Business And Society Final Exam

Front 1

Corporate Governance

Back 1

the structures, procedures and policies established to protect the interest of the shareholders

Front 2

Top Management

Back 2

The CEO and other managers who have responsibility for the entire organization

Front 3

Board of Directors

Back 3

elected representatives of the shareholders with responsibility for hiring, directing, compensating ans evaluating top management

Front 4

Traditional View of the Corporation

Back 4

1. The Corp. is property of the shareholders
2. Corp. exists to achieve the objectives of the shareholders
3. the job of the Board of Directors is to supervise top management in the interests of the shareholders

Front 5

The Autonomous Corporation

Back 5

1. Corporations are Social institution (with identity seperate from the individuals involved)
2. the primary objective of the corporation is to supervise and prosper
3. the job of the Board of Directors is to work with top management in determining the "best interests of the corporation"

Front 6

Specific Issue of shareholder

Back 6

1. Executive Compensation (level, not connected to performance)
2. Failure to address problems that threaten the firm
hostile takeover attempts and corporate responses that disenfranchise shareholders
4. failure of boards to detect/prevail illegal or improper acts by Top Managers
5. Decisions that "protect the firm" that disregard or victimize shareholders while protecting other parties

Front 7

Why have some boards become tools of top management rather than protectors of shareholders interests

Back 7

1. chairman of the board is also the CEO
2, composition of the board of directors (inside directors, related outside directors, unrelated outside directors)
3. ability of the board to control nominations and elections

Front 8

What can discontented shareholders do?

Back 8

1. sell their stock
2. change legal rules for corporate governance
3. file shareholder lawsuits

Front 9

influence of pressure from institutional investors

Back 9

1. separate the position of chairman and CEO
2. reduce the # of inside directors
3. outside directors should be unrelated
4. Directors should limit the number of boards they serve
6. limit terms of service for directors

Front 10

Differences between the contract model and the Tort model

Back 10

5 differences
1. principle
2. grounds for suit
3. potential defendants
4. potential plaintiffs
5. recovery

Front 11

Contract model

Back 11

1. principle: courts have the authority to enforce contracts
2. grounds for suit: generally limited to failure to comply with obligations (warranty)
3. potential defendants: parties to the contract (usually the seller)
4. potential plaintiffs: parties to the contract (usually each plaintiff is sued individually because each purchase is a separate contract)
5. recovery: normally limited to economic losses

Front 12

tort model

Back 12

1. principle: courts have broad authority to right "wrongs"
2. grounds for suit- defendant displayed; intent to harm, reckless disregard, negligence, strict liability
3. potential defendants: anyone with plausible responsibility. the principle of JOINT AND SEVERAL LIABILITY could be applied
4. potential plaintiffs: may be single party or a "class" of people who alleged the same harm (class action suits may be permitted)
5. Recovery: may include compensatory damages (economic, noneconomic) or punitive damages

Front 13

Facts about puntitive damages

Back 13

1. puntitive damages may be requested by a plaintiffs attorney only after the jury has returned an award of compensatory damages
2. the judge is not required to allow puntitive damages, and in most cases does not
3. when the judge permits the jury to consider puntitive damages, they will normally return some award, often based on sympathy for the defendant
4. in many cases the plaintiff will not recieve the entire amount of the punitive award and in some cases NONE of it

Front 14

Definition of Tort Reform

Back 14

includes a variety of changes that have been proposed or adopted in some jurisdiction to address specific problems

Front 15

problems that tort reform attempt to fix

Back 15

- reducing judicial backlog
-preventing fraud and extortion
- restoring justice for small business
- protecting consumer access to products and services
- protecting the public from high costs associated with excessive jury awards

Front 16

common subjects of tort reform legislation

Back 16

-strict "loser pays"
-replacing joint and several Liability with comparative fault for non-economic damages
-limits on the size of punitive damages
-limits on attorneys' fees in some cases
-establish a magistrate system for specifc types of cases that are legally and technically complex

Front 17

Changes that have affected the relationship

Back 17

1. globalization of industries and markets
-cost control, flexibilty
2. technological innovations
-increased rate of change/shorter technological lifespans
-elimination/creation of industries , industry segments and jobs
3. rising costs of benefits
4. diversity of lifestyle
-affects value benefits to employee

Front 18

Strategies for attracting/retaining good employees

Back 18

1. change benefit packages
2. Change work schedules
-flextime, compresses work week, telecommuting
3. redefine career paths
-foreign postings, lateral transfers
4. introduce outplacement programs
-extend benefits and assistance for personnel who are displaced due to mergers, aquisitions or downsizing
5. Redefine Career Paths
-foreign postings, lateral transfers
6. introduce outplacement programs
-extend benefits and assistance for personnel who are displaced due to mergers, acqusitions or downsizing

Front 19

what rights do shareholders have in a corporation

Back 19

1. to receive declared dividends
2. to vote on: BOD, acquisitions, charters
3. to receive annual reports
4. bring shareholder suits against company
5. to sell their shares of stock

Front 20

way shareholder activism attempts to influence behavior of corporate boards

Back 20

corporate governance

Front 21

corporate governance

Back 21

the process by which a company is controlled or governed

Front 22

Reasons that have given rise to the consumer movement

Back 22

1. to prevent consumers from being abused by unfair prices
2. prevent unsafe products
3. prevent promotion of products known to be harmful to human health
4. complex products have complicated choices when consumers go shopping
5. services/products have becomre more specialized and difficult to judge
6. some businesses have ignored public saftey

Front 23

Rights of consumers

Back 23

1. the right to be informed
2. the right to safety
3. the right to chose
4. the right to be heard
5. the right to privacy

Front 24

the right to be informed

Back 24

to be protected against fraudulent and deceitful information, advertising and labeling and to be given facts to make an informed decision

Front 25

the right to safety

Back 25

to be protected against the marketing of goods that are hazardous to health

Front 26

the right to chose

Back 26

to be assured of access to a variety of products and services at a competitive price

Front 27

the right to be heardq

Back 27

to be assured that consumer interests will receive full and sympathetic consideration in the formulation of government policy

Front 28

the right to privacy

Back 28

that the information disclosed in the course of a commercial transaction, such as a health conditions, financial status, or identity is not shared with others unless authorized

Front 29

How Rights of consumer laws have been reflected in the goals of consumer laws

Back 29

- some laws are intended to provide consumers against possible hazards
- to promote competitive pricing and consumer choice
- to protect privacy

Front 30

changes businesses have advocated to reform product liability laws

Back 30

- most large class action suits were moved from state to federal courts
-limit punitive damages
-require loser to pay the costs of winner
-strict liability

Front 31

what rights to employees have in the work place

Back 31

1. the right to organize and bargain collectively
2. the right to a safe and healthy workplace
3. the right to a secure job

Front 32

what current issues with regard to employee privacy have created controversy

Back 32

1. privacy rights
2. electronic monitoring
3. romance in the workplace
4. employee drug use and testing
5. alcohol abuse at work
6. employee theft and honesty testing

Front 33

what kinds of things can businesses do to strengthen the community in which they operate

Back 33

1. hire a community relations manager
2. economic development
3, crime abatement
4, housing
5. aid to minority enterprises
6. diaster, terrorism and war relief

Front 34

globalization

Back 34

refers to the increasing movement of goods, services, and capital across national boarders. it is a process of an ongoing series of interrelated events

Front 35

factors of the acceleration of globalization

Back 35

1. technological innovation
2. transportation systems
3. the rise of major transnational corporations
4. the rise of major transnational corporations
5. social and political reform

Front 36

benefits of globalization

Back 36

1. it increases economic productivity
2. globalization tends to reduce process for consumers
3. globalization also benefits consumers by giving them access to a wide rande of diverse goods and the latest "big thing"
4. for the developing world globalization also brings benefits

Front 37

costs of globalization

Back 37

1. job insecurity
2. the environment and labor standards may be weakened as companies seek manufacturing sites where regulations are most lax
3. globalization prevents individual nations from adopting policies promoting environment or social objectives if these discrimiate against their products
4. erodes regional and national cultures

Front 38

ways shareholder activism attempted to influence behavior of corporate boards

Back 38

1. instituational investors: have become mroe assertive in prompting the interests of their members
2. social investmetL the use of stock ownership as a strategy for promoting social objectives
-stock screening
-social responsibility shareholder resolutions
3. stockholder lawsuits-advance their interests by suing the company