MGMT 201 Study Guide for First Exam Chapter 1 The Nature of Law Types of law constitutions statutes common law equity set up structure of government for what they control prevent other governments from laws created by elected representatives in Congress or state legislature law made and applied by judges as they decide cases not governed by statues or other o Constitutions taking actions or passing current laws o Statutes o Common Law types of laws o Equity Functions of law o Peace keeping o Checking government power and promoting personal freedom o Facilitating planning and the realization of reasonable expectations o Promoting economic growth through free competition o Promoting social justice o Protecting the environment courts find the appropriate legal rules in prior cases called precedents stare decisis o The natural ambiguity of language serves as on reason courts face difficulties when interpreting statues Case law reasoning Statutory interpretation Limits on the power of courts o Limited to deciding existing cases or controversies o Parties must have standing direct interest in the outcome to sue o Written opinions expose judges to criticism o Can be over ruled by higher court I will not ask specific questions about the cases in the chapter but you should understand the reasons for the courts decisions Chapter 2 The Corporation and Its Stakeholders Stakeholder theory of the firm compared to ownership theory o Stakeholder theory corporations serve a broad public purpose which is to create value for the society Aid shareholders and society too o Ownership theory of firm the firm is seen as the property of its owners Purpose is to maximize its long term market value Owners interests are paramount and take precedent over interest of others Stakeholder concept o A stakeholders is someone affected by business o Business are embedded in networks that involve many stakeholder groups people affected by the business but not engaging economically Nonmarket stakeholder sometimes called secondary stakeholders Media community Employee customers Market stakeholder engages in economic transaction sometimes called primary stakeholder Stakeholder analysis managers way to identify relevant stakeholders and understand them o WHO are relevant stakeholders groups that will be affected o WHAT is the interest what do they want o WHAT is the power of each stakeholder economic political legal o HOW are coalitions likely to form form groups to pursue common interest Stakeholder salience and mapping o Salience stakeholders with greater importance stand out Power Legitimacy Urgency Discussion case A Brawl in Mickeys Backyard o Company wanted to build affordable housing on land designated for resort o Disney fought back even though their workers have a hard commute and miserable housing o Disney wins and company can not build on land Chapter 14 Ethics and Ethical Reasoning Meaning of ethics o Conception of right and wrong conduct Business ethics o Application of general ethical ideas to business behavior o NOT a special set of ideas different from ethics in general Why should business be ethical o Meet demands of business stakeholders o Enhance business performance Use reward system to promote good behavior o Comply with legal requirements U S corporate sentencing guidelines Sarbanes Oxley Act makes ethical standards really high o Prevent of minimize harm o Promote personal morality Stop toxic waste dumping or outright greed Pressure to contradict personal standards Why ethical problems occur in business o Personal gain and selfish interest o Corporative pressure on profits o Conflicts of interest o Cross cultural contradictions ethical relativism Managers moral development and stages of moral development o Managers Values Managers set the ethical tone for the company Corporate scandals have led to a crisis of confidence in business leadership o Stages of Moral Development Earliest stage of reasoning 1 and 2 are EGO centered Stage 3 is GROUP CENTERED Stage 4 is SOCIETY and LAW CENTERED Model of how individuals grow and mature in relationship to morals Most developed stage 5 and 6 is PRINCIPLE CENTERED Most managers make decisions based on criteria in stage 3 and 4 o Virtue ethics pursuing a good life Theory based on vales and personal character Focuses on character traits a good person should have o Utilitarian company benefits VS costs Overall amount of good that can be produced by action or decision Like a cost benefit analysis Can be social costs economic or human Analyzing ethical problems in business four methods of ethical reasoning discussed in text virtue utilitarian rights justice o Rights determining and protecting entitlements Human rights are basis to make judgment Difficult sometimes to balance conflicting rights ex honesty vs privacy o Justice is it fair Justices within the work place Concerning fair pay and price Difficult to measure lack of agreement on fair shares Discussion case Warhead Cable o Manager had to test cables o For military use they found that one section did not pass inspection o Was faced with challenge of reporting the truth when boss said not to o Whistle blowing Chapter 9 Case 2 The Collapse of Enron Know the facts of the case well enough to answer questions about it Chapter 12 Corporate Social Responsibility Corporate power and responsibility o Corporate power society based on their organized resources refers to the capability of corporations to influence government the economy and Large corporations have extensive power economically socially legally Can be positive or negative effects says in the long run those who do not use power in ways that society idea that the wealthiest members of society should be charitable to those less belief they have an obligation to see that everyone especially people in need o Iron Law of Responsibility considers responsible will tend to lose it Meaning of corporate social responsibility o Charity principle fortunate should benefit from the firms actions Balancing economic legal and social responsibilities o Stewardship principle o Enlightened self interest o Legal requirements versus CSR Arguments for and against CSR o FOR CSR Balances corporate power with responsibility Discourages government regulations o AGAINST CSR Promotes long term profits for business Improves business value and reputation Corrects social problems caused by business Lowers economic efficiency and profits Imposes unequal cost among competitors Imposes