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bus 101 review guide -3

bus 101 review guide -3 - BUS 101 — Exam 2 Study Guide...

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Unformatted text preview: BUS 101 — Exam 2 Study Guide Wednesday, October 12 7:00-9:00 PM 25 FSB 1] Chapter 1 — The Corporation & Its Stakeholders: *Matching — Match the key term on the right to its definition on the left; (Answers are located on the last page of the study guide). 1. An organization that is engaged in making a. Boundary-spanning departments a product or proving a service for a profit. b. Business 2. Refers to human beings and to the social structures they collectively create; c. General Systems Theory specifically refers to segments of humankind, such as members of a particular (1. Interactive Social System community, nation or interest group. e. Ownership Theory of the Firm 3. A theory that holds that the purpose of the firm is to maximize the long-term return f. Society for its shareholders. g. Stakeholder 4. Alliances among company’s stakeholders to pursue a common interest. h. Stakeholder Analysis 5. The nature of each stakeholder group, its i. Stakeholder Coalitions concerns, and what it wants from its relationship with the firm. j. Stakeholder Interests 6. A stakeholder’s ability to stand out from k. Stakeholder (market) the background, to be seen as important, or to draw attention to itself or its issue. 1. Stakeholder (nonmarket) 7. An analytic process used by managers m. Stakeholder map that identifies the relevant stakeholders in a particular situation and seeks to understand n. Stakeholder power their interests, power, and likely coalitions. 0. Stakeholder Salience 8. A person or group that affects, or is affected by, a corporation's decisions, p. Stakeholder Theory of the Firm policies, and operations. 9. The ability of one or more stakeholders to achieve a desired outcome in their interactions with a com an . 10. A stakeholder that engages in economic transactions with a company. 1 1. A theory that holds that the purpose of the firm is to create value for society. 12. The closely intertwined relationships between business and society. 13. Departments, or offices, within an organization that reach across the dividing line that separates a company from groups and people in society. 14. A graphical representation of the relationship of stakeholder salience to a particular issue. 15. A stakeholder that does not engage in direct economic exchange with a company, but is affected by or can affect its actions. 16. A theory that holds that all organisms are open to, and interact with, their external environments. * Key Notes: Read the Chapter Summary on pg. 29, also. '1' Four Types of Stakeholder Power: <Voting Power <Economic Power <Political Power <Legal Power Stakeholder: Interest: Power: Owners/ Stockholders: Employees: Customers: -Receive a satisfactory return on investments (dividends) - Realize appreciation in stock over time - Maintain stable employment in firm - Receive fair pay for work - Work in safe, comfortable environment - Receive fair exchange: - Exercising voting rights based on share ownership - Exercising rights to inspect company books and records - Union bargaining power - Work actions or strikes - Publici - Purchasing goods from value & quality for money competitors spent - Receive safe, reliable - Boycotting companies Customers (cont): products whose products are unsatisfactory or whose policies are unacceptable - Receive regular orders for - Refusing to meet orders if goods conditions of contract are Suppliers: breached. - Be paid promptly for - Supplying to competitors supplies delivered - Employ local resident in - Refusing to extend the community additional credit Communities: - Ensure that the local - Issuing or restricting environment is protected operating licenses & permits - Ensure that the local area is - Lobbying government for developed regulation of the company's policies or methods of land use and waste dis osal 2) Chapter 14- — Stockholder Rights and Corporate Governance: *Matching — Match the key term on the right to its definition on the left. 1. The use of stock ownership as a strategy a. Board of Directors for promoting social objectives. b. Corporate Governance 2. A resolution on an issue of corporate social responsibility placed before c. Executive Compensation stockholders for a vote at a company’s annual meeting, usually by social activist d. Insider-trading groups. e. Institutional Investors 3. A form of compensation. f. Proxy 4. A lawsuit initiated by one or more stockholders to recover damages suffered g. Securities & Exchange Commission (SEC) due to alleged actions of the company's management. h. Shareholder Lawsuits 5. US Government Federal Agency whose i. Social Investment mission is to protect stockholders’ rights by making sure that stock markets are run j. Social Responsibility Shareholder fairly and that investment information is Resolutions fully disclosed. k. Stockholders 6. The system of allocating power in a corporation that determines how and by 1. Stock Option whom the company is to be directed. 7. A person, group, or organization owning one or more share of stock in a corporation; the legal owners of a business. 8. A legal instrument giving another person the right to vote the shares of stock of an absentee stockholder. 9. An elected group of individuals who have a legal duty to establish corporate objectives, develop broad policies, and select top-level personnel for a company. 10. Occurs when a person gains access to confidential information about a company's financial condition and then uses that information, before it becomes public knowledge, to buy or sell the company’s stock; generally illegal. 11. The compensation (total pay) of corporate executives, including salary, bonus, stock options, and various benefits. 12. A financial institution, insurance company, pension fund, endowment fund, or similar organization that invests its accumulated funds in securities offered for sale on stock exchanges. * Key Notes: Read the Chapter Summary on pg. 235, also. Owners' Legal Rights: 1. To receive dividends, if declared. 2. To vote on: Members of Board of Directors Major mergers and acquisitions Charter and by-law changes 0 Proposals by stockholders 3. To receive annual reports on the company‘s financial condition. 4. To bring shareholder suits against the company and officers. 5. To sell their own shares of stock to others. 000 '1' Who is primarily in charge of protecting the interests of stockholders? <The Board of Directors. I Government comes second to the Board. 0 *The government is not listed as a stakeholder because it acts on behalf of certain stakeholder groups to protect their interests. <Directors have a legal duty to the owners known as Fiduciary Duty, which includes: I Duty of Obedience: To obey all pertinent laws and act to further the corporation's purpose. 0 The individual must not knowingly break the law; even if it is believed to further financial interests of the business and its owners. I Duty at Loyalty: To set aside personal or conflicting interests and act solely in the best interest of the corporation. 0 The individual must not act in his/her own best interest; conflicts of interest — can't protect yourself over the interests of the owners / company. I Duty of Care: Act in good faith, in the best interests of the organization, with the care an ordinarily prudent person (average person) in a like/ similar position would exercise under similar circumstances. 0 The individual must devote the time, attention, and resources necessary to understand and prudently oversee the affairs of the organization, to give proper consideration to a decision. ‘2‘ Corporate Governance: The process by which a company is controlled or governed. <Principles of Good Governance: I Outside directors I Open elections of directors I Independent lead director (chair) I Regular meetings without CEO I Evaluate board performance regularly o All of these are desirable to owners; however, not all are required by law. ‘2‘ Securities and Exchange Commission [SEC]: <Major government agency protecting stockholders' interests. <Established in 1934 in the wake of the stock market crash and Great Depression. I Main purpose is to protect stockholder’s rights by: 0 Maintaining fair, orderly, efficient markets 0 Facilitating capital formation ‘3 Sarbanes-Oxley Act: <Failings among a number of large corporations prompted Congress to pass in 2002. <Purpose of the law = Protect stakeholders/ owners / investors through: I Stricter scrutiny on accounting, I Independence of audit committee [check validity of financial records), I Independence of external auditor, I CEO & CFO must certify financial statements. ‘2‘ Primary stakeholders connected with the process of acquiring financial capital = owners. <Financial capital = the money you need to start a business. Why acquiring financial capital is important: I Business may need more financial resources that (original) owner(s) can supply. I Can eventually lead to “publicly" held corporations (many owners, stock bought and sold on the open market). 3) Forms of Business: *Matching — Match the key term on the right to its definition on the left. 1. A corporation that is owned by an a. Alien Corporation individual or a group of individuals; its stock is not available for purchase by the general b. Corporate Charter investing public. c. Corporation 2. Company does business in states other than the one where it has filed incorporation (1. Domestic Corporation papers. e. Foreign Corporation 3. Business that stands as a legal entity with assets and liabilities separate from those of f. Partnerships its owner(s). g. Privately Held Corporation 4. A corporation whose stock is available for purchase by the general investing public. h. Publicly Held Corporation 5. Form of business ownership in which the i. Sole Proprietorship company is operated by two or more people who are co-owners by voluntary legal agreement. 6. A firm incorporated in one nation that operates in another. 7. Form of business ownership in which the company is owned and operated by one person. 8. In the state where the firm is incorporated. 9. A legal document that formally establishes a corporation. * Kev Notes: Form of Number of Liability: Advantages: Disadvantages: Ownership: Owners: - Unlimited - Owner retains financial Unlimited all profits liability Sole personal - Easy to form - Financing Proprietorship: One liability for and dissolve limitations business debt - Owner has - Management flexibility deficiencies - Lack of continuity - Easy to form - Unlimited - Can benefit financial Personal assets from liability of any operating complementary - Interpersonal Partnership: Two or more partner at risk management conflicts from business skills - Lack of creditors - Expanded continuity financial - Difficult to capacity dissolve - Limited - Difficult and financial costly to form liability and dissolve - Specialized - Tax management disadvantages Corporation: Unlimited Limited skills - Legal - Expanded restrictions financial capacity - Economies of large scale operations 4) Chapter 15 - Consumer Protection: *Matching — Match the key term on the right to its definition on the left. 1. Laws that provide consumers with better a. Alternative Dispute Resolution information, protect consumers from possible hazards, encourage competitive pricing, protect privacy, or permit consumer lawsuits. 2. Measures taken by an organization to assure quality, such as defining the customer's needs, monitoring whether or not a product or service consistently meets these needs, analyzing the quality of finished products to assure they are free of defects, and continually improving processes to eliminate quality problems. 3. Manages the complex network of consumer relations. 4. A consumer’s right to be protected from the unwanted collection and use of information about that individual or use in marketing. 5. A social movement that seeks to augment the rights and powers of consumers. 6. A legal doctrine that holds that a manufacturer is responsible (liable) for injuries resulting from the use of its products, whether or not the manufacturer was negligent or breached a warranty. 7. A method for resolving legal conflicts outside the traditional court system, in which a professional mediator works with the two sides to negotiate a settlement agreeable to both parties. 8. Protected by law. 9. An advertisement that makes false or misleading claims about the company's own product or its competitors product, withholds relevant information, or creates unreasonable expectations; generally illegal under US law. b. Consumer Affairs Officer c. Consumer Movement (1. Consumer Privacy e. Consumer Protection Laws f. Consumer Rights g. Deceptive Advertising h. Product Liability i. Product Recall j. Quality Management k. Strict Liability 10. Occurs when a business firm, either voluntarily or under an agreement with a government agency, removes a defective or sometimes dangerous product from consumer use and from all distribution channels. 1 1. The legal responsibility of a firm for injuries caused by something it made or sold. *Key Notes: Read Summary on pg. 256, also. '1' Customer satisfaction determines long-term success of business. ‘2‘ Should consumers fend for themselves? <Caveat emptor: "Let the buyer beware." I Comes from assumption if the buyer buys it they have to live with the consequences of their purchase. 0 By economic theory, it is assumed that the customer had “perfect information" at the time of their purchase. <Caveat venditor: “Seller take care." I Burden is on the seller; in other case burden is on the consumers. I We operate in between in the US 0 Balance disclosure of sufficient, accurate information, and the consumer takes reasonable care. st. Consumer Rights: <*These are protected by law: I Right to be informed I Right to safety I Right to choose I Right to be heard I Right to privacy ‘3' Consumer Product Safeg Commission [CPSC |: <Works to reduce the risk of injuries & death from consumer products. I Safety standards for consumer products. 0 Informing & educating consumers Conducting research Developing voluntary standards (company can choose to follow or not) Issuing mandatory standards (legally required) Obtaining recalls Banning products if no standard would adequately protect the public (rarely happens in the US) 9 “Right to be Informed,” & “Right to Safety." st. Food and Drug Administration [FDA]: Works to reduce the risk of injuries and death from consumer products, specifically food & drugs by: I Setting standards I Conducting research to demonstrate effectiveness, understanding side effects. 0 No such thing as NO risk; therefore goal = as safe as reasonably possible. ‘3 Federal Trade Commission [FTC j: <Right to choose (variety of products/ services at fair prices) <Two major activities: I Maintain free and fair competition I Protect consumers from unfair or misleading practices. 5) "Intro to Supply Chain Management": ‘3' What does the supply chain include? <Everything that is involved from the raw materials to the end customer and all the parties in between. I A lot of relationships to maintain with business to business. <#1 Interest = Good relationship with business partners. I Open, honest information flow. I Decision-making framework that recognizes mutual interests. <Does the government have a large role? I N0; no administrative agencies that pertain from protecting suppliers' interests. I Why?? 0 Suppliers are businesses; business-to-business relationship. 0 In business, regulation by the government is undesirable and businesses are supposed to fend for themselves. 0 Suppliers also make their own choices to supply to a company. 0 Government regulation would take away ability to choose. <The supply chain includes: I The network of upstream firms providing inputs (directly or indirectly) I The network of downstream firms responsible for delivery. 0 EX: All suppliers, intermediaries, and customers of a firm who move product or service to the final customer AND raw material suppliers, transportation companies, etc. I *Supply chain management is the integration of all activities and parties up and down the “chain" — emphasis is on managing the relationship among the parties involved. 0 A competitive advantage is available to businesses that do this well (higher profit margin). <Three major developments in global markets and technologies have brought SCM to its current vanguard: I Information Revolution I Customer demands for better service, quality, delivery, cycle time, etc. (due to competition. 0 (“Cycle Time" = How long it takes a product to get from start to finish). I New forms of organizational relationships. 6] Chapter 16 - Employees and the Corporation: *Matching — Match the key term on the right to its definition on the left. 1. Factories where employees — sometimes including children — are forced to work long hours at low wages, often under unsafe working conditions. 2. The moral obligation for a company to pay its employees enough to achieve a decent family standard of living. 3. Rules that establish minimum acceptable standards for the conditions under which a company's employees will work. 4. The testing of employees, by the employer, for the presence of illegal drugs, sometimes by means of a urine sample, saliva, or hair follicle analyzed by a clinical laboratory. 5. A employee's disclosure of alleged organizational misconduct to the media or appropriate government agency. 6. Protecting an individual’s personal life from unwarranted intrusion by the employer. 7. An organization that represents workers on the job and that bargains collectively with the employer over wages, working conditions, and other terms of employment. 8. Adapting work tasks, working conditions, and equipment to minimize worker injury or stress. 9. Company sponsored programs to assist employees with alcohol abuse, drug abuse, mental health, and other problems. 10. An implied understanding between an a. Drug testing b. Electronic Monitoring c. Employee Assistance Programs (EAPs) d. Employment-at-will e. Ergonomics f. Fair Labor Standards g. Honesty Tests h. Labor Union i. Living Wage j. OSHA k. Privacy Rights 1. Social Contract m. Sweatshops n. Whistle-blowing organization and its stakeholders as to how they will act toward one another. 1 1. The US Federal Government agency that enforces worker safety and health standards. 12. Written psychological tests given to prospective employees that seek to predict their honesty on the job. 13. The principal (legal doctrine) that workers are hired and retained solely at the discretion of the employer. 14. The use of employers of electronic technologies to gather, store, and monitor information about em 10 ee’s activities. *Kez Notes: Also read Summary on pg. 279 ‘3 Business Process #4 — Human Capital: <Involves recruiting and selecting employees. <Deciding how much to pay them <Keeping them appropriately trained, motivated, and supervised so as to be productive, and keeping them satisfied enough so that they stay with the organization (as long as the organization wants them to stay). '1' Employees’ Rights: <Federal level of extensive legal protection. I Right to organize and bargain: 0 National Labor Relations Act (NLRA) enforced by Fed. Agency National Labor Relations Board (NLRB) O Intention of law = to protect both employers and employees I Right to safe and healthy workplace: 0 Occupational Safety and Health Act (OSHA) enforced by Fed Agency Occupational Safety and Health Administration (OSHA) o Responsible for researching, identifying, setting, and enforcing specific standards. 9 Can impose penalties, including on execs (personal liability/ accountability) I Right to Equal Employment Opportunity: 0 *Non-discrimination 0 Title VII of the Civil Rights Act of 1964 o Prohibits discrimination on the basis of race, color, c...
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