BUS 101 Study guide

BUS 101 Study guide - Business Study Guide Exam 1...

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Business Study Guide: Exam 1 Stakeholder-as group how can affect or is affected by what is going on in the business or affected by the achievement or a corporation’s purpose -Primary stakeholders- determined by who has the biggest power/influence -include: owners, customers, employees, suppliers, community (government never a primary stakeholder; government acts on behalf of other stakeholders) Owners - stockholders Rights: voting rights – check for more Receive dividends Board of directors protects rights Interests: make $$$ Corporate Governance - process by which a business is run/controlled or governed which board of directors is in charge of Principles of good corporate governance: Board of Directors are agents for the owners- represent owner’s interests -Legal Duties to owners (fiduciary duties) -select and supervise top management -top management reports to the board Fiduciary Duties- -Duty of Care - act in good faith, in the best interest of the organization (vague –leaves room for people to make mistakes) -Duty of Loyalty - set aside personal or conflicting interests and act solely in the best interest of the corporation -Duty of Obedience - must obey all pertinent laws and act to further the corporations purposed Securities and Exchange Commission (SEC) Purpose: “. ..to protect investors, maintain fair orderly and efficient markets, and efficient markets, and facilitate capital formation” -protects owners and capital – ripple affect helping everyone else -Sarbanes-Oxley Act- expands the powers of the SEC to protect interests of owners; ensures expertise and attention to details; minimizes conflicts of interests; reduce incentives/opportunities for conflicts of interests 1. stricter scrutiny on accounting 2. independence of audit committee (which is made of board members and should be outside accountants) 3. independence of external auditor 4. CEO and CFO must certify financial statements
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*Alternatives to government regulation: voluntary compliance Business process: Acquiring and Managing Financial Capital Acquiring and Satisfying Customer Needs Supply Chain Management Acquiring and Managing Human Capital **know which process goes with which stakeholder Sole proprietorship - don’t allow people to own stock, private -Advantages: easy to form and dissolve; minimal legal requirements; own boss; owners keeps all profits; management flexibility -Disadvantage: invest own $ ; unlimited financial liability; financial limitations Partnership - two people own business -Advantages: easy to form; benefit from others ideas; expanding financing capacity -Disadvantages: conflicts between partners; harder to dissolve; lack of continuity; responsibility of partners actions; personal assets are at risk Corporation - assets and liabilities separate from those of its owners; business has unlimited number of shareholders -Advantage: limited financial liability; specialized manegers skills; continuity;
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This note was uploaded on 08/29/2011 for the course BUS 101 taught by Professor Rollins during the Spring '08 term at Miami University.

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BUS 101 Study guide - Business Study Guide Exam 1...

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