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Unformatted text preview: G202 (1/14/09) • Topic 1: The Non-Market Business Environment – REQUIRED READINGS: “Case: Wal-Mart’s Business Environment” and “A Hummer of a Tax Break” – Online Wal-Mart Case Discussion: Jan. 23 rd —Jan. 25 th – In-class Wal-Mart Case Debriefing: Jan. 26 th • Corporate Social Strategy – Corporate Social Responsibility (CSR): • Emphasizes that firms should think about ALL stakeholders in ALL its operations • Firms are responsible for their entire value chain. • From the beginning of production to the end of product life. – Stakeholders: • Market Stakeholders: • customers, clients, employees, shareholders, etc… • Non-Market Stakeholders: • communities, governments, the environment, socially-minded non- governmental organization (NGOs), etc… • Corporate Social Strategy – Socially Minded NGOs will take action whenever they believe government regulations and corporations are insufficient at ensuring quality. • Social Issues: Environmental Damage, Labor Rights, Animal Rights, Moral and Ethical Concerns, Consumer Safety, etc… – Strategic CSR (profit enhancing): • Manage non-market threats and look for non-market opportunities to exploit. • Evaluate current and proposed government regulation. • Monitor interest group activity and changing social demands. • Non-Market Forces • Market Efficiency and Public Policy – Firms often take political action that results in market inefficiencies: • Limited competition and increased market power. – NGOs usually take political action when market inefficiencies exist: • Lack of property rights, market power abuses, quality concerns, externalities (pollution), etc… – Policy changes can either correct existing inefficiency, or it can be the cause of inefficiency depending on the state of the market before the policy is implemented. • Markets and Efficiency – Demand : Based on the Value to Consumers. • Higher prices cause consumers to switch to relatively cheaper products. • Consumer Surplus (CS): difference between what consumers are willing to pay and the amount they have to pay. – Supply : Based on the Cost to Producers. • Higher prices cover additional production costs. • Producer Surplus (PS): difference between the minimum supply price and market price. • Markets and Efficiency – The Idea of ‘Markets’ • Field Trip to the Grocery Store. – Market Equilibrium occurs at the intersection of supply and demand. – Productive (Allocative) efficiency: • Produce and sell product that consumers value more than the costs of the productive resources. • Avoid producing and selling product that consumers value less than the costs of the productive resources....
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This note was uploaded on 04/18/2011 for the course BUS 202 taught by Professor Kreft during the Winter '09 term at Indiana.
- Winter '09