Business and Society 1010 Exam

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