BUS 101c 1st EditionExam # 1 Study Guide Lectures: 1 - 14Lecture 1 (January 27)What are the names of Herron’s grandchildren?Jack – 8 1/2Nate (Nate Daniel, Tot) - 5Samantha - 4Wesley – 2 1/2Blaise – born Tues. Feb 3, 2015What is business?Contract is business, transactional activityAdam Smith’s Wealth of Nations – invisible hand, market self regulatesKarl Marx’s Das Capital – socialism, counteracts wealth of nationsRoosevelt – Keynesian: government step in and help society when neededFactors that support transaction in business?Accounting - keeps track of money for businessMarketing – make people want to buy from companyISA – keeps track of data for companyManagement – helps people and controls organizational behaviorFinance – determines value and capitalizationLaw – restraints and requirements influence organizationEntrepreneurship – Helps organization think outside of the boxLecture 2 (January 29)What is the supply-value theory?When buying/selling something, you are always betting that you are getting the best dealBuyer – betting the product will go up in valueSeller – Betting the product will go down in valuePillars of capitalism: Private Property & Right to ContractBusiness and innovationWhen product is released, high price & low qualityWhen product further develops, low price & high qualityMarket efficiency, competitors cannot keep up with quality and price Basics of businessGovernment is reactive to business; they will not enter unless there is a problem not being addressed. The businesses want to get in front of business regulation, becausewithout it, they will face the government regulations, which are much higher than the solutions they would develop as a business or market. What are stakeholders and stockholders?Stakeholder theory – Edmund Freeman 1980’sAll who have a claim within a company: investors, employees, suppliers, customers, society, & marketLegal, economic, political, moral challengesMain focus is still to make money – profit primacyForeshadowed by evolution of 20th century government regulationStockholder Theory – Friedman (liaise-faire) Work within constraints of the law to maximize profits; is it legal? Does it make money? Profit exclusivityLecture 3 (February 3)Supplier relationship to businessSuppliers do not need much regulation, because they are a business in themselves and have market leverage. They have a contractual relationshipRelationship of company to other stakeholdersNo market leverage, take it or leave itWhy do companies not use only most productive workers, even if discriminating? Society creates norms, business is part of society & needs their supportWhy should companies adopt stakeholder theory?Coping strategyBusiness decision and social expectations conflict, government intervention is likely. Must act is ways that won’t attract government intervention, curb perceived abuses of larger corporations. To avoid government regulation, be ableto identify and be proactive with change, leading the cause instead of not adapting Creating your own solutions to problems is better than having the government create regulations to fix your problemsSelf interestUltimate goal is to make money. Is it legal? Does it maximize shareholder value?Business relationships are competitiveSupplier sells high, buyer buys low. Want long term relationship and loyaltyCollaborative –Satisfy and enlist support of stakeholders, create relationship so all can win over a period of timeSocial contract - Business responsible to achieve basic goals, has social responsibilityMethod of property tenure and means of organizing economic lifeCorporate system, major social institution, overlaps with copingGovernment serves regulatory role as means to advance social expectationsCapitalism – innovation, value creation, exchange, Competition follows, adds to innovationFundamental fairnessMost philosophical – social contract, legalistic reliance and marketCoping, expect underlying rules to govern contexts. If law did not support poverty rights or contract obligation, no reason to enter into market activitiesFairness required to maintain marketMust extend to all market participants – make universalLecture 4 (February 5)Rights in America are expanding Greater individual liberties: cleaner environment, modern business practicesFreedom to fail: business must look into future and adopt to thrive, or stay stagnant and fail. Transparency holds individuals accountableChange and stakeholdersPeople have a natural resistance to change. Stakeholders do not impose change, but embrace change. Market is continuously changing.Time is not instantaneous, people’s rights are Reasons to adopt stakeholderSocial contract – what kind of world do we want to live in? Social concerns are a major issue within communities. Unspoken rights and expectations of the communityFundamental fairness – protect those you rule over; if you have wealth, you are obligated to help those who are strugglingInland bank case Rockdale branch – older people, bus route to other banks, renovation that is not worth investment – close this bankNorth Madison branch – poor neighborhood, hurt entire community and contribute to povertyLecture 5 (February 10)DemocratizationEthics – society must recognize this value system; promotes equality, money, power, and happiness. America is individualistic, think of ourselves before others; responsibility, autonomy, freewill. 5th reason to adopt stakeholder theoryAdopt practice to enhance democracy; work together to get best solutionProprietary rightsPrivate people have private property to do with what they wantSphere of influence – some things in private sector, some in publicWhen private influences public, have a problem. Solve with regulation or people choosing not to do business with your company – fail.Is business separate (libertarian), the same as (socialism), or a vend-diagram (Keynesian)with society? Inland bank caseInvestors and society affectedLecture 6 (February 12)Who can be considered an individual stakeholder? Investors, employees, customers, and suppliersSociety – collection of individual stakeholders into a defined group; groups of groups make up a societyWhat affects customers, affects societyWhen does business begin to affect society?Moves into public sphere, must use own judgment to decide whether the business’s issues are moving into public influence or staying within only the customersThe Market as a