final exam review

• value chains, domains of management, and the key functional areas of business

  A) inputs

  B) conversion processes

  C) outputs

  D) members

  E) money

  F) other organizations/resources

  G) human resource managemnet

  H) finance

  I) finance

  J) raising money

  K) investing money

  L) accounting

  M) supply chain management

  N) operations management

  O) marketing

  
• carroll's pyramid of CSR

  A) philanthropic

  B) ethical

  C) legal

  D) economic

  
• stakeholder mapping


  what is their position on the issue?

  what is their salience(influence)?
• stakeholder mapping

  A) keep satisfied

  B) manage closely

  C) monitor

  D) keep informed

  
• long-term

  firms seek to achieve more significant, even transformational changes that will enable durable success.
• long-term actions take longer to pay off and can be difficult to quantify in advance, but can act as game changers for the firm.
• short-term


  these tactics help a firm deal with crisis or rapid change quickly, effect is incremental.
• in short-term actions the benefits and costs appear quickly and are easy to measure.
• the short-term/long-term debate

  A) respond to changing environment, generate quick wins

  B) building lasting success and stability

  C) smaller

  D) larger

  E) high

  F) low

  G) smaller, quicker, easier to estimate

  H) larger, slower, harder to estimate

  I) incremental (e.g. better product)

  J) transformative (e.g. new business area)

  
• short-termism: over emphasis on short-term actions
• why do we suffer from short-termism?

  investor pressures

  • want quarterly returns maximized

  organizational incentives

  • executive compensation is often tied to share prices

  desire for sure returns

  • long-term benefits are inherently more abstract and difficult to foresee

  human nature

  • humans naturally focus on the shorter term since we value the satisfaction of quickly addressing a problem
• overemphasis on the short-term puts organizations at risk.


  -lack of focus on research and development

  -damaging long-term stakeholder relations

  -long-term reputational risks

  -short-term cost cutting may lead to long-term costs
• overcoming short-termism

  overcoming human nature

  • make long-term objectives part of the company culture
  • clear communication, training, and education

  overcoming desire for sure returns

  • structured decision-making
  • balanced scorecard (balancing short- and long-term actions)
• overcoming short-termism (macro changes)

  changing organizational incentives

  • performance evaluations linked to long-term performance, refined stock options, flatter organizations reduce short-term pressures
  • executive compensation linked to social and environmental goals

  changing investor pressures

  • educate stock analysts about the long-term horizon and its relation to shareholder value
  • encourage cumulative reporting by regulators whereby each quarter would build on the next - would ensure the transparency of regular reporting while avoiding quarter to quarter decision making
• overcoming short-termism - larger structural issues


  investor composition

  • institutional investors have longer term outlook than other investors

  firm structure

  • family owned firms and privately-owned companies may be more likely to pursue long-term strategies than publicly-owned firms.

  system of firm financing

  • countries where companies are financed by banks tend to have a more long-term orientation than countries where firms are financed by the stock market.
• the dominance of large corporations (two primary factors)

  limited liability

  • investors only assume the responsibility/loss of what they put into the company

  corporate personhood

  • ability of the organizations to be recognized as individuals.
• business political involvement


  broadly defined as participation in the formulation and execution of public policy at various levels of government.
• business political involvement may include:

  • corporate political spending
  • publicly expressed support for a candidate
  • publicly expressed views on political issues
  • executives running for public office
  • management's position on employee participation
• corporate political spending has to do with the supreme court case saying that corporations have free will and can spend as much money as they want toward poitical parties.
• political action committees(PACS)


  an organization that pools campaign contributions from members and donates those funds to a campaign for or against candidates, ballot initiatives, or legislation.
• PACs(political action committees) can take funds from:

  corporations, unions, individuals
• super PACs are PACs, but are unlimited in the amount of donations they can collect.
• business lobbying


  the process of influencing public officials to promote or secure the passage or defeat of regulations and/or laws
• lobby groups:

  umbrella associations/peak organizations, trade associations, ad hoc organizations, and think tanks and foundations
• umbrella associations/peak organizations - chamber of commerce - want to lower taxes
• trade associations- only represent interests of one industry (ex: grocery stores)
• ad hoc organizations, corporate front groups, coalitions: organizations set up by a group of trade associations as well as some corporations specifically for an issue that they want to lobby the government.

  • disband after the lobby
• think tanks and foundations: corporations supporting the creation of scientific reports that help them to lobby the government
• public affairs offices

  organizations 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
• public affairs offices

  they focus on relations with:

  • government, communities, media

  activities include

  • advertising, education, stakeholder engagement
• globalizations and the reduced role of government

  some have argued that globalization gives corporations greater power than ever before and gives governments considerably less power.
• capitalism: an economic system that allows for private ownership of the means of production(land, labor, and capital) and assumes that economic decision making is in the hands of individuals or enterprises who make decisions expecting to earn a profit.
• 3 central features of capitalism:

  1. wage labor
  2. private ownership of the means of production
  3. production for exchange and profit
• what are the key assumptions of capitalism?

  private property, individualism, economic freedom, equality of opportunity, competition, profit, work ethic, customer sovereignty, and role of government
• private property


  the legal right to own and use economic goods(means of production)
• individualism


  the individual, not society, is the dominant decision-maker in society

  • assumes the individual to be rational(cost-benefit analysis) and seeks to maximize self-interest
• economic freedom


  few restrictions on business activity
• equality of opportunity


  assumption that all individuals or groups have an even chance at responding to some condition in society
• obstacles to equality of opportunity:

  • race
  • gender
  • age
  • quotas
• competition


  many rival sellers seek to provide goods and services to many buyers