BUS-100: exam 1

This Chapter has many stories of individuals and companies that have been unethical, as a team, which do you think is the most outrageous?

I think the Enron issue of the early 2000's was one of the worst. The corrupt executives took away jobs for thousands of people by being fraudulent. This included the dissolution of Arthur Anderson one of the big six accounting firms.

Describe and give an example of the economic environment as dimension of business? Discuss the key elements of the economic environment as it relates to U.S.-based businesses.

Key Elements Economic Environment Current: Covid 19 pandemic of 2020 led to a worldwide recession this spring/summer. U.S. Congress passed a huge economic stimulus package, ratcheting up Federal debt The Federal government and the Fed took an activist role in bailing out key failing businesses and establishing new regulation On-going: U.S. government actively promotes fair competition and supports small businesses U.S. legislation supports enforceable contracts, which is not the case in some other countries Corruption and bribery are relatively low in the U.S. compared to other parts of the world Underlying issues such as high federal and consumer debt may threaten long-term health of U.S. economy

How can domestic companies that outsource manufacturing to foreign factories ensure that their vendors adhere to ethical standards

No system is perfect, but the most responsible firms establish codes of conduct for their vendors, setting clear policies for human rights, wages, safety, and environment impact. They also monitor and enforce compliance, proactively pulling contracts from serious violators and rejecting bids from suppliers who do not meet their standards.

How do nonprofit organizations compare to businesses? What role do nonprofits play in the economy? How do they interact with businesses? Name a nonprofit business you admire and give reasons why.

Nonprofit organizations differ from businesses in that their primary goals do not include financial gain. However, nonprofits are clearly business-like establishments that contribute to the economy in a number of significant ways—most employ people, many produce goods and services and take in revenue, and many act as economic magnets for additional investment. Many nonprofits interact with businesses by developing partnerships that benefit both parties. Kraft Foods, for instance, contributes to America's Second Harvest, a nonprofit organization that aims to eliminate hunger in America. Kraft benefits by raising their public profile in alignment with their corporate vision: "Helping People around the World Eat and Live Better." America's Second Harvest benefits, of course, from the financial support.

How has Covid 19 impacted the business environment?

Online and pick-up outside of store took a step function jump in business (Amazon and Walmart are examples). Many small business were impacted, including a number of permanent shutdown. Companies with strong balance sheets had a better chance to survive the pandemic.

Define the concept of planned obsolescence. Is this strategy ethically unsound? Why or why not?

Planned obsolescence involves deliberately designing products to fail at a certain time in order to shorten the time between consumer re-purchases. This represents a clear violation of social responsibility because it abuses consumer trust and wastes consumer money. Long term, the market will typically weed out offenders, but that does not do much to help short-term victims.

What is the formula for profit? How can businesses increase profitability

Revenue - Expenses = profit (if revenue is higher than expenses, if not this is a loss). Increase the margin by increasing revenue or sales. Reduce expenses and keep revenues the same.

When did American business begin to concentrate on customer needs? Why?

A critical mass of American businesses began to concentrate on customer needs during the marketing era, which emerged after World War II. The key reason was more intense competition, which gave customers more choices. In this environment, meeting customer needs became an imperative for business success. The customer-first approach continues to influence business decisions today as global competition heats up to unprecedented levels.

What factors contribute to the rapid pace of change in business? Is the pace likely to accelerate or decrease over the next decade? Why?

A number of factors contribute to the rapid pace of change in business, including cutthroat global competition, rapidly changing technology with plunging prices, better and cheaper global communication, and depleted resources. As these trends intensify, the pace of change will likely pick up even more speed in the decade to come.

What is an ethical dilemma? Give 3 examples of ethical dilemmas that workers or managers might face in a business setting.

An ethical dilemma is a decision that involves a conflict of values—a decision in which every potential course of action has significant negative consequences. Here are 3 hypothetical examples: · In order to meet financial goals of your firm, you need to layoff one of three workers in your group, but all three workers have been key contributors to the organization. What should you do? · The rules of your firm require that you report any co-workers who are rude to customers. You have just overheard a co-worker yelling at a customer, but you are convinced that the customer completely deserved it. What should you do? · The supplier you know and trust has just submitted a bid for your business that is 2% higher than a different supplier who is new to your industry. You want to suggest that the supplier you know lowers his bid, but you do not want to undermine the confidentiality of the process. What should you do?

What is the difference between corporate philanthropy and corporate responsibility to the community? Which do you think is better? Why?

Corporate philanthropy includes all business donations—including money, time, and products—to nonprofit groups. Corporate responsibility, on the other hand, focuses on the actions of the business itself, rather than direct donations. I think corporate responsibility is much more powerful to a community and for a company's overall brand.

What are some key strategies for developing a competitive edge in today's competitive global market? How important is customer satisfaction?

Customer satisfaction is more important than ever before in today's competitive global market. The goal is to develop long-term, mutually beneficial relationships with customers. Higher customer satisfaction can translate into higher profits even when the competition is most challenging. Some broad strategies to develop a competitive edge: · Use imagination and innovation to deliver unsurpassed value · Increase speed-to-market for new products · Recruit and retain the most talented workforce

What role does entrepreneurship play in the economy? Who stands to gain from the success of individual entrepreneurs? How do other parties benefit? Name a current entrepreneur that you think is making a huge change.

Entrepreneurship fuels innovation and increases competition, which leads to more choices for consumers, higher quality products, and better prices. The success of individual entrepreneurs impacts those individuals, of course, but also affects other players in the community. A successful new business provides jobs, offers business to suppliers, pays taxes, and adds vitality to the community. As the entrepreneur accumulates wealth, he or she will spend, save, or invest that money, further boosting the economy. I think Elon Musk is making a huge change in running Tesla and his massive battery technology/factories.

Compare the role of the individual and the role of the organization in ethical decision-making. How can business promote an ethical climate?

Ethical choices begin with ethical individuals, but a high profile, ethical organizational culture and a formal ethics program can work in tandem to support ethical decision making. Organizations can promote an ethical climate by establishing a strong, clear, written code of ethics, and bringing it to life through training, communication, and action. The active leadership of senior management plays an especially strong role in creating and supporting an ethical climate.

What are the factors of production? How can economies grow when one or more of the factors is weak?

Factors of Production: · Natural resources: All inputs that offer value in their natural state, such as land, fresh water, and wind · Capital: The synthetic resources that a business needs to produce goods or services such as machines, information, and technology · Human resources: The physical, intellectual, and creative contributions of everyone who works within an economy · Entrepreneurship: People taking the risk of launching and operating their own businesses, largely in response to the profit incentive Economies can compensate for weak factors of production by buying or investing in other economies (e.g., purchasing technology from another country), or by developing their own weak factors (e.g., investing in the education of their workforce).

What are the 4 consumer rights originally outlined by President Kennedy in the early 1960s? How would you rank those rights in terms of importance? Why?

Four consumer rights: · The right to be safe · The right to be informed · The right to choose · The right to be heard

Give an example of a company that competes on quality and not necessarily on price

Graeter's Ice cream competes on quality and has a business model of charging more for its premium product vs cranking out volume. They make ice cream two gallons at a time and hand pack their products. In addition, this company was fortunate by being on Oprah in the early 2,000's, which helped the company grow substantially.

Do you believe that employers should respond to employee needs for work-life balance? Why or why not? What are the trade-offs?

I believe that companies that help workers establish a healthy work-life balance are likely to have more loyal, motivated employees and to have an easier time recruiting the most talented workers. The trade-off, of course, is cost. Providing more work-life balance typically requires an investment in expensive programs such as childcare, and it requires more tolerance of flexible work hours. This was the reason I choose Hewlett Packard in the late 1980's

Most successful businesses today actively develop loyal customers who buy their brands again and again. After all, getting current customers to buy more is much easier than constantly seeking new customers. Think of three brands that you buy on a regular basis. Why do you stick to these products? How could another company dislodge you?

I think Apple, Amazon and Microsoft are great examples for my purchases. All three continue to create long-term value and understand the importance of innovation for both keeping current customers and finding new customers.

Define sustainable development. What are 3 examples of successful companies that have pursued sustainable development programs?

Sustainable development involves doing business to meet the needs of this generation without harming the ability of future generations to meet their needs. Examples of companies with active sustainable development programs: · Toyota · GE · Starbucks · BP (British Petroleum) · McDonald's

Discuss with the class The Spectrum of Social Responsibility. Please give an example of a company who is on the proactive contribution end of the continuum.

TOMS Shoes donates one pair of shoes for each pair they sell. This is the brainchild of Blake Mycoskie who put a new spin on corporate social responsivity several years ago when visiting Argentina

Who are a few of the top companies that won Ethisphere Institute awards in 2020? How many Companies, Industries and Countries were part of the awards in 2020?

The 2020 World's Most Ethical Companies: 3M, AARP, Accenture, ADM, Aflac 131 honorees 50 industries 21countries

When might the need for social responsibility conflict with the need to maximize profits? When the needs conflict, how should a firm decide which path to pursue?

The need for social responsibility might conflict with the need to maximize profits in a number of situations. For example, investing in pollution control equipment, paying foreign contractors a living wage, investing in the local community, providing workers with top-notch health insurance can all be costly, which impacts profitability. When social responsibility conflicts with profitability, firms should decide which path to pursue based on both their values and objectives. They should also consider the potential long-term payoff from investments in social responsibility. Socially responsible firms often benefit financially in terms of stronger sales and branding, stronger customer loyalty, and higher employee retention rates.

How has the rise of the World Wide Web changed business practices? What are the benefits and drawbacks for business? For consumers?

The rise of the Web has created unprecedented opportunities for businesses to reach markets far beyond their local areas, creating a huge potential source of new revenue. The Web has also facilitated alternative selling strategies that give rise to an individualized buying experience. Producers can offer customized products at a cost and price that are roughly comparable to standardized products. And by creating links among producers, suppliers, and distributors, the Web offers businesses the potential for new efficiencies in their day-to-day practices. Businesses that capitalize on the opportunities offered by the Web can sharpen their edge dramatically. But the Web has also intensified competition, since it brings new competitors into virtually every business arena. Consumers benefit from the plethora of options, enjoying a new power to choose and to offer feedback to producers. Leading edge businesses respond to consumer feedback and tap into consumer creativity, using both to further sharpen their competitive edge. But to make this work, they must be willing to relinquish power and control to the marketplace.

How has the definition of diversity changed over time? Can a diverse workforce help a company compete more effectively? How?

Until recently the definition of diversity was fairly narrow, including only ethnic diversity. But leading edge companies view diversity more broadly, including differences in gender, age, religion, and nationality, among others. A diverse workforce can help a company compete more effectively by raising the level of innovation, and gathering new insights about how to reach an increasingly diverse marketplace.