MGMT 320 Midterm Review
Terms in this set (71)
The duty of a corporation to create wealth in
ways that avoid harm to, protect, or enhance societal assets.
The fundamental idea is that
corporaMons have duMes that go
beyond lawful execuMon of their
Advocates of CSR say...
(1) It is an ethical duty to promote social jusMce.
(2) Social responsability is pracMcal, and has concrete benefits.
(3) It is necessary because other forces do not force full responsability on
corporaMons, parMcularly those which operate across borders in a global
arena of weak governance.
Opponents of CSR say...
1) On the far le[, it is seen as an insufficient doctrine that allows corporaMons
to form a smoke screen.
(2) On the far right, it is seen as an unwarranted cost that creates
The three elements of social responsibility are
market actions, externally
mandated actions, and voluntary actions.
A traditional business model is
one in which the central strategy for creating value is based on meeting market demands while complying with the law.
A progressive business model creates value by
Meeting market demands and, in the process, mitigating social problems or improving society in
some way. The value proposition is based on actions that would be considered voluntary responsibilities in more traditional companies.
Narrow response vs. expansive response
Obey law and make profit vs. CSR
is the alignment of charity with business strategy.
Charitable activities reinforce strategic business goals.
is a variant of strategic philanthropy in which charitable contributions are based on purchase of a product. It links a brand to a social cause so both benefit
The philosophy of an open society in which the state does not interfere with rights of individuals.
An economic philosophy of active state intervention to stabilize the economy and stimulate employment.
government intrusion in markets menaced human freedom.
"Every act of government intervention limits the
area of individual freedom directly".
He wanted to abolish the minimum wage, end Social Security, eliminate tariffs, and end detailed regulation of industries.
Global Justice Movement
Critics in the global justice movement saw neoliberalism as a new doctrine of colonialism and imperialism.
AcLvists, by definiLon, take acLon.
Aeacks on corporaLons marshal a range of devices that create pressure.
• Consumer boycoes
• Shareholder aeacks
• Harassment, ridicule, and shaming
• Corporate campaigns
study of what is good and evil, right and wrong, and just and unjust.
theory of amorality
is that business should be amoral, that is, conducted without reference to the full range of ethical standards, restraints, and ideals in
theory of moral unity
in business actions are judged by the
general ethical standards in society, not by a special set of more permissive
Major sources of Ethical values
Factors that influence managerial ethics
2. Strategies and policies
3. Corporate Culture
4. Individual characteristics
1. Categorical Imperative
One should not adopt principles of acTon unless they can, without inconsistency, be adopted by everyone.
2. The Conventionalist Ethic
Business ethics is different from society's ethics. In business, people may act to further their self-interest so long as they do not violate the law. Business is like a game with permissive ethics.
3. Disclosure Rule
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.
4. Doctrine of the Mean
Calls for virtue through moderation. Right actions are found in the area between extreme behaviors.
5. Ends-mean ethic
The results validates the deeds
6. Golden Rule
Do unto others as you would have them do unto you
7. The intuition Ethic
The solution to an ethical problem lies in what you sense or understand to be right or wrong without resort to conscious reasoning. A person's ethical instincts are the product of socialization, role expectations, educations, and experience.
8. Might-Equals-Right Ethic
Justice is nothing but the interest of the strongest. What is ethical is what a stronger individual or company has the power to impose on a weaker one.
9. Organization Ethic
It implies that the wills and needs of individuals are subordinate to the overall welfare of the organization.
10. Principal of equal freedom
Everyman may claim the fullest liberty to exercise his faculties compatible with the possession of like liberty by every other man
11. Proportionality Ethic
Proportionality applies to decisions having both good and evil consequences.
Principle of double effect:
(1)the good effects outweigh the bad
(2)the manager's intention is to achieve the good effects
(3)there is no better alternative
12. Rights Ethic
Rights protect people against abuses and entitle them to important liberties. Rights are not absolute and their limits may be hard to define
13. The Theory of Justice
what individuals must do for the common good of society
14. Utilitarian Ethic
Actions that promote happiness are right and actions that cause unhappiness are wrong.
Requires comparison of the ethical consequences for each alternative in a decision. Cost-benefit studies embody its logic and its spirit
Practical suggestions for making ethical decisions
1.Pay attention to your ethical intuition.
2.Consider tactics that illuminate alternatives. 3.Sort out ethical priorities early.
4.Set an example.
5.Thoughts must be translated into action.
6. Cultivate sympathy and charity toward others.
The force behind an act by a company, industry, or sector.
When is business power legitimate?
When it is used for the common good
Surface level of corporate power
Business power that is the direct cause of visible, immediate changes.
Deep level of corporate power
Corporate power shapes society over time through the aggregate changes of industrial growth.
The Dominance Theory (3 aspects)
Business abuses power its size and wealth confer in a number of ways.
1. The rise of huge corporaIons creates a business elite that exercises inordinate power over public policy.
2. Asset concentration creates monopoly or oligopoly in markets that reduces competition ad harms consumers.
3. Corporations wield financial and organizational resources unmatched by opposing interests.
The Elite Theory
There exists a small group of individuals who, by virtue of wealth and position, control the nation.
A pluralist society is one having multiple groups and institutions though which power is diffused.
Several features of American society support this thesis of pluralism:
(1)U.S.A is infused with democratic values. (2)There is a large population spread over a wide geography and engaged in diverse occupations. (3)The Constitution encourages pluralism. (4)Business is exposed to constraining market pressures that forces a stream of resource allocaIon decisions centered on cost reduction and consumer satisfaction.
Boundaries of managerial power
•Governments and laws in all countries regulate business activity
•Social interest groups represent every segment of global society and have many ways of restrict business.
•Social values are transmitited across generaIons, reflected in public opinion, and embedded in the law.
•Markets and economic stakeholders impose strong limits.
Nine elemental historical forces affecting business environment
1. Industrial revolution
3. Population growth
7. Dominate Ideology
8. Great Leaders
Some changes in the business environment may be best explained as the product of unknown and unpredictable causes.
In the international arena, the nation-state is an actor formed of three elements, a ruling authority, citizens, and a territory with fixed borders.
An ideology is a set of reinforcing beliefs and values that constructs a worldview.
Leaders have brought beneficial and disastrous changes to societies and businesses.
The basic population trend throughout human history is growth.
Has occurred in many waves
1. Water power, textiles, Iron
2. Steam rail, steel
3. Electricity, chemicals, internal combustion engine
4. Electronics, aviation, petrochemicals
5. Digital networks, software, biochemicals, new media
In economics, globalization occurs when nation open themselves to foreign trade and investment, creating world markets for goods, services, and capital.
Inequality is ubiquitous. As the industrial revolution accelerated the accumulation of wealth, it worsened the persistent problem of uneven distribution.
Industrial growth remakes societies. It elevates living standards, alters life experience, and shifts values.
Six external environments of business
The internal environment
Why is the BGS Field Important to Managers?
To succeed in meeting its objectives, a business must be responsive to both its economic and its non-economic environment.
Recognizing that a company operates not only within markets but also within a society is critical.
A basic agreement or social contract exists between economic institutions and other networks of power in a society.
The BGS field is the study of the business, government, and society environment and its importance for managers.
Society has three interacting elements (3)
3. Material things
Ideas (2 types)
Intangible objects of thought, include values and ideologies.
1. values: enduring beliefs about which fundamental choices in personal and social life are correct
2. ideologies:are bundles of values that create a worldview
Formal patterns of relations that link people to accomplish a goal; vital to markets
Institutions that support markets
Four models of the BGS relationship
1. market capitalism model
2. business dominance
3. countervailing forces model
4. stakeholder model
shows the corporation at the center of an array of relationships with persons, groups, and entities called stakeholders.
Primary vs. Secondary stakeholders
A small number of constituents for which the impact of the relationship is mutually immediate, continuous, and powerful.
Include a possibly broad range of constituents in which the relationship is one of less immediacy, benefit, burden, or power to influence
Countervailing forces model
Depicts the BGS relationship as a flow of interactions among major elements of society.
Characteristics of countervailing forces model
(1) Business is deeply integrated into an open society and must respond to many forces.
(2) Business is a major force acting on government, the public, and environmental factors.
(3) To maintain broad public support, business influence but no control social, political, and economic forces.
(4) BGS relationships evolve as changes take place in the ideas, institutions, and processes of society.
Represents the perspective of business critics. In it, business and government dominate the great mass of people. Corporations and a powerful elite control a system that enriches a few at the expense of the many
Market capitalism model
Depicts business as operating within a market environment, responding primarily to powerful economic forces.
Commercial society --- Capitalism
Four goals of Market Capitalism Model
(1) government regulation should be limited
(2) markets will discipline private economic activity to promote social welfare
(3) the proper measure of corporate performance is profit
(4) the ethical duty of management is to promote the interests of owners and investors.
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