MGMT 5440 midterm practice

Pluralism

Disperses power, maximizing freedom

of expression and action

Creates diverse loyalties, preventing

dominance by a single organization.

Iron Law of Responsibility

In the long run, power must be used in a manner that society deems responsible, or power will be lost

Pluralistic society

This societal condition exists when there is a dispersion of power, maximization of freedom of expression and action, and the creation of diverse loyalties, all of which prevents dominance by a single organization.

Special Interest society

This societal condition is characterized by complex and diverse groups with focused agendas, often working at cross purposes, lacking unified goals.

Social Contract

The set of reciprocal understandings that characterize the relationships between major social institutions, which include the following elements:

Laws and regulations ("The Rules of the Game"); and

Two-Way Shared Understanding of Each Other.

Complexity

The sheer number of relationships that business has with other segments of society indicates this of its social environment.

Because of the sheer member, and specificity of special interest groups, the groups often...

work at cross-purposes

Major institutions in a pluralistic, special-interest society will inevitably receive...

analysis and criticism

Which of the following is not a factor in the social environment that has lead to the current climate of criticism of business?

affluence and education

the revolution of rising expectations

an entitlement mentality

all of these choices are factors leading to criticism of business

all of these choices are factors leading to criticism of business

Stakeholders include all of the following groups except . . .

owners.

employees.

customers.

all of these are stakeholder groups.

all of these are stakeholder groups.

An internal stakeholder is a person or group who...

is "inside" the company, such as employees and owners.

"In the long run, those who do not use power in a manner which society considers responsible will tend to lose it" is the description of

The Iron Law of Responsibility

Identify the four component's of corporate social responsibility according to Carroll's Pyramid of CSR.

economic, legal, ethical, and philanthropic responsibilities

According to Carroll's Pyramid of CSR, the philanthropic ("discretionary) responsibility is required by society. T/F

F

A business donates a portion of its profits to local charities while simultaneously maintaining its legal obligations and profitability. According to Carroll's Pyramid of Corporate Social Responsibility, this donation would fall under which layer of the pyramid?

Philanthropic responsibility

Corporate social responsiveness (CSR2) is a state or condition of having an obligation or responsibility. T/F

F

Which of the following best describes the "Environmental" aspect of ESG?

Ensuring employee diversity and fair labor practices

Reducing a company's carbon footprint and improving energy efficiency

Implementing transparent financial reporting standards

Ensuring executives have diverse backgrounds

Reducing a company's carbon footprint and improving energy efficiency

What is the primary focus of the "Social" component of ESG?

Corporate tax transparency

Environmental sustainability efforts

Community engagement, employee well-being, and social responsibility

Board structure and executive compensation policies

Community engagement, employee well-being, and social responsibility

Which of the following is an example of a "Governance" factor in ESG?

Adoption of renewable energy technologies

Equitable treatment of employees and fair wages

Establishment of an independent and diverse board of directors

Reduction of carbon emissions by 50% over 5 years

Establishment of an independent and diverse board of directors

Which of the following best defines Corporate Social Performance (CSP)?

The economic performance of a company in its market

The assessment of a company's contribution to environmental, social, and ethical responsibilities

The legal performance of a company in terms of compliance with regulations

The financial stability of a company based on shareholder returns

The assessment of a company's contribution to environmental, social, and ethical responsibilities

Which of the following is a key indicator of strong Corporate Social Performance (CSP)?

High shareholder dividends

Low employee turnover rates due to competitive compensation

Engagement in philanthropy, ethical labor practices, and sustainable environmental policies

Aggressive growth in international markets

Engagement in philanthropy, ethical labor practices, and sustainable environmental policies

What does Corporate Social Responsiveness primarily refer to?

The capability of a company to proactively address social issues and stakeholder concerns

Which of the following is an example of Corporate Social Responsiveness?

A company responding to community protests by revising its labor practices

A company faces public criticism for its environmental impact. Instead of acknowledging the issue, the company denies any wrongdoing and refuses to change its practices. Which Corporate Social Responsiveness strategy is the company using?

Reactive

A corporation decides to exceed regulatory requirements by implementing sustainability initiatives, such as reducing emissions and sourcing renewable energy, even though it has not been pressured by regulators to do so. Which Corporate Social Responsiveness strategy does this exemplify?

Proactive

What is one major similarity between CSP and ESG as frameworks for evaluating corporate responsibility?

Both are used to evaluate a company's ethical, social, and environmental performance

A company is deciding whether to switch from using non-renewable resources to renewable energy sources. Which choice best aligns with the concept of sustainability?

Implement renewable energy sources even if initial costs are higher to preserve resources for future generations

A company is evaluating its product packaging and is considering using biodegradable materials. How does this decision align with the principle of sustainability?

It reduces environmental harm, helping meet present needs while preserving the environment for future generations

Which of the following best describes the Triple Bottom Line (TBL) framework?

A framework for measuring corporate success based on social, environmental, and financial performance

A company is deciding whether to invest in a new project that will reduce carbon emissions but may result in lower short-term profits. Using the Triple Bottom Line approach, how should the company evaluate this decision?

Consider the social and environmental benefits alongside the financial costs, weighing the long-term impact on people, the planet, and profitability

What is the best definition of CSR Greenwashing?

A practice where companies spend more on marketing themselves as environmentally friendly than on actually reducing their environmental impact

A fashion brand advertises a new clothing line made from "sustainable materials," but investigation reveals that the company still uses harmful chemicals in its production process and exploits labor. This is an example of:

CSR Greenwashing

What is the primary goal of stakeholder management?

Identifying, prioritizing, and addressing the interests and concerns of all parties affected by an organization's activities

A company plans to close a factory in a small town to move operations overseas. Which stakeholder group is likely to be most affected by this decision, and therefore should be prioritized in stakeholder management efforts?

Local community and employees

A corporation wants to build a new factory in a rural area. To manage stakeholders effectively, what is the best course of action for the company?

Engage with local residents, environmental groups, and government officials early in the planning process to understand and address their concerns

Which of the following best describes the difference between primary and secondary stakeholders?

Primary stakeholders are directly affected by the company's operations, while secondary stakeholders have an indirect or less immediate interest in the company's actions.

A company plans to implement a new employee wellness program. Which of the following is the primary stakeholder group that would be most directly impacted by this decision?

The company's employees

What is the Stakeholder View of the Firm?

The perspective that a firm should consider and address the interests of all parties affected by its operations, not just shareholders

What is the instrumental view of the stakeholder model?

It emphasizes that engaging stakeholders is important for improving financial performance and achieving strategic goals.

What is the normative view of the stakeholder model?

The ethical perspective that stakeholders have intrinsic value and should be treated fairly, regardless of business outcomes.

A company improves working conditions in its factories because it believes that doing so will increase productivity and reduce employee turnover, leading to higher profits. This action reflects which stakeholder model perspective?

Instrumental

A company decides to offer additional benefits to its employees, such as extended parental leave and healthcare, even though these benefits may not increase profits. This decision is most aligned with which view of the stakeholder model?

Normative

Which of the following best describes the Strategic Approach to stakeholder relationships?

Focusing on stakeholders only if doing so contributes to the financial goals of the organization.

What is the main focus of the Multi-fiduciary Approach to stakeholder management?

Treating stakeholders as ethical partners whose interests are just as important as shareholder interests.

A company is facing pressure from environmental groups to reduce its carbon emissions, but the CEO decides not to take action because it would reduce short-term profits. Which stakeholder approach is the CEO following?

Strategic Approach

A corporation decides to balance the needs of its shareholders with those of its employees and customers without giving priority to one group over the other. Which stakeholder relationship approach is the company using?

Multi-fiduciary Approach

"I believe that the enlightened corporation should try to create value for all of its constituencies. . . . ""Not that we're only concerned with customers. At Whole Foods, we measure our success by how much value we can create for all six of our most important stakeholders: customers, team members (employees), investors, vendors, communities, and the environment." This quote from John Mackey, founder of Whole Foods, is an example of .

Stakeholder Thinking

What are the Five Questions of Stakeholder Management?

1. Who are our stakeholders? 2. What are their stakes? 3. What opportunities and challenges do they present? 4. What responsibilities does the firm have to them? 5. What strategies should be used to address these opportunities and challenges?

Stakeholder Salience Typology. From Google's perspective, the federal and state governments bringing antitrust actions against Google claiming that Google is a monopoly should be classified as a _______________ under the stakeholder typology.

Definitive stakeholder

Stakeholder Salience Typology. From the NFL's perspective, Colin Kaepernick when he was kneeling during the National Anthem before NFL football games would would be classified as a ______________ under the stakeholder typology.

Definitive stakeholder

Stakeholder Salience Typology. From Google's perspective, a hacker making persistent and increasingly threatening and credible attempts to breach Google's security and gain access to confidential user data that Google has collected on all of us. Google would classify the hacker as a _______________.

Dangerous stakeholder

Stakeholder Diagnostic Typology. From Google's perspective, DuckDuckGo as a competing search engine with a 1.35% share of the search engine market, compared to Google's approximate 90% market share.

Marginal

A company decides to invest in sustainable farming practices for its key suppliers, knowing that it will improve long-term supply chain stability while also benefiting local communities. This decision is an example of:

Strategic CSR

A clothing retailer partners with a nonprofit to reduce waste by recycling old clothing into new products. This initiative helps the company reduce costs while addressing environmental concerns. What type of CSR approach is this?

Strategic CSR

What is the primary goal of Michael E. Porter's Strategic CSR (Corporate Social Responsibility)?

To align CSR initiatives with the company's core business strategy to create both social value and competitive advantage

According to Michael E. Porter, which of the following is a key characteristic of Strategic CSR...

Creating shared value by addressing societal issues that intersect with the company's operations

What is the primary purpose of a Certified B Corporation (B Corp)?

To meet the highest standards of social and environmental performance, transparency, and accountability

Which of the following distinguishes a Certified B Corp from a traditional corporation?

A Certified B Corp is legally required to consider the impact of its decisions on all stakeholders, not just shareholders

What is the key difference between a Certified B Corporation (B Corp) and a Benefit Corporation under state law?

What is the key difference between a Certified B Corporation (B Corp) and a Benefit Corporation under state law?

What is corporate governance primarily concerned with?

The system of rules, practices, and processes by which a company is directed and controlled

Which of the following is a key responsibility of a company's board of directors in corporate governance?

Ensuring the company's financial transparency and protecting shareholder interests

A company's board of directors notices that the CEO is making decisions that benefit her own compensation but are harmful to the company's long-term success. According to principles of corporate governance, what should the board do?

Replace the CEO to protect the company's long-term interests and hold them accountable

A company's board of directors wants to ensure strong governance practices. What should they implement to enhance accountability?

Establish clear roles, independent audits, and regular evaluations of executive performance

What is the corporate agency problem in the context of corporate governance?

The conflict that arises when management acts in its own self-interest rather than in the best interests of shareholders

From the perspective of Milton Friedman's argument on corporate responsibility, John Mackey's decision to donate a portion of Whole Foods' profits to charity can be seen as part of the corporate agency problem because...

It aligns management's personal preferences with the company's social mission, potentially at the expense of shareholder profits.

Which of the following best illustrates how Enron's collapse was a failure of corporate governance?

Enron's executives used complex accounting practices to hide the company's true financial condition from shareholders and the board of directors.

Enron's executives engaged in risky and unethical practices to inflate the company's stock price, while the board and auditors failed to intervene. How does this reflect a breakdown in corporate governance?

The board of directors and auditors failed to hold management accountable, allowing self-interested behavior that prioritized short-term gains over the company's long-term health.

What is one recommended best practice to ensure board members can maintain objectivity in their decision-making?

Holding board-member-only meetings without the CEO's presence

According to the lessons from Boeing's board mistakes, what should a board do to manage for truth and realism?

Prepare for worst-case scenarios by estimating potential threats and their costs

According to the article, what do corporate board members primarily view as their role?

To hire the best CEO and provide support and advice

What was one of the main reforms introduced by the Sarbanes-Oxley Act (SOX) in 2002 regarding corporate boards?

It mandated that a majority of board members be independent and required the formation of an audit committee.

A corporate board has been supporting a CEO's decisions but recently discovered a major decision that led to significant financial losses for the company. Based on the recurring theme found in the article, how is the board likely to respond?

They will fire the CEO if their trust in the CEO's decision-making abilities falters.

Why do corporate board members often feel unqualified to judge the CEO's decisions on a case-by-case basis, according to the document?

They lack the same level of detailed knowledge and preparation as the CEO, who is immersed in the company's operations full-time.

Why is it important for a board of directors to be independent from management and the corporation?

To ensure the board can make unbiased decisions that protect the interests of shareholders and other stakeholders

A corporation's board of directors includes several executives from the company, and the CEO has significant influence over board decisions. What potential issue could arise from this lack of independence?

The board may fail to challenge the CEO's decisions, leading to unchecked power and potential conflicts of interest.

What is the primary purpose of the Say on Pay Act?

To allow shareholders a non-binding vote on the compensation packages of top executives

In a company where the CEO also serves as Chairman of the Board, the board is tasked with evaluating the CEO's performance. What governance issue does this situation present?

The board may be less objective in evaluating the CEO, compromising its ability to hold the CEO accountable for poor decisions.

A group of shareholders advocates for a company to improve its environmental sustainability practices. After months of pressure, the board agrees to adopt new policies. This is an example of:

Shareholder activism successfully influencing corporate governance

Which of the following is recommended to improve board oversight of corporate risks?

Spreading risk oversight across multiple committees

Why is it important to align the board's size and skill mix with the company's strategy?

To ensure the board has the necessary expertise and capacity to effectively support and guide corporate strategy

Which of the following best defines "risk" in the context of risk management?

A potential issue that may or may not occur

What does an "issue" represent in the context of issue management?

A gap between a firm's actions and stakeholder expectations

A company realizes there is a growing gap between its environmental practices and the expectations of stakeholders. How would this be classified according to the definitions provided?

Issue

Which of the following best distinguishes between an issue and a crisis?

An issue is a minor stakeholder concern, while a crisis represents an issue that has escalated to a critical state requiring immediate action.

An organization identifies a possibility of regulatory non-compliance that could lead to penalties if not addressed, and moves to address it. In which type of management is the organization engaged?

Risk management

Which of the following best describes a "preventable risk"?

An internal risk that can be avoided and offers no strategic benefit

What type of risk is a company taking when it decides to undertake deep drilling for greater oil production, despite the potential hazards?

Strategic risk

Which category of risk includes events like natural disasters and economic shocks that cannot be controlled by the company?

External risks

Into which risk category does a cyberattack fall?

External risk

What is the potential downside of risk-shifting according to the material?

It can damage the sustainability of others by transferring risks that could have negative long-term effects on other entities.

How is an "issue" defined in the context of issue management?

A gap between what stakeholders expect and what the firm is doing

What is a key characteristic of issues, according to the material?

They are ongoing and require ongoing responses and attention to effectively manage them over time.

Which of the following is the correct order of the issue management process as described in the material?

Identify issues, analyze and prioritize, plan responses, evaluate and monitor

What is a key benefit of early anticipation of issues in the issue management process?

It widens the range of options available for addressing the issues.

What is one way early anticipation of issues helps organizations in their approach towards issues?

It helps the organization develop a positive orientation towards managing the issues.

What are the two essential questions that need to be answered for ranking or prioritizing issues?

How likely is the issue to affect the organization, and how much impact will the issue have?

What is the primary purpose of the issue development process?

To help management recognize when an event or trend is becoming an issue

Which of the following is the first stage of the issue development process?

Felt need

Which of the following best describes a crisis as defined in the material?

An extreme event that may threaten an organization's existence, causing injuries, deaths, financial costs, and damage to reputation

What characterizes an organizational crisis according to the second definition in the material?

A low-probability, high-impact event that threatens the organization's viability, often marked by ambiguity and the need for swift decision-making