New User Special Price Expires in

Let's log you in.

Sign in with Facebook


Don't have a StudySoup account? Create one here!


Create a StudySoup account

Be part of our community, it's free to join!

Sign up with Facebook


Create your account
By creating an account you agree to StudySoup's terms and conditions and privacy policy

Already have a StudySoup account? Login here


by: Gustavo Heinert Amador

Slides Bus-G 202

Gustavo Heinert Amador
Business, Government, and Society

Almost Ready


These notes were just uploaded, and will be ready to view shortly.

Purchase these notes here, or revisit this page.

Either way, we'll remind you when they're ready :)

Preview These Notes for FREE

Get a free preview of these Notes, just enter your email below.

Unlock Preview
Unlock Preview

Preview these materials now for free

Why put in your email? Get access to more of this material and other relevant free materials for your school

View Preview

About this Document

Business, Government, and Society
Study Guide
50 ?




Popular in Business, Government, and Society

Popular in Department

This 46 page Study Guide was uploaded by Gustavo Heinert Amador on Monday February 16, 2015. The Study Guide belongs to Bus-G 202 at Indiana University taught by Kreft in Fall2014. Since its upload, it has received 301 views.


Reviews for Slides


Report this Material


What is Karma?


Karma is the currency of StudySoup.

You can buy or earn more Karma at anytime and redeem it for class notes, study guides, flashcards, and more!

Date Created: 02/16/15
Topic 1 PEST Framework and Non Market Stakeholders CASE Farming Pharmaceuticals Ventria Bioscience and the Controversy over PlantMade Medicines Online Ventria Bioscience Case Discussion 96 99 lnclass Ventria Bioscience Case Debriefing 910 III SCHOOL OF BUSINESS INDIANA UNIVERSITY 6202ontheBEA T Ill INDIANA UNIVERSITY Corporate Social Strategy Competition in the marketplace tends to school managers to think in terms of outcomes Profits Sales Market Share Etc However in interactions with nonmarket players processes gaIn In relative Importance Oversight Quality Assurance Social Welfare Etc Corporate Social Strategy Integrate nonmarket forces Political Economic Social and Technological into your market strategy For example Evaluate current and proposed government regulations or monitor nongovernmental organization NGO activity and changing social demands III INDIANA UNIVERSITY P E S T Framework NonMarket Strategy Political H Economic V Social Technology gt gt V Integrated Strategy Ill INDIANA UNIVERSITY Mini Case BP s Integrated Strategy In the early 21t century BP made two strategic acquisitions ARCO oil and gas and SOLAREX solar energy The Solarex acquisition made BP Solar the largest solar energy company in the world BP launched the Beyond Petroleum campaign and began rebranding with the HeHoslogo bp What was BP s motivation Ill INDIANA UNIVERSITY Beyond Petroleum Profit Drivers First mover advantage into new growing market Enhance brand equity and corporate reputation Differentiate from competitors and expand franchises Tap into new customer segments price still most important Employee retentionrecruiting concerns Attract greenlsociallyresponsible investors SRls Manage regulatory risks Preempt stall or shape future regulation Take advantage of government subsidies llooolo o I L O Ill INDIANA UNIVERSITY Beyond Petroleum Risks Heightened public expectations especially from NGOs Greenpeace awarded BP the Greenwash of the yean 45 million spent on Solarex while 265 billion spent on ARCO 588 times more And 207 million spent on Helios rebranding badople Brandweek wrote BP will be beyond petroleum the day that AnheuserBusch is beyond beer Ill INDIANA UNIVERSITY Market Efficiency and Social Regulators NGOs usually take political or direct action when market inefficiencies exist Lack of property rights market power abuses quality concerns externalities pollution etc Public policy changes can either correct existing inefficiency or it can be the cause of inefficiency gas first define the socially efficient production level e 1Produce and sell product that consumers value more than the costs of production 2Avoid producing and selling product that consumers value less than the costs of production Ill INDIANA UNIVERSITY Markets and Efficiency Demand and Supply capture all the metrics needed to gauge social efficiency Demand is based on the Value to Consumers Consumer Surplus Difference between what customers are willing to pay and the price they have to pay Supply is based on the Cost to Producers Producer Surplus Difference between the price sellers receive and the minimum supply price needed to cover costs Social efficiency occurs at the market equilibrium if all costs and value are accounted for in the DampS curves Eli INDIANA UNIVERSITY Markets and Social Efficiency S Productive Costs pe At Qe Social 5 5 E ffi ci en c y Occurs E E 5 D Consumer Value 01 Qe oz 0 39 Q1 Below Qe you are giving up producing some units that are valued more than their productive costs 39 02 Beyond Qe you are producing in a range where the units are valued less than their productive costs Ill INDIANA UNIVERSITY The Effects of Taxes Taxes imposed on sellers cause an inward shift of the supply curve decreased supply Taxes on sellers raise the costs of production General Results of a tax Government revenue is collected Increased prices to buyers Consumer surplus decreases Decreased prices to sellers Producer surplus decreases Reduced quantity bought and sold Taxes are efficiency enhancing in markets that are producing over social efficient point 9 02 III INDIANA UNIVERSITY The Effects of Subsidies Subsidies given to sellers cause an outward shift of the supply curve increase supply Subsidies given to sellers effectively lower the costs of production General Results of a subsidy Decreased prices to buyers Consumer surplus increases Increased prices to sellers Producer surplus increases Increased quantity bought and sold Subsidies are efficiency enhancing in markets that are underproducing over social efficient point 9 Q1 Ill INDIANA UNIVERSITY The Effects of Productive Regulation Productive Regulation on sellers cause an inward shift of the supply curve decreased supply The regulation causes sellers to incur higher operating costs compliance costs General Results of a productive regulation Increased prices to buyers Consumer surplus decreases Decreased prices to sellers Producer surplus decreases Reduced quantity bought and sold Productive regulations are efficiency enhancing in markets that are in Q2 overproducing 9 pollution lillllllllllllq a l Ill INDIANA UNIVERSITY Public Sector Government Participants Voters are assumed to be Rationally Ignorant It is costly for you to become informed on most political issues It is not likely that your individual vote will make a difference Politicians elected officials are assumed to be Vote Maximizers Regardless of their ultimate motivation the ability of politicians to achieve their goals depends on their election or reelection Thus Politicians try to provide information about themselves and their rivals at no charge to voters Bureaucrats civil servants are assumed to be Budget Maximizers Bureaucrats are not elected but are hired into office much like what occurs in the private sector Bureaucrats seek promotions higher pay prestige job security etcwhich all become more possible with a bigger budget III INDIANA UNIVERSITY Possible Public Sector Inefficiency The Shortsightedness Effect Lack of Operational Efficiency LobbyingRent Seeking The Special Interest Effect III INDIANA UNIVERSITY The Shortsightedness Effect Politicians support projects that have Clearly defined current benefits and future costs that are difficult to identify Maximized influence on current voters at the expense of future generations Politicians are biased towards such projects even when they are inefficient Ill INDIANA UNIVERSITY Operational lnefficiency The public sector has no profit motive Reduces the incentive of government to keep costs low Bureaucrats are seldom in a position to personally gain from reducing costs The Office Surplus httpllvimeocoml27060669 Since bureaucrats spend other people s money they are less conscious of costs than if it were their own money Evolution of the Police Car httpllwwwyoutubecomlwatchvtsAW4J4W93Mampfez Ill INDIANA UNIVERSITY LobbyingRent Seeking LobbyingRent Seeking devoting resources to influence public policy formation in order to bring more income to your interests The cost of lobbying can produce significant inefficiencies if its main affect is solely income redistribution Function of Lobbyists Find political opportunities and threats Inform politicians and influence public opinion Form coalitions identify groups with similar interests Ill INDIANA UNIVERSITY The Special Interest Effect Special interest effect Small group of people receive benefits at the expense of a large group Large widely dispersed groups rarely gain political power The individual costs of taking action often exceed the potential individual benefits Small concentrated groups can gain political power The individual benefits of taking action often exceed the potential individual costs III INDIANA UNIVERSITY Costs Opposition Types of Political Action Benefits Support W ldely Concentrated Dispersed Widely Majorltarlan Client Dispersed Concentrated Entrepreneurial Interest Group Ill INDIANA UNIVERSITY Types of Political Action 1 Majoritarian Politics No special interest groups take action on either side of the issue Example Social Security Lobbying does not occur 2 Client Politics One special interest group is active in favor of an issue Example USDA Foreign Advertising Funds MAP httpllwwwfasusdagovlprogramsmarketaccessprogrammaplmapfundingallocationsfy2013 Lobbying will likely be succesful Ill INDIANA UNIVERSITY Types of Political Action 3 Interest Group Politics Active special interest groups are on both sides of theissue Example Legalizing Marijuana Outcomes depend on the relative strenght of lobbying 4 Entrepreneurial politics One special interest group is active against an issue Example Nuclear waste dumps Succesful lobbying will be costful Ill INDIANA UNIVERSITY Farming Pharma Case Detail the major adversarial stakeholders that are threatening the positioning and development of Ventria Bioscience Try to gauge how much leverage you think each adversary has over the issue of GM rice being grown in California And make sure to detail who you think is the biggest potential threat Detail the major stakeholder allies that could rally around Ventria Bioscience and support its advancement going forward with GM rice Try to gauge how much influence you think each potential ally would have over the issue of GM rice being grown in California And make sure to detail who you think is the biggest potential ally What type of political issue is GM rice being grown in California Majoritarian Client Entrepreneurial or Interest Group Ill INDIANA UNIVERSITY Farming Pharma Case How would you develop a campaign in California to push for future approval of Ventria s GM rice Make sure to specifically detail the steps you would take to try and secure approval in California Also state what you think is the likely probability of success in securing production rights in California Would the company s resources be better spent elsewhere Thinking generally about developing Ventria s GM rice business model further what are the options that you feel are open to Ventria Make sure to discuss the strengths and weaknesses of the option that you feel is most appropriate for Ventria to pursue and defend why your chosen option is the most optimal Case Update on next slide will be updated in the posted slides after our inclass case debriefing Topic 2 Global IP Management in the Face of Weak Property Right Regimes CASE Online Music Distribution in a PostNapster World Online Napster Case Discussion 918 921 lnclass Napster Case Debriefing 922 w SCHOOL OF BUSINESS INDIANi UNIVERSITY 6202ontheBEAT Ill INDIANA UNIVERSITY I Three types of Property Communal PropertLRights No single owner everyone has access while it lasts Overutilization occurs and no one has incentive to conserve for the future Government PropertLRights Property decisions made by a small group of elected political representatives Secure Private PropertLRights give property owners incen veto create value with property benefit others maintain property and conserve for the future innovate and create new technologies Engage in voluntary exchange Ill INDIANA UNIVERSITY 39 Intellectual Property IP Rights Patent Right to exclude all others from using producing or selling an invention Examples pharmaceutical drugs manufacturing equipment home appliances Trademark a word name symbol or device that is used in trade with goods to indicate their source Used to distinguish goods from competitors Copyright Right to exclude all others from reproducing distributing or performing a work Examples writings software music art movies tv programs Ill INDIANA UNIVERSITY Gary Becker s Criminal Decision Rule Assume an individual with an annual income of 30000 Yo is considering committing a crime with a payoff of 15000 G The individual has a 13 chance of getting caught 11 and if he does he will get fined 9000 F Current Utility 2 YO Expected Utility 2 1 7TYO G 7TYO F Current Utility U 30000 Expected Utility EU 113300001500013300009000 EU 23450001321000 37000 Commit crime if expected utility from committing the crime is greater than the current utility EUgtU Commit Don t commit crime if expected utility from committing the crime is I H II I I E H I I I Ill INDIANA UNIVERSITY Variables of Interest The size of the punishment F Strategic Variable for government y g The probability of being caught 11 5 g l Government can affect this with technology Criminals can affect this with their technology Payoff of the crime G Once a particular crime is chosen the payoff is fixed so this is not considered strategic to anyone Income Y Changes in Income do not affect the decision to Eli INDIANA UNIVERSITY Example Fake IDs Punishment Response Many bars are beginning to use ID scanning devices which increases the probability of minors to get caught Response Fake ID manufacturers are investing in more advanced forging devices Ill INDIANA UNIVERSITY I Example Online File Sharing Probability of being caught Can the government significantly affect this with hundreds of millions of global users NOglobal enforcement is the problem Copyright protection stops at a country s borders unless other countries grant reciprocal protections Targeting individual users comes with very high enforcement costs So for the average user the probability of getting caught is pretty close to zero INDIANA UNIVERSITY The Problem is Enforcement The primary source ot irrerrlg r released pirated movies come from thieves who camcord films in theaters Illegallyr recorded lmlovies are then sold to quotReplicatorsquot who rapi lllr produce millions of pirated DVDs and to quotRelease Groupsquot who distribute them around the world throuh computer sewers known as quotTopsites Facilitators act as Internet directories or search engines to coordinate the mass downloading and exchange of pirated content between downloadlers Release Groupsquot are individuals who obtain pirated content from suppliers and are the first source ot piracyr Oh the Internet Release groups put pirated movies Oll lt clusters of high speed computers known as 39quotT39opsitesquot The extraordinary slpeed and power of a Topsite trigers the avalanche that is global ilnternet piracy A downloader transfers illegal copies of movies from the internet to his or her compute The peeratospeer software commonly used lay downloaders enables them to instantly share their content with other downlloaders which greatlyr accelerates the global spread of pirated movies 2011 INTERNATIONAL PRORERTY RIGHTS INDEX RANKING BY QUINTILE it Greenland Norway 39 39I I ll 1 Damnark I MIL Mongolia 7 Pom al I Korea Umlecl States a g I 39 imKorea Morocco a I 39 Bahama Western Sahara quot739 alxjren f 39 39 chcupied by Morocco 7 1 u a II I I up Dum mchpuIJhc 39 elizeh quot 1 u M11515 u I I I mums 39 IIAPEVEY IQI SMEH I hdlppmes UMIBETEAIVMB Nicaragua I I I mb n I Viemam I 39 II Pmma Fmdadam39lahagu II a m 39 Costa 39 I Guyana II I 39 L V I 39 1 mm Sierra Leena I I palau39 men mm mm 39 I 301113113 Sri Lanka klalavsigmn 39 i 39 39 39 A I E f I quCUadm I If I molumtmwdihnfn39 II II I I I quot I H 39 39 Itdonesm Chile 39 Ma dagascar N ew Zealand Top 20 percent Bottom 20 Percent Ill INDIANA UNIVERSITY Interesting Data Source The following website allows you to view the data behind the world map shown in the previous slide httpIlwwwinternationalpropertyrightsindexorglranking You can look at regions and individual countries Also property rights are broken down into Legal and Political Environment Physical Property Intellectual Property Gender Equality analyzed in limited countries Ill INDIANA UNIVERSITY I Example Online File Sharing Punishments fine per song ranges between 750 and 150000 RIAA mission make examples of the few that go to trial in order to deter others Minnesota resident Jammie ThomasRasset 2007 1st jury trial 220000 for 24 songs 2009 2nd jury trial 192 million judgereduced to 54000 2010 3rd jury trial 15 million judgereduced to 54000 2012 appeals court reinstated the original 222000 The Obama Administration has publically supported the ruling with a brief sent to the Supreme Court Boston University Student Joel Tenenbaum 2009 1st jury trial 675000 for 30 songs judgereduced to 67500 later overturned and 675000 reinstated 2011 2012 amp 2013 appeals denied 675000 upheld Ill INDIANA UNIVERSITY I The Napster Case How did Napster start and what was its business model What were some of the characteristics of the average Napster user Also describe how the Napster technology worked and think about the role of the central server Available folders file sharing What arguments and evidence did the RIM use against Napster in its lawsuit What did Napster base its defense on Which side did the courts support Violated copyright protection and piracy Are there other Napsters out there and available to users now If yes how do they differ from the original Napster and how are they able to exist yes pure peer to peer Ill INDIANA UNIVERSITY I The Napster Case What is the recording industry doing now to combat the ongoing existence of online file sharing of music Among other things make sure to think about the fee based services offered by the recording studios and give reasons for why they failed to gain popularity Going beyond your reading of the case think about how the popularity of iPods and other iDevices is related to the existence of online file sharing cites Are the sales of iDevices just driven by sales of music through i Tunes Finally assess what type of political issue online file sharing can be classified asDefine the political action as making online file sharing illegal and develop the cost benefit structure of that action Topic 3 NonMarket Strategy and International Expansion Case Genicon A Surgical Strike into Emerging Markets Online Genicon Case Discussion 927 930 lnclass Genicon Case Debriefing 101 III OF BUSINESS INDIAN UNIVERSITY 6202ontheBEAT Ill INDIANA UNIVERSITY Economic Profits Revenue price times the quantity sold Costs explicit costs plus implicit costs Explicit costs when a monetary payment is made Example Wages paid to labor Implicit costs involve the firm s resources but do not have a monetary payment Example Opportunity cost of the owner s investment Economic profit Revenues minus all costs Implicit costs are calculated as a normal rate of return Normal rate of return what firms could get by investing in businesses with similar risk LII INDIANA UNIVERSITY Role of Entrepreneurs 39 Entrepreneurs take risk in order to find what ventures are profitable Entrepreneur someone who tries to exploit 39 opportunities that exist within markets 39 Offer new products or open new markets Create a lower cost technology Find new resources lntrepreneur an entrepreneurial individual that is employed by a firm Needed to keep ahead of rival firms Needed to improve overall efficiency An effort to keep the brightest minds within the corporation Incentive to incorporate more profitable projects Ill INDIANA UNIVERSITY Economic Freedom Entrepreneurs and Economic Growth There is a positive link between economic freedom and economic growth Economic Freedom highest with low taxes low regulation property rights and consistent legal structure Economic freedom creates an environment that is conducive to entrepreneurship Then increased entrepreneurship leads to economic growth Ill INDIANA UNIVERSITY Economic Growth and Creative Destruction Creative Destruction When entrepreneurial change makes older industries or technologies become obsolete Efficiency enhancing Less efficient industries die off and free resources that can go to new more efficient industries hirij 39 Hum quot 731 ll 5 39I l r l lt 1 Ii 7 7 l iquot 3H at I L 55 i U quotquot 39 I b 7 gt4 Government can block creative destruction by enacting policies to protect dying industries Ill INDIANA UNIVERSITY Conflict of Interest When a professional individual has a private interest sufficient enough to influence the pursuit of their official duties Key elements Professional Personal Interest Official duty III INDIANA UNIVERSITY Types of Conflict of Interest SelfDealing Use your position to secure personal benefits Influence PeddlingUse your position to secure benefits for a third party anyone who is not yourself Accepting Benefits Receiving bribes or nonmonetary gifts Misuse of Inside Information Misusing Confidential Information Ill INDIANA UNIVERSITY Types of Conflict of Interest Misuse of Employer s property Personally gaining from employers property without consent Outside Employment or MoonlightingHolding multiple employment positions at one time which biases professional behavior PostEmployment Holding a sequence of employment positions where you carry a bias from one job to the next Ill INDIANA UNIVERSITY Transparency International Corruption is the abuse of entrusted power for private gain Pett Corruption Decisions made by lowlevel bureaucrats 39 Often centered on localregional regulations licenses or discretionary spending Grand Corruption Decisions made by highlevel politicians Often centered on national policy formation infrastructure decisions military equipment procurement or allocation of subsidies Perceptions of Corruption Sand Corruption is associated with 1 reduced GDP growth 2 reduced foreign direct investment3 increased income inequality and 4 a misallocation of government property OiCorruption helps to speed up commerce in an environment controlled by heavy bureaucracy and excessive regulation Ill INDIANA UNIVERSITY The Genicon Case In the relevant time period 2009 which of the BRIC markets Brazil Russia India China looks most attractive based on Medical Device Market market size demand and forecasted growth factors Market Potential Index for Emerging Markets httpglobaledgemsueduKnowledgeToolsMPl Economic Freedom httpwwwheritageorglndex Corruption Perceptions httpwwwtransparencyorgpolicyresearchsurveysindicescpiZO1O Property Protection httpwwwinternationalpropertyrightsindexorg How should these different market and nonmarket factors be integrated into Genicon s expansion decision Case Update will be posted after our case debriefing


Buy Material

Are you sure you want to buy this material for

50 Karma

Buy Material

BOOM! Enjoy Your Free Notes!

We've added these Notes to your profile, click here to view them now.


You're already Subscribed!

Looks like you've already subscribed to StudySoup, you won't need to purchase another subscription to get this material. To access this material simply click 'View Full Document'

Why people love StudySoup

Bentley McCaw University of Florida

"I was shooting for a perfect 4.0 GPA this semester. Having StudySoup as a study aid was critical to helping me achieve my goal...and I nailed it!"

Amaris Trozzo George Washington University

"I made $350 in just two days after posting my first study guide."

Jim McGreen Ohio University

"Knowing I can count on the Elite Notetaker in my class allows me to focus on what the professor is saying instead of just scribbling notes the whole time and falling behind."


"Their 'Elite Notetakers' are making over $1,200/month in sales by creating high quality content that helps their classmates in a time of need."

Become an Elite Notetaker and start selling your notes online!

Refund Policy


All subscriptions to StudySoup are paid in full at the time of subscribing. To change your credit card information or to cancel your subscription, go to "Edit Settings". All credit card information will be available there. If you should decide to cancel your subscription, it will continue to be valid until the next payment period, as all payments for the current period were made in advance. For special circumstances, please email


StudySoup has more than 1 million course-specific study resources to help students study smarter. If you’re having trouble finding what you’re looking for, our customer support team can help you find what you need! Feel free to contact them here:

Recurring Subscriptions: If you have canceled your recurring subscription on the day of renewal and have not downloaded any documents, you may request a refund by submitting an email to

Satisfaction Guarantee: If you’re not satisfied with your subscription, you can contact us for further help. Contact must be made within 3 business days of your subscription purchase and your refund request will be subject for review.

Please Note: Refunds can never be provided more than 30 days after the initial purchase date regardless of your activity on the site.