MIDTERMEXAMREVIEWTOPICS.pdf MGMT 320
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This 21 page Study Guide was uploaded by Lorain Zhang on Thursday November 6, 2014. The Study Guide belongs to MGMT 320 at University of Washington taught by Judd Hugh in Fall. Since its upload, it has received 236 views. For similar materials see Management in Business, management at University of Washington.
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Date Created: 11/06/14
MANAGEMENT 320 REVIEW TOPICS MD TERM EXAMINATION CHAPTER 1 STUDY OF BUSINESS GOVERNMENT SOCIETY The four models of the BGS relationship 1 Market Capitalism Model 8 Business operates in market environment 2 Market acts as a buffer between business and sociopolitical forces a b C f 3 Domi a Market economy people move beyond subsistence production to production for trade markets takes on a more central role Capitalism commercia society private ownership of means of production profit motive free competition limited government Managerial Capitalism dominant businesses are large firms run by salaried mangers not by small firms run by entrepreneurs Assumptions 1 Government interference is slight laissez faire governments job to correct social problems businesses focus on profit and efficiency 2 individuals can own private property and freely risk investments 3 other Consumers are informed about products and prices to make rational decisions Moral restraint accompanies the self interested behavior of business Basic institutions such as banking and laws exist to ease commerce There are many producers and consumers in the markets Market Capitalism 1 government regulation is limited 2 markets will discipline private economic activity to promote social welfare 3 the proper measure of corporate performance is private 4 ethnic duty of management is to promote the interests of owners and investors Diagram sociopoitica environment 9 market environment 9 business nance Model Perspective of business critics business and government dominate the great mass of people enriches few at expense of many democratic principles Populism common people feel oppressed or disadvantaged to seek to take power from ruling elite seen as thwarting fulfillment of collective welfare Marxism opposed to industry capitalism emerged in Europe similar workers should revolt against property owning capitalism and replace economic and political dominance with democratic socialist institutions Diagram triange business government top masses bottom environmental forces arrows hovering over top point to business and government 4 Countervailing Forces Model 8 b C Exchanges of power among Environmental Catalysts Business The Public and Government attributes constant dominance to none Different from Market Capitalism Model in that nonmarket forces can directly affect business Different from Dominance model in that it rejects absolute primacy of business instead crediting power to combination of forces Assumptions 1 Business is not isolated from any part of society nor is it always dominant 2 business is a major force acting on the government the public and environmental factors however defeats compromises and power sharing are highly visible 3 maintain broad public support business must adjust to social political and environmental forces it can influence but not control 4 BGS relationships evolve as changes take place in ideas institutions and processes of society e Diagram Environmental Catalysts Business The Public and Government four boxes arrows crossing the center 5 Stakehoder s Model a Stakeholders entity that is benefitted or burdened by the corporation s actions or whose actions may benefit or burden the corporation The corporation has a ethical duty toward these entities b Primary Stakeholders small number impact of relationship is mutually immediate continuous and powerful Customers employees communities governments suppliers or creditors Secondary Stakeholders ess immediacy benefit burden or power to in uence e Activists trade associations politicians schools Top priority ethica theory of management in which the welfare of each stakeholder must be considered as an end multiple stakeholders interests g Critics no way to adjudicate between alternative projects when there is more than one bottom line h Assumptions 1 ignore stakeholders at peril of survival of company 2 stakeholders have moral rights that grow from the way powerful corporations affect them Q9 h CHAPTER 2 DYNAMIC ENVIRONMENT Historical forces changing the business environment the implications of each 1 Industrial Revolution a Sufficiency of capital labor natural resources fuel transportation strong markets economic growth b Social mobility political liberty free speech public debate c Elevated living standards altered life experiences shifted values d Moral progress Fosters greater opportunity tolerance of diversity social mobility commitment to fairness and dedication to democracy 2 Inequality a The Gini Index statistical measure of inequality in which zero is perfect equality everyone has the same amount of wealth and 100 is absolute inequality a single person has all wealth b The cause of most of the rise in world income inequality is a growing gap between the peoples of rich and poor nations not a growing separation in rich and poor within nations c Inequality worsened drop in poverty trend line shows economic growth led to reduction in privation d Perpetuated by social institutions caste marriage land ownership law market relationships 3 Population Growth a 1 Advances in water sanitation hygiene and scientific medicine reduced deaths 2 mechanized farming expanded food supply b Replacement fertility 21 births per woman number of children woman must have on average to ensure that one daughter survives to reproductive age Replacement rate lowest in developed countries highest in less developed Falling fertility low mortality and migration drive future population changes an e 1 world population growth is slowing but highest in least developed regions widening the wealth gap between countries 2 growth will strain the earth s ecosystems 3 West is in demographic decline shrinking aging populations may lead to lower GDP growth nonWestern populations will be stronger economically militarily and politically 4 Technology a Printing press reshaped culture b Scientific revolution new ideas c Steam engine first of five waves i European immigrants poured into the American East creating labor gluts that led to wage depressions and fueling political movements against big companies financiers and the gold standard 5 Globalization a Globalization creation of networks of human interaction that span worldwide distances b Multiply number of stakeholders by operating in many countries 6 NationStates a Nation state internationa actor having a ruling authority citizens and a territory with fixed borders b So nations today increasingly prefer to aggrandize themselves through trade where they can build wealth more efficiently than through traditional warfare c Nations were often irrational defined and split by culture ethnicity religion andlanguage d Market forces epidemics climate change terrorism nuclear weapons potent ideas such as international norms of human rights 7 Dominant Ideologies a Ideology set of reinforcing beliefs and values that construct a worldview b Capitalism c Constitutional democracy protected rights that allowed the individual to flourish d Progress humanity in upward motion toward material betterment e Darwinism constant improvement of characterized the biological world progress f social Darwinism evolutionary competition weeded out unfit g Protestant ethic sacred authority called for hard work saving thrift honesty for salvation 8 Great Leadership a Leaders themselves change history rather than beign pushed by its tide 9 Chance a Chance accident random occurrence The HDI 0 Statistical tool used by the UN to measure progress of humanity Theory alone is not adequate measure of standard of living 0 0 lowest to 1 highest human development 0 3 Categories 1 Longevity live expectancy at birth 2 Knowledge adult literacy and ratio of students enrolled in school of population of school age 3 Income GDP per capita 0 Overall HDI average has risen Seven key environments of business 6 external and 1 internal 1 Economic Environment a b c d FD 39393quot quot j Economic activity commodity prices interest rates current fluctuations wages government policies World Trade Organization WTO Reciprocate openness of market between nations Negotiation and trader liberalization nations promote trade by easing restrictions including both tariff and nontariff barriers Bedrock of economic globalization Foreign Direct Investment FDI capital invested by private firms outside their home countries growth outsourcing Technological Environment Nanotechnology manipuate things the size of an atom Digital communications technology Wiki principle coaborative editing promotes equality innovation can be a opportunity and a threat Tiny Bell Telephone Company became ATampT had to be broken up because it was so big 2 Cultural Environment 8 b Culture system of shared knowledge values norms customs and rituals acquired by social learning Postmaterialist values based on assumptions of security and affluence eg tolerance of diversity and concern for environment stamp out racism sexism authoritarianism intolerance and xenophobia 3 Government Environment a b c d 4 Legal a b c d e f 5 Natur a b Two trends government activity has greatly expanded example government spending within size of its economy rising democratization caused by rise of postmaterialist values undermining hierarchical authority democracy government requiring three elements 1 popular sovereignty 2poitica liberty 3 majority rule Environment Laws and regulations grow in number and complexity Legal duty to protect rights of stakeholders Globalization increased complexity of legal environment exposing corporations to international law and laws of foreign nations Soft law guidelines for conduct based on emerging norms and standards in international codes Requirements of ethical behavior and corporate social responsibility go beyond legal duty voluntary Law is constantly evolving al Environment Living Planet Index population trends among terrestrial freshwater and marine vertebrate species decline of biodiversity Ecological Footprint human consumptions of renewable natural resources total land area needed to maintain human consumption 6 Internal Environment 8 b Four groups managers owners or shareholders employees and board of directors Corporate culture Diagram Historical forces current business environment external the corporation internal three concentric circles CHAPTER 3 BUSINESS POWER Power ability to compel another entity Business power act by a company Legitimacy rightfu use of power opposite of tyranny Levels and spheres of corporate power deep level vs surface level 1 Economic power influences events activities and people by virtue of control over resources a Surface open close a factory immediately affect shareholders b Deep over longer period of time can increase wealth to raise living standards Technological power influence direction rate characteristics of physical innovations as they develop a Surface transportation is convenient b Deep house of prostitution on wheels Political power influence over government a Surface money to candidates and lobby legislatures b Deep engenders values that radiate freedom Legal power shape the laws of society a big corporations have formidable legal resources that intimidate opponents b Deep aws shaped by industrial activity Cultural power a Surface started mother s day traditions b Deep reinforcing values materialism over asceticism Environmental power a Surface pollute the air b Deep ater chemistry of earth s atmopshere Power over individuals over employees managers stockholders consumers and citizens a Surface determine the work life and buying habits of individuals b Deep sets pattern of daily life Activity in economic sphere is primary force for change and radiates into other spheres The story of the railroads as it relates to business power New York Stock Exchange went from a sleepy place to a roaring market Railroads laid between trading centers Required enormous amounts of wood and whole forests were downed Transformed populations destabilized technology powered by aggressive capitalism Young people moved to cities in lure of wealth lmpersonality and ethic of commerce Surface obbyists could dominate legislature deeper changes were more profound national meetings Interstate Commerce Act of 1887 reguate railroads 0 Diner place to eat after first dining car Two perspectives on business power 1 The Dominance Theory dominance model business is preeminent in American Society control of wealth and power was inadequately checked a Corporate asset concentration i Change from agricultural to industrial caused a growth and concentration of wealth ii Increased from mergers and leveled off iii Over time competition strategic errors technological changes have continuously winnowed the roster of America s biggest companies iv Power of technology based market forces exceeds the power of even the largest corporations to maintain their dominance b Elite dominance i Small group of individuals who by virtue of wealth and position control the nation ii Similarity in thinking Disproportionately white male Christian from upper class families and went to prestigious schools others include black latinos and women with similarity in background and thinking 2 The Pluralist Theory countervailing forces model other institutions such as markets government labor unions advocacy groups have great power business power is counterbalanced power is diffused a Democratic values equality b America encompasses a large population spread over a wide geography and engaged in diverse occupations wide mixture of interests c Constitution encourages pluralism rights protect the freedom of individuals right to form associations and freely express interests d Four boundaries on managerial power 1 Government and Laws 2 Social interest groups boycotts lawsuits picket lines media campaigns lobbying for more regulation 3 Social Values pubic values embedded in law and internalized in schools and churches 4 Market and Economic stakeholders influence corporate decisions market s technological changes CHAPTER 4 CRlTlCS OF BUSINESS Mother Jones o Family died in epidemic nursed the sick 0 Organized rally of the miners wives to get the miners themselves to protest 0 International Workers of the World IWW radica union dedicated to overthrowing American capitalism Origins of Critical Attitudes Towards Business 1 The Greek and Romans a Agragrian society fixed wealth increase wealth only by taking from others b Subsistence agriculture c Profit seeking was an inferior motive 2 The Medieval World a Roman Catholic Church ethics of merchants to set a just price a price giving a moderate profit inspired by fairness not greed vs modern idea of market price determined by the interaction of supply and demand b Condemned usury lending of money for interest 3 The Modern World a Rise of Protestant ethic if a person earned great wealth through hard work it was a sign of God s approval b Theory of Capitalism that free markets harnessed greed for the public good and protected consumers from abuse The American Critique of Business 1 Populists and Progressives a Populist Movement arose among farmers in the late 1800s Populists blamed social problems on industry and sought radical reforms such as government ownership of railroads b Progressive Movement counterpoint to socialist movement classless social system in which property is collectively owned and income from labor is equally and indiscriminately divided among members i Communist Manifesto ii Socialists and labor unions 0 Child labor injured and wore down workers wealth and power concentrated in great banks trusts and railway systems 0 First big national union Knights of Labor 1869 constitution recognized exploitation of labor by owners of capital and called for reforms to protect labor rather than overthrow capitalists 0 Violent strikes and many deaths 0 Largest union American Federation of Labor elected to work with employers for higher wages and better working conditions 0 Industrial Workers of the World IWW represent all workers of both sexes and all races in every industry to fight o overthrow capitalist structure 2 The collapse of confidence public support of businesses collapsed a 1 civil rights 2 consumer rights 3 environment 4 against the Vietnam War i attacked businesses for contributing to a range of social ills including racism and sexism consumer fraud etc b Confidence Gap gap between publics expectations about how corporations should act and public perceptions of how they actually act c allowed for increase in government regulation d The continued collapse in the recent recession 40 years changed public opinion 3 The new Progressives a Old Progressive members of a broad political and social reform movement in the early years of the 20quot century b Members of contemporary leftleaning groups who advocate more radical corporate reform than did old time Progressives New Progressives seek to avoid being branded as liberals and try to take advantages of favorable connotations of the word progressive Choose direct action instead of reform through government old Three beliefs 1 Corporations have too much power can t be controlled by the market or government 2 corporations have inordinate legal rights laws are permissive 3 corporations are inherently immoral Global Critics 0 Civil society zone of ideas dominated by progressive values that transcends national societies and focuses on global issues 99 0 Global Justice Movement coalition of groups united by opposition to economic globalization dominated by corporate capitalism 1 Liberalism philosophy of an open society in which the state does not interfere with rights of individuals a Economic liberalism sanctified pursuit of individual self interest in markets free from state interference laissez faire capitalism b Keynesianism economic philosophy of active state intervention to stabilize the economy and stimulate employment 2 Neoliberalism both the ideology of using markets to organize society and a set of specific policies to free markets from state intrusion a Chicago School name given to a group of economists and to the free market doctrine they taught synonymous with neoliberalism 3 Global activism a Attacks on corporations tactics i Consumer Boycotts ii Shareholder Attacks sponsor resolutions on which all shareholders of public companies vote on at annual meetings iii Harassment ridicule and shaming lawsuits disrupt lives of execu ves iv Corporate Campaigns broad sustained attack CHAPTER 5 CORPORATE SOCIAL RESPONSIBILITY The evolving idea of social responsibility 1 The CSR Spectrum a left Radical Progessives Progressive Civil Society Mainstream Corporate Managers Free Market Conservatives right b Radical Progressives insufficient doctrine forming smokescreen for companies behind their profit seeking behavior c Free Market Conservatives draining the strength of the corporate institution d Conservatives see capitalism as natural and venerable 2 In classical economic theory the lnvisible Hand a Classical capitalism business is socially responsible if it maximizes profits while operating within the law because an invisible hand will direct economic activity to serve the good of the whole b The Charitable Impulse 3 Social Darwinism philosophy to explain the dynamics of human society and institutions The idea of survival of the fittest implied that rich people and dominant companies were morally superior 4 1950 to the present contemporary CSR formed a Basic arguments 1 managers have an ethical duty to consider the broad social impacts of their decisions 2 businesses are reservoirs of skill and energy for improving civic life 3 corporations must use power in keeping with broad social contract or lose their legitimacy 4 is it the enlightened self interest of business to improve society and 5 voluntary action may head off negative public attitudes and unwanted regulations b Friedman s article employees of a corporation s owners are directly responsible to them If a manager spends corporate funds on social projects he or she is diverting shareholders dollars to programs they may not even favor c Opposing vision Committee of Economic Development 1 inner circle clear cut responsibility for efficient execution of the economic function resulting in products jobs and economic growth 2 intermediate circle exercise this economic function with a sensitive awareness of changing values and priorities 3 outer circle outines newly emerging and still amorphous responsibilities that business should assume to improve the social environment even if not directly related to specific business processes Jeff Ericson s views on social businessregulationbusinesses duties Basic elements of social responsibility 1 Market actions responses to competitive forces in market a Value chain sequence of coordinated actions that add value to a product or service 2 Externally mandated actions required by government or public regulation a Civil regulation nonstate actors based on social norms or standards enforced by social or market sanctions 3 Voluntary Actions a legal plus exceed required mandates General principles of corporate social responsibility 1 Corporations are economic institutions run for profit 2 All firms must follow multiple bodies of law including 1 corporation laws and chartering provisions 2 civil and criminal laws of nations 3 legislated regulations that protect stakeholders 4 international law and trade agreements 3 Managers must act ethically 4 Corporations have a duty to correct adverse social impacts they cause 5 Social responsibility varies with company characteristics such as size industry products strategies marketing methods etc 6 Managers should try to meet legitimate needs of multiple stakeholders 7 Corporate behavior must comply with an underlying social contract 8 Corporations should be transparent and accountable Are social and financial performance related 1 Positive correlation between responsibility and profitability 2 Evidence that it does so broadly for most companies is weak CSR in the global context 1 Global CSR is now defined and dominated by the progressive ideology of Western civil society and the practices of Western multinationals 2 US leadership strongest early development of CSR spread to Europe Do transnationals elude proper controls Yes 1 International law is weak in addressing social impacts of business Protects commercial rights Labor protection human rights cultures and other social resources are less codified 2 Transnational corporations are subject to uneven regulation in developing nations where institutions may be rudimentary and enforcement feeble 3 Corporations use strategies fo joint venture outsourcing and supply chain extension to create efficiencies distancing themselves from direct accountability of social harms 4 Significantly more government regulation of transnational firms is unlikely no global government or nation state powerful enough to regulate The rise of NGOs and their impact on global CSR 1 Development of Norms and Principles a International codes of conduct for corporations i International Declaration of Human Rights ii Tripartite Declaration iii Norms on Responsibilities of Transnational Corporations 2 Corporate and industry codes of conduct a Formal statements of aspirations principles rules for corporate behavior b Multistakeholder initiatives coaborate processes with many codes more than one code 3 Reporting and Verification Standards a Sustainability reporting measure their actions annual reporting i Problem 1 defining the measure 2 not comparable between companies ii Assurance Standard created for audit companies b The Fair Trade concept i Certifications promote fair trade small marginal producers should be paid fair stable guaranteed price so they can make a living in sustainable farming practices ii Fair Trader Certified 4 Social investment and lending in the international CSR movement a Principles for Responsible Investment consider company s environmental social governance performance when they evaluate investments pressure corporations in direction of responsible behavior b FTSE4Good Global Index set world standard for those wanting to invest in companies following good standards of corporate responsibility 5 Government regulations and promotion of voluntary CSR actions a Lead by European companies small funding in US China called adoption of CSR inevitable 6 The role of NGOs Civil Society Vigilance a NGOs watch multinational corporations and police actions from global norms The Vitality Curve 1 Jack Welch at General Electric a Employees ranked on a Vitality Curve that differentiated among As Bs and C s b As were commited and filled with passion initiative and exceeded performance goals C AS 20 o BS 70 o CS 10 o d Darwinian survival of the fittest CHAPTER 6 lMPLEMENTlNG CORPORATE SOCIAL RESPONSIBILITY Progressive business models promoting CSR leadership 0 Traditional business model centra strategy for creating value is based on meeting market demands while complying with the law 0 Progressive Model value by meeting market demand in the process mitigating social problems or improving society in some way Model of CSR implementation Narrow responseobey law deny further obligations make a profit 9 Anticipate new demand alter behavior before pressure embed management systems and processes to implement CSR expansive response 2 Determining core values mission statements a Mission statement 3 Engaging stakeholders a Basic Stakeholder Map by orientation to firm confrontational supportive or power to affect its business high to low 4 Developing and implementing CSR strategy a Developing i Strategy basic approach for achieving a objective ii List of possible social initiatives from meeting legal requirements to voluntary actions iii Stakeholder demand conflicts iv Essential list worthiness of any additional social initiative meaningful benefit for society that is also valuable to business b Implementing i Organizing Structure CSR is often isolated to parts of the organizations to centralize oversight use of cross functional CSR committees from different departments ii Action Planning revising or creating policies budgeting resources and assigning work iii Performance Goals and Timelines specific and progress toward them should be measurable sustainability indicators iv Incentives and Accountability rewarded based on performance for job descriptions that include sustainability duties to encourage accountability v Alignment of Strategy and Culture advancing management that supports both company s financial and soft goals to align with culture allowing time off to volunteer 5 Corporate social reporting and verification a Transparency in informing stakeholders vs opacity b GRI indicators Global Reporting Initiative GRI i Set of uniform standards for sustainability reporting documentation and disclosure of how closely corporate operations conform to goal of sustainable development ideal of economic growth that can meet the needs of the present without compromising the ability of future generations to meet their own needs ii Prism of the triple bottom line economic social and environmental results iii Clear timely comparable verifiable iv Assurance verification for readers that a report is reliable by outside auditors Errors of CSR Implementation 1 No coherent systematic thought to CSR 2 Allow CSR strategy to be reactive by not aligning it with major social impacts core competencies or business strategies 3 They fragment responsibility for CSR initiatives by assigning them to separate areas without central oversight 4 They do not issue credible reports of CSR actions for stakeholders and fail the test of transparency Corporate Philanthropy 0 Checkbook philanthropy traditional form of corporate giving in which donations go to multiple worthy causes without any link to business strategy 0 Strategic philanthropy charitabe activities reinforce strategic business goals 1 Causerelated marketing variant of strategic philanthropy in which charitable contributions are based on purchases of a product a 1 impression of product s positive qualities directed to logical mind 2 emotional association New Forms of Philanthropy grants to nonprofit organizations Philanthrocapitalism relies on market to achieve results blurring lines between charity and business Micro finance small loans given to poor people The Grasshoppers and the Ants article CHAPTER 7 BUSINESS ETHICS Two theories of business ethics 1 amorality business should be amoral conducted without reference to the full range of ethical standards restraints ideologies in society invisible hand 2 moral unity business practices judged by general ethical standards in society not a set of more permissible standards same standards for everyone and in other areas of life 3 Should business ethics be more permissive than general societal or personal ethics a Amorality business and personal ethics existed in separate compartments b Moral Unity same as general society and personal ethics 4 Aristotle s theory of moral responsibility power point slide Major sources of ethical values in business Religion Philosophy Cultural Experience and Law Reciprocity behave supportively in expectation of this behavior will be given in return 0 Religion o PhHosophy o The Republic 50 year program for training rulers to rule In harmony with ideal of justice 0 Realist School school of thought that rejects ethical perfection taking the position that human affairs will be characterized by flawed behavior and ought to be depicted as they are not as we might wish them to be 0 Cultural Experience o Hunting and gathering stage 0 Agricultural stage 0 Ethical Variations in Culture 0 Law Ethical Universalism theory that because human nature is everywhere the same basic ethical rules are applicable in all cultures there is some room for variation in the way these rules are followed Ethical Relativism ethical values are created by cultural experience Different cultures may create different values and there is no universal standards by which to judge which values are superior Hypernorms master ethical principles that underlie all other ethical principles all variations of ethical principle must conform to them Damages Compensatory and Punitive Damages Compensatory damages payments awarded to redress actual concrete losses suffered by injured parties Punitive damages payments in excess of a wronged party s actual losses to deter similar actions and punish a corporation that has exhibited reprehensible conduct Criminal prosecution of Managers and Corporations White collar crime nonvioent economic offense of cheating and deception done for personal or corporate gain in the course of employment Respondeat superior corporations are liable for the actions of employees who commit a crime in the course of their employment when their act is for the benefit of the company Sentencing and Fines The use of the criminal law to enforce ethical principles Factors used by prosecutors to decide when a corporation should be charged 0 Nature and seriousness of offense including risk of harm to public 0 Pervasiveness of wrongdoing within the corporation including management of complicity or involvement 0 Corporations history of similar misconduct 0 Corporations timely and voluntary disclosure of wrongdoing and its willingness to cooperate in the investigation 0 Existence and effectiveness of preexisting compliance program 0 Remedial actions including starting or improving a compliance program replacing management and disciplining wrongoders 0 Consequences for shareholder pension holders employees and other innocent parties as well as the public 0 Adquecy of prosecuting individuals responsible for crimes 0 Adequacy of other remedies such as civil lawsuits or enforcing regulations Deferred prosecution agreement agreement between prosecutor and corporation to delay prosecution while the company takes remedial ac ons Nonprosecution agreement agreement in which US attorneys decline prosecution of a corporation that has taken appropriate steps to report a crime cooperate and compensate victims the US Sentencing Guidelines Base score type of offense Points added and subtracted because of enhancing or mitigating factors Prison terms fined probation community service restitution to injured parties banned from working as corporate officers Factors that influence managerial ethics 1 Influence of Leadership a Exemplary behavior 2 Strategies and Policies a Strategic goals without encouraging ethical compromise b Reward and compensation systems 3 Corporate Culture a Corporate culture set of values norms rituals formal rules and physical artifacts that exists in a company First level artifacts both physical expressions of culture and visible behaviors ex dressing office layouts symbolic displays such as picture walls of former exectuives addressing by first or first and last name Second level Espoused Values formal statement of belief and intentensions mission statement code of ethics often inconsistences between 13 and 2nd levels Third Level Tacit Underlying Values deep shared assumptions in the organization s culture about how things really work unspoken unwritten 4 Individual Characteristics a Ethics come with advancing age and longer work experience Influenced by situations they are in c Dynamic psychological process or innate predicatable and powerful tendencies desire to conform sef justification rationalization 5 Ethical Average or Compromised behavior b d b How corporations manage ethics 0 Ethics and Compliance program structures policies and controls used by corporations to promote ethical behavior and ensure compliance with laws 1 US Sentencing Commission s Guidelines seven minimum steps a Establish standards and procedures to prevent and detect criminal conduct b Create highlevel oversight to the board of directors and assign responsibility for it to a high level executive who in turn will assign day to day responsibility to specific manager c Screen out criminals from positions of substaintial authority d Communicate standards to all employees e Monitor and set up a hotline for reporting suspicious conduct without fear of retaliation f Enforce standards discipline violators providing both incentives to reward compliance and discipline for violators g Assess areas of risk modify the program to prevent repeat offense 2 Caremark case heathcare company giving kickbacks to physicians who referred patients to its clinics 3 Compliance approach training employees to follow rules in laws regulations and policy 4 Ethics approach training employees to make decisions based on ethical values Impact of SarbanesOxley on corporate ethics programs CHAPTER 8 MAKlNG ETHICAL DECISIONS IN BUSINESS 0 David Geffen o Deontological ethics idea that actions are right and wrong in themselves independently of any consequences o Consequentialism actions are right or wrong in part of whole based on consequences Fourteen Principles of Ethical Conduct interpretation and application to specific situations 1 Categorical Imperative act only according to that maxim by which you can at the same time will that it should become universal law no exception a test of universalizability could this act be turned into a universal code of behavior 2 Conventionalist Ethic business is like a game with permissive ethics and any action that does not violate the law is permitted a Justification for deceptive behavior 3 Disclosure Ethic test an ethical decision by asking how you would feel explaining it to a wider audience such as newspaper readers television viewers or your family a Screens out lying and theft 4 Doctrine of the Mean virtue is achieved through moderation Avoid behavior that is excessive or deficient of virtue Golden mean lnbetween excessive and shortage 5 EndsMean Ethic end justifies the means a When end justify efficient means end are of overriding importance or virtue unscrupulous means to reach them 6 Golden Rule do unto others as you would have them do unto you a Practical imperative b Test of reversibility would you be willing to change places with the person affected by your actions 7 Intuition Ethic What is good or right is understood by an inner moral sense based on character development and felt as intuition a Intuition mora sense of right or wrong 8 Might Equals Right Ethic justice is the interest of the stronger 9 Organization Ethic be loyal to the organization 10 Principle of Equal Freedom person has the right to freedom of action unless such action deprives another person of a proper freedom a An action will restrict others from actions that they have a legitimate right to undertake b Two conflicts need to use another rule 11 Proportionality Ethic managers can risk predictable but unwilled harms to people after weighing a five factors i type of good and evil major minor ii probability iii urgency iv intensity of influence v alternatives b Proportionality set of rules for making decisions having good and evil consequences c Principle of double effect good and bad result from decision manager has acted ethically if the good outweighs the evil if his or her intention is to achieve the good and if there is no better alternative 12 Rights Ethic each person has protections and entitlements that others have a duty to respect a Natural rights protections and entitlements that can be interfered by reason from the study of human nature b Legal rights protections conferred by law c Rights imply duties 13 Theory of Justice each person should act fairly toward others in order of maintain the bonds of community a Do common good of society well kept civil society b Three Spheres of Justice i Distributive justice benefits and burdens of company life should be distributed using impartial criteria ii Retributive justice punishment should be evenhanded and proportionate to transgressions iii Compensatory justice victims should receive fair compensation for damages 14 Utilitarian Ethic greatest good for the greatest number 0 Virtue Ethic ethical behavior stems from character virtues build up by habit 0 Cardinal Ethic four most basic traits of ethical characters Justice temperance courage wisdom Plato 0 Functional magnetic resonance imaging method used to map activity in neural networks during ethical decision making Practical suggestions for making ethical decisions 0 Critical questions approach insight comes from answering questions 0 Ethical questions to ask yourself 0 Are my actions legal 0 Am lbeing fair and honest 0 Will my action stand the test of time o How will Ifeel about myself afterward o How will it look in the newspaper 0 Will lsleep soundly tonight 0 Can lexplain my action to the person ladmire most Warning signs of ethical issues Lockheed Martin 0 On ethical thin ice 0 It doesn t matter how it gets done as long it gets done No one will ever know We didn t have this conversation It sounds too good to be true Shred that document I deserve it lt s all for a good cause Well maybe just this once Everyone does it This will destroy the competition What s in it for me lt s okay if I don t gain personally No one will get hurt This is a non meeting OOOOOOOOOOOOO CHAPTER 9 BUSINESS IN POLITICS Paul Magliocchetti and Associates 0 Earmark amount of money for a project added into an appropriations bill by any member of the Senate or House of Reps The federal system 0 Agov in which powers are divided between central government and subdivision governments In American government the specific division of powers between national and state governments is set forth in the Constitution The Supremacy clause 0 Clause in the constitution Article VI Section 2 setting forth the principle that when the federal government passes a law within its powers the states are bound by that law The separation of powers 0 Constitutional arrangement that separates the legislative executive and judicial functions of the national government into three branches giving each considerable independence and the power to check and balance the others Judicial review 0 Power of judges to review legislative and executive actions and strike down laws that are unconstitutional or acts of officials that exceed their authority The First Amendment 0 1791 Bill of Rights protects free speech free press freedom to assemble or form groups and freedom to contact and lobby government The implications of the above for business s impact on politics 0 agriculture culture didn t require laws that exist now business power grew Corruption and Reform in the 19quot century and early 20 century 0 cheated on taxes dominated states politically o Adversaries of business organized labor and Anti Saoon League 0 17quot Amendment 1913 direction election of senators by Voters 0 used to be voted in by state legislatures 0 19quot Amendment 1920 women s right to vote 0 Big business fought suffrage for women Liquor companies feared women would vote for prohibition 0 Against liquor child labor and income inequality The New Deal implications for business s impact on politics 0 Franklin D Roosevet s plan to regulate banking and industry strengthen labor unions and social security 0 Corporations fought him but went against public sentiment causing business power to reach an all time low 0 Welfare of citizens 0 19521960 Dwight D Eisenhower pro business president with probusiness appointees Antagonistic groups 0 consumer environmental taxpayer civil rights 0 mass regulatory programs 0 government growth 9 increased spending 0 short lived The diffusion of power in government 0 three reasons 1 reforms in congress 2 decline of political parties 0 3 increased complexity of government 0 composition of congress changed lobbyists required funding corporations are happy to oblige growth in size and complexity of federal government Organized business interests 0 peak associations group that represents the political interest of many companies and industries 0 large expanse of business community broad issues due to divide in members 0 US Chamber of Commerce 0 National Association of Manufacturers 0 trade associations group representing interests of the industry or industry segment 0 grouped by industry 0 Washington Office office in Washington DC set up by a corporation and staffed with experts in advocating the firm s point of view to lawmakers and regulators o Coalition combination of business interests including corporations trade associations and peak associations united to pursue a political goal Lobbying advocating a position to government 0 Methods 0 Contact lobbying direct interaction with government officials or staff in meetings phone calls or e mail 0 Background lobbying indirect lobbying designed to build friendly relations with lawmakers officials and staff o Grassroots lobbying technique of generating an expression of public or grassroots support for the position of a company industry or any interest 0 regulations on lobbyists p 292 o Lobbying Disclosure Act requires individuals and corporations engaged in lobbying to register with Congress and fill out quarterly forms on whom they contacted their issue objectives and fees or expenses o Prohibits individuals and corporations registered as lobbyists from giving gifts to members of Congress or congressional staff Code of Official Conduct o Illegal Gratuity exchange of a gratuity for an official action in the past or future when that action might have been r might be taken even without the exchange Corporate Role in Elections 0 efforts to limit corporate influence o federal elections for president vice president senator and representative 435 representatives elected every two years president VP every four years senators every 6 years 13 of senators up for election biennially elections held first Tuesday after the first Monday of November in even numbered years o the Tillman Act crime for banks and corporations to directly contribute to candidates in federal elections corporations finding a new way Tillman hated Republican party for freeing slaves 0 the Federal Election Campaign Act 1971 FECA stiffen disclosure requirements on campaign contributions and expenditures 0 amendments ceilings on campaign contributions and expenditures 1000 per election to candidate individual 25000 a year total to combination of candidates or political committees prohibition on direct corporate contributions new regulatory agency Federal Election Commission o Reasons for failure 3 Supreme court compromised law s design for controlling campaign money 0 The Buckley v Valeo case First Amendment rights to political speech o Court held that giving and spending money in political campaigns are forms of expression protected by First Amendment guarantee of free speech 0 Upheld FECA contribution limits avoid corruption o Struck down overall expenditure limits on political speech Proliferation of interest groups caused by growth of government created more organized interests to fund campaigns 0 Set up Political Action Committees PACs contribute to candidates in their name Corporations and lobbyists adapted new FECA by exploit avoid live with regulations 0 Use of PACs 0 Rise of soft money used for advertising PACs 0 how they work o political committee carrying a company s name formed to make campaign contributions Money it gives to candidates comes from individual employees not from the corporate treasury o peaked then slowed as companies wearied of politicans who pressured them for money 0 no dollar limit on overall amount PACs can lawfully raise and spend 0 Election cycle two year period between federal elections 0 hard money v soft money o Soft Money money that is unregulated as to source or amount under federal election law political parties could use money raised outside these limits including checks from corporations or unions when it was spent in ways that benefited states and local candidates as well as federal candidates can be used for issue ads tiptoe around supporting candidate 0 Hard Money raised and spend under strict contribution limits and rule sin federal election law o Issue advocacy political view or comment on an elector race o Express advocacy suggest the election or defeat of a candidate using specific words such as vote for defeat or support 0 soft money and issue advertising The 2002 Bipartisan Campaign Reform Act 0 its prohibitions on corporations individuals and PACs p 300 prohibited raising of soft money only use hard money to benefit federal candidates ended issues advocating election not expressly but by implication contribution limits for individuals were raised BCRA prohibited corporations and unions from directly funding issue ads legal to make contributions to advocacy groups from trade associations to PACs for sole purpose of running issue ads Blackout periods prohibited issue ads funded by corporate independent expenditures within 30 days before a primary election and 60 days before general election 0 Only run ads funded by hard money 0 Clearly identify a federal candidate target relevant audience paid for whole or in part by a corporation o the law s purpose o has the law worked Supreme Court struck down blackout rule BCRA prohibition against corporation funding issue ads unconstitutional Corporations making independent expenditures that expressly advocated election or defeat of federal candidates Tension between corporate First Amendment rights and the need to regulate 0 election conduct the McConnell case The impact of Citizens United 0 Citizens United v Federal Election Commission Freed corporations to pay for political ads o Can independently advocate their choice in any federal race for office 0 Freedom of speech and political equality o Still limited in advocacy of candidates or measures 0 Current developments before the US Supreme Court How Business Dollars Enter Elections PACs Individual contribtuions executive bundlers bundling occurs when an individual solicits contributions for a candidate bundles them together and passes them on 501c groups corporations contribute to tax exempt organizations set up under section 501c of the Internal Revenue Code allowed to engage in political activity as long as its not their only activity 527 groups groups under 527 tax code are political organizations set up primarily to influence elections register with Rederal Election Commission take in unlimited soft money to advertise independent expenditures citizens united invalidated the long standing prohibition against corporations paying for ads or actions that expressly advocate election ro defeat of a federal candidate communications that are made independently not coordinated with candidates State and local elections corporate contributions banned in 23 states and many cities not required to report
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