Week 2 Notes
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This 4 page Class Notes was uploaded by Isabel Hubeny on Sunday February 22, 2015. The Class Notes belongs to BUS-G202 at Indiana University taught by Kreft in Winter2015. Since its upload, it has received 103 views. For similar materials see Corporate Social Strategy in Business at Indiana University.
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Date Created: 02/22/15
Day 3 Public Sector Participants 1 Voters Rationally ignorant too costly to be informed large opportunity cost little benefit 2 Politicians elected officials try to maximize votes by providing free information 3 Bureaucrats civil servants look to maximize budget are hired Public Sector Inefficiency 1 Short Sightedness Effect a Government likes a project with clear current benefits and neglect unidentifiable future costs i Ex Lucas oil stadium very costly but motivation to continue building it was to maximize in uence on current voters at the expense of future generations 2 Operational Inefficiency a Public sector has no profit motive the government a fixed budget so no incentive to lower costs because it would lower the future set budget allocated 3 Lobbying Rent Seeking a Small groups spending money to in uence politicians to give money 4 Special Interest Effect a Small groups of people receive benefits at the expense of a large group Benefits support Widely dispersed Concentrated Cost opposition Widely dispersed Majoritarian Client Concentrated Entrepreneurial Interest Group Types of Political Action Majoritarian No special interests Ex Social security Result Lobbying does not occur Client Politics one special interest group Ex USDA Foreign Ad Funds MAP Costs spread over widely to tax payers Result Lobbying is successful Interest Group Politics Active groups on both sides Ex Legalizing Marijuana NORML V CALM Result Outcomes depend on relative strength of lobbying relative strength can change over time Entrepreneurial Politics One group against the issue EX Nuclear waste dump Result Successful lobbying will be costly because it would include changing the norm and taking away widespread benefits Day 4 Ventria Debrief Does the US produce a lot of rice Depends how you look at it US is the top 2 in exports Ventria Case background 20 employees with strong science backgrounds and ties with the UC Davis Focused on SCIENCE not business politics With this strong relationship with UC Davis they decided to stay in Cali Goal take an animal protein from breast milk and grow it in rice There are 2000 farms in California for rice total 500 million average revenue of the rice industry therefore rice is important in California therefore government sets up the CRC becomes the only state to have an organization like this Ventria threatens the 500 million 2000 farms by commercializing their engineered rice Ventria Opposition Iapan among many other countries that don t like genetically modified food GM Cali s valuation is dependent on exports to these countries Ventria s Argument They are fighting death by saving the 2 million lives a year Therefore Ventria markets a this product to WHO Red Cross Military as a life saving drug Ventria Allies CRC part of state gov t skewed because 6 said yes and 5 said no Employees investors UC Davis World Health Organization Unicef Red Cross Biotechnology Industry Organization BIO and Pro GMO organizations Infant formula companies military Neutral Players State government CRC Secretary of Agriculture are split Federal government FDA USDA EPA gt doesn t have to approve until it passes Secretary of agriculture must pass the state first Ventria Adversaries California Secretary of Agriculture Iapanese Rice Retail Association Coalition of Activists in AntiGMO Traditional Rice farmers millers producers distributors etc Active interest groups on both sides therefore considered interest group politics REsult depends on strength of each side Fight for Cali Problem with strategy the decision maker has strength and is shortsighted and is already against Ventria because it will help with the reelection Adversaries have more strength in California Only in uence in allies is CRC which can only give recommendations and the employees and the investors which is only about 20 people and have very little in uence Compromise for Cali Ventria already made more capital expenditure compromises but adversaries want more Compliance costs snowballing and are ineffective If we run from Cali the optimal place to be isolated from traditional race in order to grow genetically modified rice government incentives problems often arises with government bribes intellectual property protection ProGMO location low activists Facilities Market Access Result of the Pharma Case Update 2004 Ventria partners with a ricce State Northwest Missouri State University Anheuser Busch a big rice investor for beer threatens to not buy Missouri Rice because of Ventria therefore the state pulls the University project 2006 Ventria moves to Kansas where jobs are scarce and high unemployment city covers startup costs for production and milling Activists came in but government said Kansas was a nontraditional rice state good for biotechnology 2008 Ventriaprofitable
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