Business and Society Quiz
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Questions and Answers

What is the primary difference between long-term and short-term shareholders?

  • Long-term shareholders focus on dividends while short-term shareholders focus on corporate governance.
  • Long-term shareholders are typically members of the board, while short-term shareholders are not.
  • Long-term shareholders only invest in startups, while short-term shareholders invest in established companies.
  • Long-term shareholders seek appreciation of stock prices, whereas short-term shareholders prioritize immediate returns. (correct)

    • Which of the following is NOT a legal right of shareholders?

  • To receive annual reports on the company’s financial health
  • To sue the company and its officers
  • To vote on their own salaries (correct)
  • To receive dividends

    • What is the typical size range of a Board of Directors?

  • 5-7 members
  • 9-11 members (correct)
  • 8-10 members
  • 12-15 members

    • In a one-tier governance system, what roles are combined into a single board?

    <p>Executives and supervisors</p> Signup and view all the answers

    What is one of the main duties of the Board of Directors?

    <p>To review management’s performance among other responsibilities</p> Signup and view all the answers

    What is the main belief of stakeholders regarding corporations?

    <p>They should create value for society.</p> Signup and view all the answers

    Which of the following groups is NOT typically classified as a market stakeholder?

    <p>Government</p> Signup and view all the answers

    What is one type of stakeholder power described in the content?

    <p>Economic Power</p> Signup and view all the answers

    How do shareholders view the purpose of an organization?

    <p>To make profits.</p> Signup and view all the answers

    Which question is NOT part of the Stakeholder Analysis?

    <p>What are the annual profits of the organization?</p> Signup and view all the answers

    What is a characteristic of non-market stakeholders?

    <p>They influence the organization without purchasing goods.</p> Signup and view all the answers

    What distinguishes market stakeholders from non-market stakeholders?

    <p>Market stakeholders are involved in economic transactions.</p> Signup and view all the answers

    Which group has the legal power to influence corporate decisions?

    <p>Government</p> Signup and view all the answers

    What common interest do employees expect from their employers?

    <p>Fair pay and benefits</p> Signup and view all the answers

    What power do shareholders possess regarding company operations?

    <p>Voting rights on company decisions</p> Signup and view all the answers

    Which of the following represents a key interest of suppliers?

    <p>Fair and prompt payments</p> Signup and view all the answers

    What is a primary way customers exert their power over companies?

    <p>Purchasing and withdrawing purchases from competitors</p> Signup and view all the answers

    What type of investor is categorized as 'Main Street'?

    <p>Individual investors</p> Signup and view all the answers

    What do governments primarily seek from businesses?

    <p>Economic and social improvements</p> Signup and view all the answers

    Which type of company issues shares to the general public?

    <p>Public limited Company</p> Signup and view all the answers

    What is a common response from consumers towards environmentally irresponsible companies?

    <p>Switching to competitors</p> Signup and view all the answers

    What power do competitors primarily leverage in the market?

    <p>Pressuring government and potentially suing unfair competitors</p> Signup and view all the answers

    What is a prevalent belief among consumers regarding corporate responsibilities?

    <p>Companies should improve societal and environmental conditions</p> Signup and view all the answers

    Study Notes

    Business and Society

    • Business is an organization that makes a product or service for profit.
    • Society is formed by individuals and the structures they create.
    • Companies like Amazon combine business and society for greater profits.

    Stakeholders and Shareholders

    • Stakeholders are individuals or groups affected by a company’s decisions, policies, or operations.
    • Shareholders are a type of stakeholder who own shares in a company.
    • Stakeholders believe companies should benefit society, fulfill societal needs, and be accountable to stakeholders.
    • Shareholders believe the company is owned by its owners, the purpose is to make profit, managers are agents of shareholders, and shareholder interests are prioritized.

    Types of Stakeholders

    • Market Stakeholders: directly involved in the company’s operations, including employees, shareholders, customers, suppliers, retailers, and creditors.
    • Non-market Stakeholders: indirectly involved in the company’s operations, including communities, government, competitors, the general public, business support groups, and NGOs.
    • Internal Stakeholders: individuals within the organization, such as employees and managers.
    • External Stakeholders: individuals or groups outside the organization, such as customers, suppliers, and government agencies.

    Stakeholder Power

    • Voting Power: Shareholders can influence decisions through voting rights.
    • Economic Power: Suppliers, customers, etc. can leverage economic power by adjusting their engagement with the company.
    • Legal Power: Government through regulation and laws.
    • Informational Power: Customers, activists, etc. can wield influence via information and publicity.

    Stakeholder Analysis

    • Identify relevant stakeholders.
    • Understand the interests of each stakeholder.
    • Assess the power of each stakeholder.
    • Determine the likelihood of stakeholder coalitions forming.

    Stakeholder Interests and Power

    • Employees (Market): Fair pay, safe work environment, secure employment. Power lies in publicity, strikes, and union bargaining.
    • Shareholders (Market): Return on investment (ROI) and stock value. Power lies in voting rights and accessing company information.
    • Suppliers (Market): Regular orders, prompt payment, ethical treatment. Power lies in withholding orders and supplying competitors.
    • Customers (Market): Value for money, safe and reliable products, accurate information. Power lies in switching to competing brands.
    • Government (Non-market): Economic development, social improvements, tax revenue. Power lies in regulation, laws, and permitting business activity.
    • Competitors (Non-market): Fair competition, cooperation, and new customer acquisition. Power lies in government influence and legal actions.
    • General Public (Non-market): Protection of social values and minimized risks. Power lies in public pressure, government influence, and social commentary.

    Consumer Perception

    • Many consumers believe businesses should achieve goals while improving society and the environment.
    • 42% of consumers would avoid buying products from environmentally irresponsible companies (ESG rules).
    • 65% of consumers would switch to a competitor that is environmentally friendly.

    Shareholder Rights and Corporate Governance

    • Shareholders are investors who own a corporation through stock ownership.
    • Shareholders can be individual (Main Street investors) or institutional (Wall Street investors).
    • Public Limited Company: Shares offered to the public, listed on stock exchanges, and subject to demanding document filing requirements.
    • Private Limited Company: Shares not offered to the public, limited number of shareholders, less stringent document filing requirements.
    • Objective: Increase in stock price (capital gain) and ROI through dividends.
    • Legal Rights: Receiving dividends, voting on board members, major mergers/acquisitions, bylaw/charter changes, selling shares, receiving financial reports, and suing the company and officers.

    Corporate Governance

    • The process of controlling and governing a company through internal systems, balancing diverse interests.
    • Shareholders → Board of Directors → Top Management
    • Board of Directors: Typically 9-11 members, average tenure of 8-10 years, may include CEOs, major shareholders, bankers, etc.
    • Board of Directors Duties: Establishing corporate decisions, developing strategies and policies, protecting stakeholder interests, evaluating management performance, and selecting top-level personnel.

    Corporate Governance Systems

    • One-tier system (common in US): One board combining executives and supervisors (e.g., Amazon).
    • Two-tier system (common in some EU countries): Two separate boards, a supervisory board and an executive board.

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    Description

    Explore the relationship between business and society through stakeholders and shareholders. This quiz covers essential concepts, definitions, and types of stakeholders in a corporate context, providing insight into how companies interact with their environments.

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