Comm 1011 Midterm PDF

1. B) The triple e bottom line 2. B) deontoligical 3. B) veil of ignorance 4. B)inflation rate 5. E) all of the above 6. ?c) industrial buildings 7. D)oligopoly 8. ?c) Germany 9. C) sustainability 10. C)consumer sovereignty 11. D) state capitalism 12. B) issues manage...

1. B) The triple e bottom line 2. B) deontoligical 3. B) veil of ignorance 4. B)inflation rate 5. E) all of the above 6. ?c) industrial buildings 7. D)oligopoly 8. ?c) Germany 9. C) sustainability 10. C)consumer sovereignty 11. D) state capitalism 12. B) issues management Capitalism What are the 8 main elements of capitalism? 1. Right to private property- owning and using things like land and buildings. -uneven distribution, taxation to redistribute wealth, intellectual property 2. Equality of opportunity- all parties have equal chance at responding to an event. - Gap between poor and rich, gender pay equity, hard to reach 3. Competition- many rival sellers seek to provide goods and services to many buyers. - Oligopolies and monopolies, market power 4. Individualism and economic freedom- individuals are decision makers in society. 5. Profits- revenue subtract cost. – can be associated with being immoral 6. Work ethic- value or moral principles that say work is desirable, a natural activity, and good in and on itself. -people now expect more will be done for them from governments and corporations 7. Consumer sovereignty- consumers have power over producers by their choice of consumption- some producers can ignore the wishes of consumers 8. Role of government – laisses-faire, government should have minimal involvement, provide infrastructure and protect business. Common forms of capitalism Consumer Capitalism- government involvement is limited, open borders and profit mentality exists (Canada Britian USA too) Producer capitalism- emphasizes production employment and statist policies (France Japan) Social Market Economy- regulated capitalist market with generous social welfare (Germany) Family capitalism- clans dominate business activities and control capital flows(Thailand Indonesia) aka crony/ confusion capitalism Frontier Capitalism-Fundamentals of business being introduced/ the beginning of capitalism (Russia China) State Capitalism- governments manipulate market outcomes for political and social purposes- usually an ine`icient use of resources Challenges of Capitalism Greed- self-interest, people desiring more than needed Economic down turns- business cycle Business failures Income and wealth distribution Corporate crime and wrongdoing (cartels, stealing) Stagnant incomes vs increasing CEO salaries Damage to environment Reliance on market system that rarely works perfectly Pros of capitalism - Produces wealth - Promotes prosperity - Better human well being - Creativity - Cooperation - Respects freedoms - Strong morals and integrity is required because it’s a moral system which means most people must have good morals and integrity. Kinds of taxations Progressive-pay more% as make more Proportional- everyone pays same % Regressive- pay less %as you make more Ethics in Business 3 Approaches: Deontological, Teleological, Virtue ethics Deontological- rule based, done for what is good without thinking about the consequences, duty of universal principles, doing the right thing even if consequences of another action are preferable, “veil of ignorance” which eliminates biases. Teleological- focuses on results/ outcomes rather of actions, decision is good if result is good, should result in the greater good for the greater number Virtue ethics- morals based on good development of character, about character or identity, to your discretion. About being rather than doing. Note: there’s not necessarily a right or wrong way in ethics it all depends on circumstances. What is greenwashing? When a company claims to do more for the environment than they actually do. What is redwashing? When a company claims to do more for social issues than they do, in Canada is often with indigenous issues or relations. What is the term ESG? ESG stands for environmental social and governance factors. What is integrity in Business? -paying taxes - treating people well -responsible with ESG factors -Protect environment -Managing with integrity-leaders behave in a way that reflects societal norms and values. Business responsibilities include… Must be sustainable Take accountability, be ethical, cooperate with society because the two have to live in a world together A responsible business is one that responds to social, ethical, and environmental responsibilities, in addition to economic obligations. What is Triple Bottom Line? Evaluation of a company’s economic, social, and environmental value. Business as an economic system Economic system -arrangement using land, labour and capital to produce distribute and exchange goods and services to meet the needs and wants of people in a society Capitalism-allows private ownership of the means of production and assumes decision making is in the hands of individuals seeking profit. Free enterprise/private enterprise system- limited government involvement where the profit motive is competition and ownership of private property is normal. Laissez-faire capitalism- minimum interference by government limited to essential services like police firefighting etc. Responsible enterprise system operates as a free enterprise system but incorporates accountability. Capitalism provides most goods and services but public and non profit sectors are also involved. Canadian business is comprised of: Sole proprietorships- A single person owns the business, and they are liable for everything to do with it. Partnerships- multiple people own the business and they are liable for everything to do with it. Incorporated entities- legally its own thing can make financial decisions as its own and gets sued as its own. Incorporation- there are 2 doctrines Concession doctrine- incorporation was conferred act and could not be made by private agreements among several persons to associate together for business purposes. Freedom of association- association of individuals coming together for some purpose is fundamental to forming a corporation. When a business incorporates a separate legal entity is created. Society provides permission for business if… Legitimacy- to be legitimate the business must respond to the changing values and expectations in society Legitimacy is continuously being shaped by the ESG factors and general ethics and morals What is social licence? Social Licence is when society recognizes a company as one that is responsible and considers their impact on society, environment, and economics. Its earned and maintained, granted by stakeholders and is a privilege. Factors that influence attitudes towards business - STANDARD OF LIVING - DECENTRALIZED DECISION MAKING - ALLOCATION OF RESOURCES - SELF INTEREST - BUSINESS CYCLE- boom and bust - BUSINESS WRONGDOING - UNEMPLOYMENT - GLOBALIZATION- aspects of an area move to others like a job. - TECHNOLOGIAL INNOVATION - MEDIA COVERAGE - GOVERNMENT Who runs Canadian businesses? Board of Directors - Elected by shareholders - Concerned with shareholders primary objective ROI - Increasing focus on CSR - Corporate governance Managers - Hired by board of directors Types of owners Direct ownership- shareholder Indirect ownership- mutual fund holders Social contract is an agreement between two major institutions that characterizes their relationship Business and society need each other Both business and society must benefit Reduce friction and increase benefits for both What is corporate citizenship? When a corporation takes into account their impact and role on society, the environment and their economic influence. What are ethics in business The rules standards codes or principles that guide for morally appropriate behavior. Includes CS, CSR, triple bottom line, corporate citizenship, corporate governance, accountability, and environmental stewardship. What is CSR CSR is how a company balances economic social and environmental responsibilities meeting expectations of stakeholders. What is CS? The inclusion of Environmental, economic, social responsibilities as they impact stakeholders to ensure the long-time survival of a company. Stakeholders Who is a stakeholder? Anyone who is impacted or impacts an organizations outcome. Examples: Owners, directors, employees, customers, lenders, suppliers, service professionals, distributors/dealers/franchisees, competitors, NGOs, government, society at large basically anyone. Managers need to identify stakeholders to obtain resources and to maintain legitimacy of business. BOARD OF DIRECTORS CEO MANAGEMENT AND REST OF C-SUITE EMPLOYEES Board of directors oversees strategy, performance and hires and fires top executives. Often two types: Independent (not a shareholder) Dependant (is a shareholder) Independent may have certain skillset or knowledge. Managers must take stakeholders into account in a systematic fashion to see better results. Categorizing stakeholders Fredrick davis and post Primary and secondary interactions Primary is your typically employees shareholders creditors, suppliers, customers, competitors, distributors/sellers. Secondary typically the surrounding community, government, social activist groups, general public. It is hard to be certain who should be on each list and it depends on situation. Mintzberg Stakeholders and categorized as being external or internal to the corperation This helps us realize where the power is. Phillips Normative- those who corporations have an obligation and accepts benefits like employees, creditors, suppliers, consumers. Derivative stakeholders- people who don’t accept benefits but they have power over corporation like competitors and NGOs. Small business owners have more power within that an owner of a large business. The Manager Responsibilities include: Identify and examine how stakeholders may influence or be influenced by corporation. Rank stakeholders based on influence. Make program on how to deal with stakeholders. Assess opportunities, and threats along with the magnitude. CEO Pay Pay for performance results in executives cash salaries and stock and equity incentives. The high compensation of CEOs raises ethical implications. Executives focus mostly on pleasing shareholders which is usually focus on ROI What is sustainable pay- tying executive pay to environmental, social, governance performance targets. Argument against stakeholder ordering and categorizing Problems of categorization Challenge meeting all stakeholder expectation Dilution of top management Shared governance is impractical because of competing and conflicting interests. Argument for stakeholder concept Responding to stakeholder is good Identifies who loyalty is needed from Provides systematic approach to recognizing stakeholder expectations an deciding whether or not to respond. Milton Friedman-the responsibility of business is to increase its profits Social responsibility of business is to use its resources and engage in activities designed to increase profits while staying in rules. Issue management Systematic process that identifies, evaluates and responds to issues This is an early warning system’ It makes managers to be systematic when dealing with issues Benefits if issue management -more likely to maintain competitive advantage - behavior will match expectations -less likely to make ethical mistakes -detect issues earlier Enhances credibility reduces vulnerability Issue life cycle 2 dimensions: Over time Degree of awareness Dregree of awareness stages: none or little increasing prominent peak declining none or little is identified by nature of issue isn’t fully clear emerging issue turns int current issue conflicting values and interests expert knowledge can’t solve it don’t give specifics trade o`s increasing is when urgency isn’t clear prominent is when people have a standpoint Peak is when media coverage is high Declining doesn’t mean the issue is gone When issues aren’t managed, they become crisis Crisis- when an event has reached a critical point Crisis management- approach to removing risk and uncertainty of the crisis so there’s more control of events. Finks anatomy of crisis Prodromal crisis Acute crisis Chronic crisis Crisis resolution Every corporation experience crisis Need to be prepared Crisis management includes apologizing, honesty, disclosing all facts.