Business Ethics and Organizational Culture
Adoptive Cultures
Characterized by accepting change, concern for others, proactive approach, and resilience
Time-series Analysis
Combining vertical and horizontal analyses of different companies
Ethical Principles
Company's duty to comply with legal requirements and ethical norms
Cross-sectional Analysis
Comparing financial performance of target company to benchmark company
Invested Capital Formula
Creditor capital + Equity capital (Assets = Liabilities + Stockholders Equity)
Company's Culture
Grounded in core values and sets ethical standards
Organizational DNA
Hierarchy, decision-making rights, motivators, and information
Stock Value Price Management
Illegal practice; harmony achieved through profit, debt, asset, and cash management
Centralized Organization
Increases risk of lack of understanding of diverse markets
Culture of a Corporation
Influences interaction with national cultures and ethical behavior
Company Culture
Internal work climate shaped by shared values and behaviors
Management's Action Agenda
Items needed for strategic action plan based on prevailing circumstances
Leadership Trait
Strong confident sense of what to do and how to do it
Industrial Classification
Determined by the US government to categorize businesses
Power Distance
Geert Hofstede's dimension measuring acceptance of hierarchical authority
Masculinity
Geert Hofstede's dimension measuring assertiveness and competitiveness
Short and Long-term Orientation
Geert Hofstede's dimension measuring focus on immediate or future outcomes
Individualism
Geert Hofstede's dimension measuring focus on self or group
Uncertainty Avoidance
Geert Hofstede's dimension measuring tolerance for ambiguity
Context Data
External environment data that enhances evaluation quality
Competitive Environment
Factors like competition intensity and new entrants
General Environment
Factors like demographics and social issues that firms must adapt to
Value Statement and Code of Ethics
Mold company culture and communicate expected actions and behaviors
Equity
Paid-in capital and earned capital
Decentralized Organization
Potential disharmony with parent company's evolving strategies
Red Flags
Actions and behaviors signaling problems or warranting further investigation
Unethical Behaviors
Actions that are not illegal but violate ethical standards
Dividends
After-tax distribution of dollars, taxed at corporate and individual levels
Business Ethics
Application of ethical principles to company actions and decisions
Ethical Universalism
Belief that fundamental conceptions of right and wrong apply universally
Organizational Soul
Beliefs and values reinforced by hiring and rewarded behaviors
Operating Activities
Day-to-day transactions directly related to routine business processes
Statement of Cash Flows
Emphasizes the importance of cash in operating, investing, and financing activities
Industry
Environment where companies provide closely related products or services
Financing Activities
Selling or repurchasing stock, issuing notes or bonds, borrowing money, debt repayments, dividends
Asset Management
Tight control over all classes of assets except cash
