Test 1 G202 Study Guide
Test 1 G202 Study Guide BUS G 202
Popular in Business, Government, and Society
BUS G 202
verified elite notetaker
Popular in Business
This 14 page Study Guide was uploaded by Kaitlyn Palmer on Thursday February 19, 2015. The Study Guide belongs to BUS G 202 at Indiana University taught by Ellie Mafi-Kreft in Spring2015. Since its upload, it has received 458 views. For similar materials see Business, Government, and Society in Business at Indiana University.
Reviews for Test 1 G202 Study Guide
Woah...are you an angel? Please tell me you're going to be posting these awesome notes all semester...
Exactly what was taught so far in class
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: 02/19/15
Test 1 G202 Study Guide Topics 13 Topic 1 PEST Framework and NonMarket Stakeholders Case quotFarming Pharmaceuticals Ventria Bioscience and the Controversy over PlantMade Medicines Corporate Social Strategy 0 Competition in the marketplace makes managers think in outcomes pro ts sales market share 0 Processes gain in importance with nonmarket players oversight quality assurance social reputation 0 Corporate Social Strategy Integrate nonmarket forces PEST into your market strategy 0 Nonmarket opportunities to exploit mitigate nonmarket risks PEST Framework 0 Political Economic Social Technology NonMarket Strategy Firm and Market Strategy Integrated Corporate Social Strategy Case BP s Nonmarket Integration 0 BP acquires ARCO oil gas and SOLAREX solar energy 0 Making them the largest solar energy company and oil gas recovery company 0 How to proceed o Launched the Beyond Petroleumquot campaign amp rebranded with new Helios Sun God logo Pro t Drivers 0 Customers caring about the brand of Oil Gas 0 Gas is a commodity making price and convenience important Enhanced corporate brand differentiates and leads to more franchise openings 0 Employees Reputation of who they work for to be the number 1 energy company attract workers 0 Investors More and more SRIs Sociallyresponsible investors High returns with no guilt 0 Policy Makers Industry leaders in uence E new policy is written and shape how it is written Proactive selfregulation can preempt the need for regulation Industry leaders give testimony on new regulation and feasibility BP creates RPS Renewable Portfolio Standard Policies meaning they make states have solar their specialty required Risks o NGOactivists had heightened public expectations 0 Received the Greenpeace Greenwash of the year award nega ve Invested a lot more in ARCO marketing Market Ef ciency and Social Regulators Market Output The amount decided to be produced 0 Business try to be pro t maximizing and not usually socially ef cient NGOs take political direct action when market inef ciencies exist 0 Lack of property rights market power abuses quality concerns externalities incomplete info 0 Public policy changes correct existing inef ciency or can cause inef ciency Socially Ef cient Production Level 1 Consumers value more than the costs of production 2 Avoid producing selling that consumers value less than cost of production Markets and Ef ciency 0 Gauging social ef ciency 0 Demand Based on the value to consumers Consumer Surplus Diff between what consumers are willing to pay and price they have to pay 0 Supply Based on cost to producers Producer Surplus Diff between the price sellers receive and the minimum supply price needed to cover costs 0 Social Ef ciency Occurs at market equilibrium if all costs and value are accounted for in the DampS curve Qe Markets and Social Efficiency P Praduai faa Caata PE quotquotl it Esaciaj E iiaiana y caura l s mmmmmmmmmmmmmm lt L B Canaumar Value W H 391 m ala aF g yxu EII39E Iiuin up prnduainl arna units that ara valued ITI II39E than thEIIl pradIuatiua aaata Q21 ayanld 4 ya are pratilualing in a ralna whara tIh uni a are valued iaaa than than pradluatwe natal Ways the Government Regulates Business The Effects of Taxes 0 Taxes imposed on sellers Inward shift of supply curve decreased supply raising cost of production overall negative for businesses 0 Gov t revenue increases Increased prices to buyers consumer surplus decreases Decreased prices to sellers producer surplus decreases Reduced quantity bought and sold Ef ciency enhancing in markets that are over producing relative to social ef ciency 0000 The Effects of Subsidies 0 Subsidies given to sellers Outward shift of the supply curve increase supply effectiver lower costs of production overall positive for business 0 Decreased prices to buyers consumer surplus increases 0 Increased prices to sellers producer surplus increases 0 Increase quantity bought and sold 0 Ef ciency enhancing in markets that are under producing relative to social ef ciency The Effects of Productive Regulation o Productive Regulation on sellers Inward shift of the supply curve decreased supply overall negative for business 0 Sellers incur higher operating costs compliance costs Increased prices to buyers consumer surplus decreases Decreased prices to sellers producer surplus decreases Reduced quantity bough and sold Productive regulations are ef ciency enhancing in markets that are overproducing relative to social ef ciency 0000 Public Sector Government Participants 0 Voters assumed Rationally Ignorant o Costly to know about political issues individual vote won t make a difference 0 Politicians elected of cers assumed to be VoteMaximizers 0 To carry out goals they must be elected 0 Provide info at low cost to voters 0 Bureaucrats civil servants assumed to be BudgetMaximizers o Hired into of ce like in private sector 0 They seek promotions higher pay Need a bigger budget Possible Public Sector lnef ciency 1 The Shortsightedness Effect 0 Current bene ts future costs dif cult to identify 0 Maximized in uence on current votersexpense by future generations 2 Operational lnef ciency 0 Public sector ahs no pro t motive o Reduces incentive of gov t to keep costs low bureaucrats are not reward from reducing costs 0 Ex If you don t spend your whole budget the Congress will give you less next year from the Of ce 0 Ex Cop car putting extra lights on a cop carjust because 3 Lobbying Rent Seeking o Lobbying Rent Seeking Devoting resources to in uence public policy formation in order to bring more income to your interests 0 Income redistribution occurs inef cient o Lobbyists nd political opportunities threats inform politicians public opinion form coalitions groups with similar interests 0 Ex Not allowed to ship alcohol to other states the liquor stores lobby for this for their pro t margins amp they partnered with Mother s Against Drunk Drivers to make sure underage kids don t get it 4 The Special Interest Effect 0 Special Interest Effect Small groups of people receive bene ts of expense at large groups 0 Individual costs of taking action exceed potential individual bene ts 0 Small concentrated groups can gain political power Types of Political Action rene fs Support Wl39d l 39 I daily E l lh f l E lllEpEfEEd p E in Wildlellyv w a E ML 11 I ll t a tapersz I aquot mquot H E Elnmenlh39allte Enpreneurial 3 Equot I Equot E t 3 Emma Types of Political Action 1 Majoritarian Politics 0 Ex Social Security 0 No special interest groups take action on either side of the issue 0 Lobbying does not occur 2 Client Politics 0 Ex USDA Foreign Advertising Funds MAP 0 Tax payers pay business get because they penetrate foreign markets 0 One special interest group is active in favor of a group 0 Lobbying will likely be successful Types of Political Action ene fs Support Wl39d I 39 1E Ein enlraltedl E lllEpEfEEd E 22 In Widely c e I H L quot 4 Eli t a lispersedl 3 quotaquot E H E l lh39 ll d Enpreneurial fem 3 Emma Types of Political Action Continued 3 Interest Group Politics 0 Active special interest groups are on both sides of the issues 0 EX Legalizing Marijuana NORML versus CALM 0 Outcomes depend on the relative strength of lobbying 4 Entrepreneurial Politics 0 On special interest group is active against an issue 0 0 Ex nuclear waste dumps Successful lobbying will be costly Ventria Case 2 of world production 14 of exports 2nOI or 3rd largest 2 million deaths from diarrhea per year their rice proteins will help 20 person start up company 2000 farmers in California Rice industry makes 500 million Allies o O O O Investors Employees UC Davis Infant Formula Industry World Health Organization UNICEF Red Cross Biotech Association Pharmaceutical Companies 0 CRC ended up siding here 0 Neutral 0 FDA USDA EPA o CADA CRC farmers millers public reps Adversaries 0 Rice Farmers 0 Rice Millers o Exporters of Rice 0 Japanese Retail Association 0 Environmentalists 0 Food Safety Group 0 CADA ended up siding here disagreeing with the CRC 0 Fight for California Compromise for California Run from California 0 Interest Group Politics Update 0 2004 Ventria partnered with Northwest Missouri State University and tried to begin production in the state 0 Anheuser Busch St Louis based announced it would not buy Missouri rice if Ventria is granted access to the state 0 State Legislature pulled funding to the University project 0 2006 Ventria moved to Kansas a nonrice state and proposed a 3200 acre production site in Geary county Junction City 0 City covered most of the start up costs for production and milling 0 Over 1000 public opposition groupsindividuals voiced concern but USDA granted APHIS permits in 2007 and the rst major crop was harvest by the end of 2007 o 2008 forward Ventria has been soidy pro table as product expansion has occurred Topic 2 Global IP Management in the Face of Weak Property Right Regimes Case quotOnline Music Distribution in a PostNapster Worldquot Types of Property Rights 1 Communal Property Rights 0 No single owner everyone has access while it lasts Overutilization occurs no one has incentive to conserve for the future 2 Government Property Rights 0 Property decisions made by a small group of elected political representatives 3 Secure Private Property Rights 0 Give property owners incentive to o Create value with property bene t others 0 Maintain property and conserve for the future 0 Innovate and create new technologies 0 Engage in voluntary exchange 0 Preferred rights where business operate under Intellectual Property IP Rights Patent Exclude others from using producing or selling 0 Ex drugs equipment appliances Trademark Word name or symbol or device used in trade with goods to indicate their source distinguishes goods from competitors 0 Ex Tiffany blue box That s Hotquot Paris Hilton Copyright Right to exclude others from reproducing distributing or performing work 0 Ex writings software music art movies tv programs Gary Becker s Criminal Decision Current U tilily 2 YO Expected Utility 2 1 7139YO G 7139YO F G payoff of crime 0 Once a particular crime is chosen the payoff is xed so it is not considered strategic to anyone 39I39 probability of getting caught 0 Gov t can affect with detection technology 0 Criminals can affect this with their technology F size of the punishment 0 Strategic variable for government Y Income 0 Changes in income to not affect the decision to commit a crime in this simple model Current Utility current satisfaction Commit crime if expected utility from committing the crime is greater than the current utility Don t commit crime if expected utility from committing the crime is less than the current utility lf equal to each other cannot conclude something from it o E Fake IDs Punishment Larger penalties for bars honoring fake IDs 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 advance forging devices 0 E Online File Sharing Probability of being caught Can the govn t signi cantly affect this with hundreds of millions of global users 0 No global enforcement is the problem 0 Copyright protection stops at country borders 0 Targeting individuals have very high cost 0 Average user the probability of getting caught is basically zero Punishment Fine per song bw 750150000 RlAA mission make examples of few that go to trial to deter others 0 Jammie ThomasRasset Minnesota resident Joel Tenebaum Boston University Student 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 0 Shaw Fanning created it in 1999 at Northeastern Shared it with his friends and was the fastest downloaded technology ever Napster user 0 Much more downloaders than up loaders 0 College students male 0 How technology worked 0 Computer to computer using a central server nothing was actually stored in it What arguments and evidence did the RIAA use against Napster in its lawsuit What did Napster base its defense on Which side did the courts support Argued for the Audio Home Recording Act consumers can share music with peers of non commercial uses 0 They had a central service providing a platform not storing it Courts supported legal side and shut Napster down 0 Napster s business model is facilitating user to break the law 0 Users are sharing with thousands not just family and friends outlined in AHRA 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 0 When Napster shut down many other replacements popped up Limewire Gnutella etc have no central server and operate in different places What is the recording industry doing now to combat the ongoing existence of online le sharing of music Among other things make sure to think about the feebased services offered by the recording studios and give reasons for why they failed to gain popularity 0 Made new versions such as PressPlay but not attractive because of restrictions 0 Treated customers as potential criminals not as customers DRM Digital Right Management 0 They put a lock on their copyrighted material that would crash their computer if someone tried to burn it Going beyond your reading of the case think about how the popularity of iPods and other iDevices is related to the existence of online le sharing cites Are the sales of iDevices just driven by sales of music through iTunes Apple created the iPod to relate to this new market they new people were going to continue to download free music but people still wanted the device 0 Apple created iTunes to help this as well Finally assess what type of political issue online le sharing can be classi ed asDe ne the political action as making online le sharing illegal and develop the cost bene t structure of that action 0 Issue Online le sharing illegal and enforced Support RIAA concentrated bene t Oppose college students widely spread cost Napster would lobby issue in government Update After focusing on ghting online le sharing with lawsuits imbedded DRM technology increasing online lesharing transaction costs with corrupted les in the le sharing sites etc the record labels have scrambled for creative ways to raise revenue Like revenue sharing with Spotify and others Another creative example the record companies working with Apple have launched iTunes Match 2499 Annual fee to have your entire music library updated to best track quality and DRM free Users with 10005 of illegally obtained les can legalize their music library by paying roughly 25 Why are the recording companies behind this service They are trying to monetize illegally obtained music 25 is more than the 0 that they got from the illegally obtained music les Topic 3 NonMarket Strategy and International Expansion Case quotGenicon A Surgical Strike into Emerging Marketsquot Economic Pro ts Revenue price times quantity sold Costs explicit costs plus implicit costs 0 Explicit Costs Monetary payment made 0 Implicit Costs Firm s resources opportunity cost Calculated as a normal rate of return what rms could get by investing in a business with similar risk Economic pro t Revenue minus all costs Economic Pro t Revenue Costs PQ Explicit Costs lmplicit Cost PQ Explicit Cost lmplicit Accounting Pro t Normal Rate of Return Opp Cost lF Economic Pro t gt0 Revenue Explicit Cost lmplicit Cost gt0 Revenue Explicit Cost gt lmplicit Cost Accounting Pro t gt Normal Rate of Return This means your business is doing the best it can be doing lF Economic Pro tlt0 Accounting Pro tlt Normal Rate of Return This means your business is underperforming lF Economic Pro t 0 Business is doing as well as the market Role of Entrepreneurs 0 Take risk to nd what ventures are pro table Entrepreneur Exploit what opportunities that exist within markets 0 Offer new products open new markets create lower cost tech nd new resources 0 lntrepreneur entrepreneurial individual employed by a rm 0 Help keep ahead of rival rms improve overall ef ciency keep brightest minds within the corporation incentive to incorporate more pro table projects Economic Freedom Entrepreneurs and Economic Growth 0 Positive link between economic freedom and economic growth 0 Economic Freedom highest with low taxes low regulation secure property and consistent legal structure 0 Economic freedom is good for entrepreneurship o Leads to economic growth 0 Creative Destruction Entrepreneurial change makes older industries or technologies become obsolete 0 Less ef cient industries die off free resources that go to more ef cient industries Ex pager amp phone booth leading to cell phone industry 0 Govn t can block creative destruction with policies protecting dying industries protectionist measures Con ict of Interest 0 Professional individual has a private interest suf cient enough to in uence the pursuit of their of cial duties 0 Professional private or personal interest of cial duty 1 SelfDealing Use your position to secure personal bene ts a E Person to replace Obama was found guilty of giving the job to whoever would give him the most money 2 In uence Peddling Use your position to secure bene ts for a third party anyone who is not yourself a Q Same as above person also wanted whoever got the job to give another job to his wife 3 Accepting Bene ts Receiving bribes or nonmonetary gifts 4 Misuse of Inside Information Misusing Con dential Information 5 Misuse of Employer s Property Personally gaining from employers property without consent 6 Outside Employment of Moonlighting Holding multiple employment positions at one time which biases professional behavior a E Company hires PwC to advise on EPA regulation company says they will keep hiring PwC if they give them a good rating as their auditors as well Moonlighting 7 PostEmployment Holding a sequence of employment positions where you carry a bias from one job to the next a Ex HalliBurton won the bid to supply soldiers for the war but Vice President Cheney had been the CEO of the company previously so why did they choose them because they were the best or because of this con ict of interest Transparency International 0 Corruption Abuse of entrusted power for private gain 0 Petty Corruption Decisions made by lowlevel bureaucrats Often centered on local regional regulations licenses or discretionary spending 0 a Pay money to low level bureaucrat to allow you to get electricity quicker in a poor country 0 Grand Corruption Decisions made by highlevel politicians Often centered on national policy formation infrastructure decisions military equipment procurement or allocation of subsidies Perceptions 0 Sand bad Corruption is associated with reduced GDP growth reduced foreign direct investment increased income inequality and a misallocation of government property 0 Oil good Corruption helps to speed up commerce in an environment controlled by heavy bureaucracy and excessive regulation Speeds up commerce where a lot of centralization is already occurring Update Genicon entered Brazil rst and has experienced solid returns since late 2009 early 2010 0 Early 2010 Genicon entered lndia concentrating on the wealthier states in the south of the country and has had mild success Genicon nished the registration process in China at the end of 2010 and Genicon has seen early signs of a promising market Genicon believed the Russian registration process was not transparent enough and they feared violating the US Foreign Corrupt Practices Act 0 They currently have no plans to enter the Russian market RJIG camparisnn Ew ggeenicnn Ease Update Hadllll Halhat Emmml E p m im Patmilall Fraas m F ampil n E39i ail l 3 In i Ili ldl i ll dl i mm 25 5 EH 5 3 51 E Elli H 1 391 2 111 23 4n 5 2 E 43 W 3921 41 5111 w 35 l E E il 3E Sid 3 1 55 3 3 2 a 1 24 ndia V 143 233 939 53 35 5 1 chm 391 391 1 a 121 El 391 quota
Are you sure you want to buy this material for
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'