the CEO •Activists have moved to separate CEO and Board functions
strategic management / broadly inclusive approach to issue management
•Broadly inclusive. •IM is typically the responsibility of senior line management or strategic management staff. •Issues identification is more important than it is in the conventional approach. •Issues management is seen as an approach to the anticipation and management of external and internal challenges to the company's strategies, plans, and assumptions.
issue management in practice
•Companies that adopt issues management processes: •Develop better overall reputations •Develop better issue-specific reputations •Perform better financially •The most successful firms sought close-knit ties with external and internal stakeholders, and successfully incorporated their values and interests into management decisions.
product information issues
•Companies understandably want to portray their products in the most flattering light. •But efforts to paint a positive portrait of a product can easily cross the line into misinformation or deception - or absurdity: •An ad implores readers to switch to Verizon high-speed internet at a price that will "never go up." But the fine print reveals, "rates increase after two years." •What part of "never go up" do they fail to understand? •Product and service information is relayed by advertising. (no need to actually know this on Quizlet)
stakeholder synthesis approach
•Considers stakeholders as a group to whom management owes an ethical, but not a fiduciary, obligation. •Synthesizes strategic and multifiduciary approach—recognizes that management does not owe equal duty to all stakeholders •Preserves primacy of shareholders •Emphasizes ethical obligation to other stakeholders not to harm, coerce, lie, cheat, steal, etc.
SOX (accounting reform and investor protection act of 2002 or sarbanes-oxley act)
•Enhances public disclosure by requiring the reporting of off-balance sheet transactions (the "SPE's"), and personal loans to executives •CEOs and CFOs must certify financials, and are held responsible for financial representations •Mandates creation of audit committee to Board of Directors with independent directors and a "financial expert." •Audit committee approves selection of and services provided by external auditor. •Limits the non-auditing services an auditor can provide to a firm it audits •Makes it unlawful for accounting firms to provide services where conflicts of interests exist
mergers and acquisitions (governance impact of the market for corporate control)
•Expectation is that the threat of a possible takeover will motivate top managers to pursue shareholder, rather than self-interest. •But many corporate CEOs and boards go to great lengths to protect themselves from takeovers,
effective issue/risk/crisis management
•Goal: To be effective, issue, risk and crisis management must close the gap between the firms' situation and its stakeholders' expectations. •Many of the crises firms face today arise out of issue categories they are monitoring and prioritizing through issue management systems. •The Basic Idea: 1.Risk Management may keep issues from arising 2.Effective issue management may enable the firm to avoid a crisis, or minimize its impact, and is vital to post-crisis management.
iron law of responsibility
•In the long run, those who do not use power in a manner society considers responsible will tend to lose it
corporate public policy
•Incorporates sustainability as that part of the overall strategic management of the organization that focuses on the environmental, economic, social and ethical stakeholder issues that are embedded in the decision processes of the firm. a firm's posture, stance, strategy, or position regarding the public, social, global, and ethical aspects of stakeholders and corporate functioning
special interest groups
•Make life more complex for business and government. •Can number in the tens of thousands in some societies. •Pursue their own focused agendas. •Are active, intense, diverse and focused. •Can attract a significant following. •Often work at cross purposes, with no unified goals. •A special-interest society is pluralism taken to the extreme.
conventional / narrowly focused approach to issue management
•Narrowly focused. •Issues fall within the domain of public policy or public affairs management. •Issues have a public policy or public affairs orientation. •An issue is any trend, event, controversy, or public development that might affect the corporation. •Issues originate in social, political, regulatory, or judicial environments.
outside director compensation
•Paying board members is a recent idea. •Today, outside board members are paid. •From 2003-2010, their median pay rose about a third, from $175,800 to $233,800. •Controversy over whether directors should be paid at all, and whether they are paid enough.
grease payments
•Relatively small sums of money given to minor officials for the purpose of getting them to: •Do what they are supposed to be doing •Do what they are supposed to be doing faster •Do what they are supposed to be doing better
SEC
•The SEC Is responsible for protecting investor interests. •Critics argue that the SEC is more focused on the needs of businesses than on that of investors. •The SEC failed to stop the Bernard Madoff Ponzi scheme before losing investors billions, although they had been warned of the scheme a decade earlier.
product tampering and product extortion
•The Tylenol tampering cases of the 1980s are best known. As a result, firms began to use tamper-evident packaging. Despite these efforts, 2 Australian manufacturers received threats from extortionists who poisoned over the counter analgesics and returned them to the shelves.
unlevied tax
•The diversion of corporate resources for social ends is a pernicious tax, the proceeds of which are allocated according to the unreliable whims and preferences of individual executives. •This practice is fraught with danger since executives charged with this duty have no special expertise in allocating resources to achieve social ends, whether reducing poverty, fighting inflation, or enhancing the environment.
FTC (federal trade commission)
•The government's major instrument for ensuring that business lives up to its responsibilities. Major Activities - 1.To prevent unfair methods of competition and anticompetitive pricing 2.To protect consumers from unfair or deceptive acts or practices. 3.Administers consumer protection laws
product liability reform
•These issues have raised calls tor product liability reform, also known as tort reform. Tort law requires that the one causing injury pay the injured party. Businesses seek tort reform; consumer groups oppose it.
strategic CSR
•Transforms value chain social impacts into activities that benefit society while reinforcing corporate strategy. •Advances strategic philanthropy that leverages competitiveness. -Corporate social responsibility activities that are directly related to their business activities so that they can combine social welfare with financial welfare -Must be planned specifically to support core business activities -Supervised carefully to create value for the community and the firm -Evaluated regularly to ensure that CSR activities benefit society while also benefitting the business
benefit corporation
•Unlike the traditional corporation, this has a broader mission that includes having a positive impact on society. •The societal mission does not take a backseat to shareholder wealth maximization. •The Benefit Corporation offers managers, investors and customers the opportunity to participate in or patronize businesses that promise to make social responsibility an important goal.
multifiduciary approach (stakeholder approaches)
•Views stakeholders as a group to which management has a fiduciary responsibility. •Management has the same "fiduciary" obligation to all stakeholders that it has to its shareholders. •Consistent with Normative value of stakeholder management
strategic approach (stakeholder approaches)
•Views stakeholders primarily as factors managers should manage in pursuit of shareholder profits. •Stakeholders are important only in the context of maximizing profitability and shareholder value. •Consistent with Instrumental value of stakeholder management
society
•a community, a nation, or a broad group of people with common traditions, values, institutions, and collective activities and interests. •is the macroenvironment in which businesses operate.
macroenvironment
•the total environment outside the firm, the comprehensive societal context in which the organization resides.
