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The different types of organizations
Corporations, non-profits, cooperatives
What are corporations?
a compnay or group of people authorized to act as a single entity (legally as a person) and recognized as such in law.
What are non-profits?
an organization that uses its surplus revenues to further achieve its purpose or mission, rather than distributing its surplus to the organizations shareholders as profits or dividends.
What are Cooperatives?
business owned and operated by a group of individuals
worker cooperatives, consumer cooperatives
ex. home hardware, assiniboine credit union
What is capitalism?
system of how we make stuff (land, labour, capital) , control how you make it and you get to make money. you yourself are allowed to own and control things
What is individualism?
basic assumption that we have free will
assumes we make irrational decisions
assumes people seek to maximize self-interest
What is HRM?
how organizations find people, train them, compensate them, promote them, dismiss them
What is finance?
finance is about raising money and spending money and deciding on the best ways to accomplish these tasks.
What is accounting?
broadly concerned with the measurement of wealth and the financial impact of transactions
good accounting results in good decision making
Supply chain management
focuses on inter-orgnaizatinal logistics, and specifically on ensuring that organizations find optimal ways to aquire the supplies that they need from other organizations
Operations management
refers to directing and controlling the processes that convert an organizations resources (inputs) into finished goods and services (outputs)
includes both production management and service operations
What is marketing?
planning and executing the conception, pricing, promotion, and distribution of ideas, goods and services.
What is a value chain?
the sequence of activities whereby an organization:
acquires the resources it needs
engages in day-to-day operations to use and add value to these resources
utilizes its value-added outputs to further its interests
What is globalization?
the increasing movement of goods, services, and capital across natinoal borders
What are some attemps to fix working conditions in developing countries?
company level policies and programs
global codes of conduct for corporatinos
multi-stakeholder initiatives
What are externalities?
the cost or benefit that affects a part who did not choose to incur that cost or benefit
externalities often lead to market failures
What are the Four P’s
Product
Price
Place
Promotion
Consumer capitalism
a theoretical economic and social political condition in which consumer demand is manipulated, in a deliberate and coordinated way, on a very large scale, through mass-marketing techniques, to the advantage of sells.
Three Central features of capitalism
1) Wage labour
2) Private ownership of the means of production
3) Production for exchange and profit
Private property
right to own and use economic goods (production)
Rationality
sometimes assumed but not always delivered
Economic Freedom
The freedom to own property, to make a profit, and to make choices about what to produce, buy, and sell
How economic freedom is measured?
- property rights
- taxation
-regulation
-international exchange
- foreign investments
- money and inflation
- wage and price controls
- corruption
Equality of Opportunity
All individuals or groups have a chance at responding to society
Competition
the struggle among producers for the dollars of consumers
Profit
excess of revenues over expenses
Work Ethic
how hard you work
Consumer sovereignty
the power of consumers to decide what gets produced
Role of Government
in perfect capitalist market, government intervention would be virtually non existing (ex. enforcing contracts)
Capitalism vs. Socialism
1. capitalism is an economic system where the means of production are owned by individuals
2. companies live by profit motive (all companies have owners and managers)
3. governments job to enforce laws and regulation to make sure companies are running
Socialism vs Capitalism
1. means of production, money and other forms of capital preowned by state or public
2. everyone works for wealth that us in turn distribute to everyone
3. government decides how wealth is distributed among people
The case of capitalism
Free market- i’ll do something for you if you do something for me
Varieties of capitalism
Varies across countries- social traditions, economic traditions, political traditions
Laissez- fair capitalism
an economic system in which the means of production and distribution are privately owned and operated for profit with minimal or no government interference
State capitalism
System in which companies are privately run, but work closely with the government in forming laws and regulations
Stakeholder Capitalism
balance the needs of shareholders with stakeholders such as employers, suppliers, customers, local communities
Clean Capitalism
Incorporates social, economic and ecological costs (and benefits) into marketplace and prices we pay
US style capitalism
- Closer to pure capitalism than other models
- History of limited government involvement
- Less worker representation in corporate policies
- Lower union density
- Stock market financing
- "Shareholder Capitalism"
Chinese Capitalism
state organized economic activities
state owned enterprise
political over economic incentives
"state capitalism"
German capitalism
- History of stronger state involvement in corporate policy
- Worker representation through co-determination
- Bank Financing with significant cross-holdings
- Strong vocational training and focus on quality
- "Stakeholder Capitalism"
Japanese Capitalism
- Strong government involvement
- Interlocking business groups
- Lifetime employment
- "Collective Capitalism"
Canada Capitalism
More state involvement than US, less than Germany+Japan
history of stable and cooperative relationship between business & government
“Peace, Order, and good government”
Higher union density than US
union composition in Canada is far more female and public sector
Business firms
-The Canadian business system comprises business enterprises varying from sole or single proprietorships
Corporations
businesses that are owned by many investors who buy shares of stock
Privately owned corporations
Owned by founders,
advantage- no shareholders to answer to
disadvantage- have to raise capital privately
Public traded corporations
traded on stock market (anyone can buy shares), advantage- can raise capital on stock market, disadvantage- must answer to shareholders
Crown corporation
A type of business owned by the government
Who runs corporations? Owners
Owners- direct ownership (shareholders) indirect ownership (mutual fund holders)
Who runs corporations? Boards of directors
elected by shareholders, must fulfill legal and fiduciary obligations
Who runs corporations? Managers
top managers are hired by boards of directors, oversee operations of corporations
Non- profit organizations
why is it called the golden age?
Business was booming- tourism, tv, dishwashers, workers and managers kind of got along- more money to go around and share
active role for government economy- massive military spending, other social spending
the golden age ends
oil shocks, inflation, stagflation and unemployment
Globalization
the process by which businesses or other organizations develop international influence or start operating on an international scale.
Modern slavery
human trafficking; people held against their will, forced to work and paid nothing.
Who should we blame for the apparel industry?
the consumer who is blissfully unaware
Global codes for conduct from international
UN global compact, OECD guidelines for multinational, principles for CSR
Multi- stakeholder initiatives (private regulation)
reporting standards- international organization for standardization- forestry stewardship council- organizations police themselves involving many other parties
Operations Management
A specialized area in management that converts or transforms resources (including human resources) into goods and services.
UN IPCC report on climate change
in order to limit temperature to 1.5- coal, carbon capture, reforestation we need to make huge changes
Strengths of regulation- driven approaches
Strengths- power for oversight and sanctions in case of non -compliance, externally controlled so more stakeholder interests considered
Weaknesses of regulation- driven approaches
Weaknesses- susceptible to lobbying and corporate influence
Strengths of law- driven approaches
-Have the power to enforce compliance and can sanction non-compliance
- susceptible to influence than regulations
Weaknesses of law- driven approaches
Weaknesses- fines are often not a deterrent for large corporations
Strengths of market- driven approaches
Strengths- incentive for companies
potentially "efficient" since it is incorporated into the market
Weaknesses of market- driven approaches
weakness- allows corporation to continue to be environmentally destructive without addressing internal issues
Strengths of environmental NGOS
Strengths
-Can effectively pressure corporations into changing policies
-Externally (stakeholder) controlled instead of internally (corporate)controlled
Weaknesses of environmental NGOS
Weaknesses
-Do not possess the same amount of power as regulations or laws
-Potential for co-optation
Marketing
creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders
Product
satisfy the consumers
Price
what are consumers willing to pay for a product, especially when such high demand
Place
competitive advantage a product has in selling its products due to its "location"
Promotion
activities designed to sell products (advertising, sales) low-cost and high-impact ex( word of mouth, trusted sources)
What are the implications of an economy that is dependent on consumption?
Companies depend on the consumers
Depending on heavy sales days
Consumerism and the natural environment
production and household goods 60% - Richest one percent of global population emit more than twice the amount of the poorest 50 %
Planned Obsolescence
All the pricing promotion of distribution of goods and services
HRM and business and society
Human resource management focuses on the human element of organizations and is involved in hiring, compensating, training, and firing workers
Gender inequality in the workplace
women are being discriminated against
What is CSR (Corporate Social Responsibility)?
The duty of a corporation to create wealth in ways that avoid harm to, protect, or enhance societal assets
History of CSR
modern era emerges in the 1950s, -1960s environmental movement broadens CSR, -1970s CSR research explodes, -1980s& 1990s CSR branches out
Corporate giving
donations, charitable funds, strategic giving, cause-related marketing
Corporate sponsorship
partnership, which has been established for mutual benefit between a business sponsor/event or a non-profit
Social venture philanthropy
The investment of human and financial resources by corporations in non-profit community development agencies to generate a social return instead of only a financial one
Social enterprise
model of business operation where some or all profits deliberately used to further social aims
CSR debate
The CSR debate focuses on what (if any) the voluntary responsibilities of business should be
early CSR debate: should business engage in CSR at all?
Today CSR debate: is CSR enough to address the pressing social and environmental issue facing society
Case for CSR
legitimacy- the existence of the business system depends on its acceptance by society. if business is to prevent criticisms or mutinous behaviour, it must be receptive to what is happening in society and respond in some way
The Business case for CSR
CSR reduces costs, increases reputation, reduces risk, source of competitive advantage, win- win for everyone
Current debates around CSR
It takes the societal needs out of public hands (government) and places it into private hands.
Voluntary CSR is not enough, mandatory measures are necessary
What are stakeholders?
person or groups that affect, or affected by an organization decisions, policies or operations
Market (primary) stakeholder
stakeholders that engage in economic transaction (customers, employees, shareholders, suppliers)
Non-market (secondary) stakeholders
The stakeholders that do not engage in economic transactions with a company, but can still affect and be affected by a company's actions
Shareholder view
Shareholders advance capital to a company's managers, who are supposed to spend corporate funds only in ways that have been authorized by the shareholders
Stakeholder view
Managers have a duty to both the corporations shareholders and "individuals and constituencies that contribute, either voluntarily or involuntarily, to ( a company's) wealth creating capacity and activities, and who are therefor its potential beneficiaries and/ or risk bearers"
How can business’s become more stakeholder focused? (3 ways)
-Changing the language
-Changing attitudes and behaviours
-Clear communication in the organization
Changing the language to become more stakeholder focused
Maximizing our ‘company's’ value instead of maximizing ‘shareholders’ value
Changing attitudes and behaviour to become more stakeholder focused
Given the current legal wording around the responsibilities of CEOs and the low effectiveness of hostile takeovers, CEOs should be more free to openly pursue a stakeholder value approach given that the board approves it
What is a hostile takeover?
Hostile takeover are when an outside company attempts to purchase the company by taking enough shares or votes to get control of company