Exam 2 Review CH 3 10 27 2014 Ch 3 Stakeholders people whose interests are affected by an organizations activities Internal owners employees the talent and board of directors o Board of directors Inside directors top executives of the firm Outside directors elected from outside the firm External Stakeholders people and groups in the orgs External environment that are affected by it task and general environment o Task Environment 11 groups that present you with daily tasks to handle Customers competitors suppliers distributors strategic allies employee orgs local communities financial institutions govmt regulators special interest groups mass media Strategic allies describes relationship of two orgs That join forces to achieve advantages that they cant alone Government regulators regulatory agencies that establish ground rules under which organizations may operate Special interest groups groups whose members try to influence specific issues MAAD NRA o General Environment macroenvironment includes six forces economic technological sociocultural demographic politicallegal and international Economic forces consists of general economic conditions and trends that may affect an organizations performance Unemployment inflation interests rates growth Technological forces new developments in methods for transforming resources into goods or services Sociocultural forces influences and trends originating in a country s society s or a culture s human relationships and values that may affect an organization Demographic forces influences on an organization arising from changes of populations such as age gender or ethnic origins Political legal forces changes in the way politics shap laws and laws shape the opportunities and threats to an organization International forces changes in economic political legal and technological global system that affect an org Ethical Dilemma situation in which you have to decide whether to pursue a course of action that may benefit you or your organization but that is unethical or illegal Ethics standards of right and wrong that influence behavior o Ethical behavior behavior that is accepted as right Values permanent deeply held beliefs and attitudes that help determine a persons behavior Value system the pattern of values within an organization o Values and value systems are the underpinnings for ethics and ethical behavior 4 Approaches to deciding ethical dilemmas Utilitarian Approach what will result in the greatest good for the greatest number of people o Often used to asses financial performance efficiency profit Individual Approach what will result in the individual s best longterm interests which ultimately are in everyone s self interest o Act ethically in short run to avoid harm in the long run Moral rights Approach respect for the fundamental rights of human beings o Difficulty occurs when rights are in conflict employer and employee rights Justice Approach respect for impartial standards of fairness and equity Insider Trading the illegal trading of a company s stock by people using confidential company information Ponzi Scheme using cash from newer investors to pay off older ones Sarbanes Oxley Act of 2002 established requirements for proper financial record keeping for public companies and penalties for noncompliance Laurence Kohlberg 3 levels of personal moral development Preconventional follow rules and obey authorities o Managers autocratic or coercive expect obedience Conventional follow expectations of others o Managers lead by encouragement and cooperation Post conventional guided by internal values o Managers follow their own values standards focus on needs of employees lead by empowering their employees How Organizations can promote Ethics Create a strong ethical climate managers promote ethical climates through policies procedures and practices o Ethical climate employees perception about the extent to which work environments supports ethical behavior Screening Prospective Employees Institute ethics codes and training programs o Purpose is to clearly state top management s expectations for all employees o Code of ethics consists of a formal written set of ethical standards guiding an organizations actions Reward Ethical Behavior protect whistleblowers o Whistle blower employee who reports organizational misconduct to the public Social Responsibility manager s duty to take actions that will benefit the interests of society as well as of the organization Corporate social responsibility notion that corporations should go above and beyond following the law and making profits Corporate Social Responsibility Pyramid Archie B Carroll 1 be a good global corporate citizen 2 be ethical in its practices 3 obey the law 4 make a profit Social responsibilities Sustainability going green Philanthropy making charitable donations to benefit humankind Corporate Governance system of governing a company so that the interests of corporate owners and other stakeholders are protected So that directors authority is clearly seperated from the CEO CH 6 Strategic Management 10 27 2014 Business Plan a document that outlines a proposed firms goals the strategy for achieving them and the standards for measuring success Strategy a large scale action plan that sets the direction for an organization educated guess for what must be done in the long term for survival and prosperity of the company Strategic Management a process that involves managers of the org in the formulation and implementation of strategies and strategic goals Strategic Management and Planning important because 1 Provide direction and momentum 2 Encourage new ideas o stress importance of innovation for long range success 3 Developing a sustainable competitive advantage o occurs when companies get and stay ahead in being responsive innovative quality and effectiveness Michael Porter the most influential and important living strategist Strategic positioning attempts to achieve sustainable competitive advantage by preserving what is distinctive about a company Strategy is the creation of a unique and valuable position o Strategic position emerges from 3 sources Few needs many customers Broad needs few customers Broad needs many customers Strategy requires trade offs in competing o Following one narrow strategy holds a trade off of giving up sales based on other aspects that the company could also benefit from Strategy involves creating a Fit among activities o All strategic activities that a company performs