MAN4701 Study Guide for Test 3 1 Refers to the increasing movement of goods services and capital across national borders Book Material Chapter 6 Globalization The factors that have led to the Acceleration of Globalization 1 Technological innovation 2 Transportation systems 3 The rise of major transnational corporations 4 Cultural convergence 5 Social and political reforms 6 The rise of international financial and trade institutions Benefits associated with Globalization Increases economic productivity 1 2 Reduced prices for consumers 3 Gives developing countries access to foreign investment funds to support economic development 4 Transfers technology 5 Spreads democracy and freedom and reduces military conflict Costs associated with Globalization 1 Causes job insecurity 2 Weakens environmental and labor standards 3 Prevents individual nations from adopting policies promoting environmental or social objectives if these discriminate against products from another country 4 Erodes regional and national cultures and undermines cultural linguistic and religious diversity 5 Is compatible with despotism Chapter 14 What rights do shareholders have in a corporation 1 To received dividends if declared 2 Right to vote 3 To receive annual reports on the company s financial condition 4 To bring shareholder suits against the company and officers 5 To sell their own shares of stock to others The rise of institutional investors Social investment o Stock screening o Social responsibility shareholder resolutions Stockholder lawsuits Chapter 15 In what ways has Shareholder Activism attempted to influence the behavior of Corporate Boards MAN4701 Study Guide for Test 3 2 What reasons have given rise to the consumer movement 1 Complex products have enormously complicated the choices consumers need to make when they shop 2 Services as well as products have become more specialized and difficult to judge 3 When businesses try to sell either products or services through advertising claims may be inflated 4 Technology has permitted businesses to learn more than ever about their customers potentially of they may appeal to emotions violating their privacy 5 Some businesses have ignored product safety How have the five rights of consumers been reflected in the Goals of Consumer Laws Five Rights of Consumers 1 The right to be informed 2 The right to safety 3 The right to choose 4 The right to be heard 5 The right to privacy 1 Better information while making purchases 2 Protect consumers against possible hazards 3 Promote competitive pricing 4 Promote consumer choice 5 Protect privacy Chapter 16 What rights do employees have in the workplace 1 Right to organize and bargain 2 Right to a safe and healthy workplace 3 Right to privacy 4 Duty to discipline fairly and justly 5 Right to blow the whistle 6 Right to equal employment opportunity 7 Right to be treated with respect for fundamental human rights What current issues with regard to employee privacy have caused controversy Electronic monitoring Office romance Drug use and testing Alcohol abuse Employee theft and honesty testing MAN4701 Study Guide for Test 3 3 Lecture Notes 10 Multi national Business Relationships Three Parties Who May Have Significant Interests in an International Business Venture 1 The Multinational Corporation MNC 2 The Host Country often Economically under developed 3 The Home Country Economically Developed Benefits Typically Sought by the MNCs Raw Materials New Markets Lower cost Labor o Efficiencies Operating Efficiencies Administrative Efficiencies o Network Relationships with Other MNCs Interests of Less developed Host Country Often Include Income Security Allies Economic Development Diplomatic Influence Respect for their Culture and Citizens Interests of the Home Country May Include Effect on Domestic Economy Diplomatic Interests Security 11 Shareholder Issues The Role of The Board of Directors relationship between the Board and Top Management Supervisory Board actively engages Management as representatives of the shareholders Consultative Board generally defers to Management but holds them accountable Protective Board trusts the CEO and is more likely to defend Management than challenge them Subservient Board is dominated by the CEO and goes along with whatever the CEO wants Specific Issues of Shareholder Concern 1 Executive Compensation a Excessive compensation b Not connected to performance 2 Failure to address problems that threaten the firm 3 Failure of Boards to detect prevent illegal or improper acts by Top Managers 4 Board actions that protect the Top Management and others at the shareholders expense MAN4701 Study Guide for Test 3 4 Why Some Boards are Dominated by the CEO 1 The CEO is also Chairman of the Board 2 The Composition of the Board Inside Directors Members of the Top Management team Related Outside Directors CEOs of other firms with significant business ties to the Company Unrelated Outside Directors Anyone else Includes experienced executives as well as people with no unique business qualifications 3 Ability of the Board to control Elections and Proxies 12 Consumer Issues Product Liability The contract model and tort model Know the 5 bullet points Differences Between the Contract Model and the Tort Model Contract Model 1 Principle Courts have the authority to enforce contracts 2 Grounds for suit generally limited to failure to comply with obligations Warranty implied or express 3 Potential Defendants parties to the contract usually seller 4 Potential Plaintiffs parties to the contract usually single party because each purchase is a 5 Recovery Normally limited to Economic Losses Plaintiff may ask that defendant be compelled separate contract Legal representation is pay as you go to comply with contract Tort Model 1 Principle Courts have authority to right wrongs 2 Grounds for suit defendant displayed Intent to harm or permit harm to occur Reckless disregard Negligence Strict Liability some cases 3 Potential Defendants anyone with responsibility doctrine of Joint and Several Liability 4 Potential Plaintiffs may be single party or a class of people who alleged the same harm Class action suits permitted Contingency fee representation possible 5 Recovery May include Compensatory Damages Economic Noneconomic based on the Plaintiff s harm Punitive Damages based on the Defendant s behavior 13 Employees Changing World Changing Relations Changes that Have Affected the Relationship 1 Globalization of industries and Markets 2