MAN4701 Business and Society Exam 1 Summer 2015 Study Hints Instructions The exam consists of 25 multiple choice questions and it is worth 50 points Choose the best response for each question Chapter 1 General Systems Theory introduced in 1940s We borrow General Systems Theory GST from biology to explain the business and society relationship first Theory posits that organisms cannot be understood in isolation even though they have clear boundaries they can only be understood in relationship to their surroundings Interdependence of Business and Society Business Any organization that is engaged in making a product or providing a service for a profit Society Human beings and the social structures they collectively create Business and society are highly interdependent Stakeholder Interests Stakeholder Analysis Question 2 What are the interests of each stakeholder Analyzing stakeholder interests includes addressing What are the groups concerns What does the group want expect from their relationship with the firm Examples Stockholders have an ownership interest they expect to receive dividends and capital appreciation Customers are interested in gaining fair value and quality in goods and services they purchase Public interest groups advance broad social interests Stakeholder Power Stakeholder Analysis Question 3 What is the power of each stakeholder Stakeholder power is the ability of a group to use resources to make an event happen or to secure a desired outcome There are 4 types of stakeholder power Voting power Economic power Political power Legal power Informational power Chapter 2 Performance Expectations Gap Discrepancy between what stakeholders expect and what an organization is actually doing Important to identify emergent expectations as early as possible Doing so can gain the company competitive advantage Failure to understand stakeholder concerns and to respond appropriately will Cause the performance expectations gap to grow The larger the gap the greater the risk of stakeholder backlash or missing a major business opportunity Figure 2 1 Environmental Scanning Consists two of parts Environmental analysis A method managers use to gather information about external issues and trends so they can develop an organizational strategy that minimizes threats and takes advantage of new opportunities Environmental intelligence The acquisition of information gained from analyzing the multiple environments affecting organizations Issues Management Process Five step process used to address emerging issues 1 Identify Issue Anticipating emerging concerns or horizon issues 2 Analyze Issue organization 3 Generate Options 4 Take Action 5 Evaluate Results Evaluating the issue coming to an understanding of how it will evolve and how it will affect the Evaluating action options involves complex judgments that take into account non quantifiable factors like the company s reputation Once option is chosen must design and implement it Must assess results of the program and make adjustments as needed Chapter 3 Iron Law of Responsibility responsible will tend to lose it Iron law of responsibility says that in the long run those who do not use power in ways that society considers Given the virtually immeasurable power in the hands of the leaders of large global corporations stakeholders throughout the social system expect business to take great care in wielding its power responsibly for the betterment of society CSR The Meaning of Corporate Social Responsibility A corporation should act in a way that enhances society and its inhabitants and be held accountable for any of its actions that affect people their communities and their environment It implies that harm to people and society should be acknowledged and corrected if at all possible It may require a company to forge some profits if its social impacts seriously hurt some of its stakeholders or if its funds can be used to have a positive social impact The Origins of Corporate Social Responsibility In the United States the idea of corporate social responsibility appeared around the start of the 20th century Faced with social protest a few farsighted business executives advised corporations to use their power and influence voluntarily for broad social purposes rather than for profits alone Phases of Corporate Social Responsibility Frederick provides expanded framework for understanding the evolution of CSR concept Divided into 4 phases Corporate social stewardship 1950s 1960s Corporate social responsiveness 1960s 1970s Corporate business ethics 1980s 1990s Corporate global citizenship 1990s 2000s Relationship between CSR and Financial Performance Corporations try to find creative ways to not only maximize their financial performance but also maintain a satisfactory level of Corporate Social Responsibility through the outreach they do environment they support and information they provide Finding that balance is the key About three fourths of employees surveyed in 2007 believe their firms are considering the environment employee well being and the interests of society and the community Chapter 4 Ethics Why And Basis for adult decision making Five Key Reasons Business Should Be Ethical To meet demands of business stakeholders Meeting demands of stakeholders is good business To enhance business performance Research shows linkage between ethically responsible behavior and favorable corporate financial performance Imparts trust promoting positive alliances among business partners To comply with legal requirements Two legal requirements provide direction for companies interested in being more ethical in their business operations U S Corporate Sentencing Guidelines Sarbanes Oxley Act of 2002 Although they apply only to U S based firms these legal requirements also provide a model for firms that operate outside the United States To prevent or minimize harm Overriding principle that business should do no harm Examples include not harming society with toxic waste protecting business from unethical employees and unethical competitors To promote personal morality Knowing one works in a supportive ethical climate contributes to sense of psychological security People want to work for companies that do the right Thing Why Ethical Problems Occur in Business Four Primary Reasons Personal gain and selfish interest Competitive pressure on profits Conflicts of interest Cross cultural contradictions Figure 4 3 Cross Cultural Contradictions Company s interests versus