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UW MGMT 320 Midterm
Business, Government, and Society (Tod's class... good luck)
| Question | Answer |
|---|---|
| Why was the government offering cheaper (than market) flood insurance in Florida? | Flood insurance providers had to charge more than homeowners could afford to stay in business, some insurance providers were leaving Florida altogether |
| What are the issues with providing government flood insurance? | It cannot be a permanent solution, it causes losses, and if you don't provide it people may relocate to safer areas |
| When a consumer is not able to select a price for their car to be towed, what is the relationship between the consumer and tow provider an example of? | A market failure, since the consumer has no say in the price |
| What two negative things result from government regulations? | Costs (regulations always cost money) and limitation of freedom |
| What is the term for a situation where a homeowner doesn't lock their house because they have insurance that will cover theft (and otherwise would lock their house)? | Moral Hazard-- one party can indulge in risky behavior because they know another party will assume any negative consequences. |
| What is the Countervailing Forces Model, aka. the Pluralist Model? | There is no single dominant force in society. Power is constantly shifting, and various, separate power centers realign with other power centers when their interests overlap. |
| What is The Ownership Theory of the Firm? | The only obligation of a business or corporation is to maximize shareholder profits (not stakeholders!) |
| Who is the economist behind the concept of the Ownership Theory of the Firm? | Milton Friedman |
| What are the four steps of stakeholder analysis? | Who are the key stakeholders? What do they want (interests)? What power does each stakeholder have? Do they form coalitions? |
| What are the five types of stakeholder power? | Voting, Economic, Political, Legal, and Informational |
| What two things does a social contract/compact (stakeholder model) tell businesses? | 1. Companies only exist because society and government have given them the right to exist by creating the rules. 2. As companies gain more power, society expects more from them. |
| What is the term that describes the ability for a middle class child to grow up to be the russian ambassador? | Meritocracy, where merit advances you instead of elitism. |
| Colleges giving extra consideration to applicants of alumni is an example of what model? | The Elite Dominance Model: Elite businesses and governments dominate society and produce wealth and power for the few |
| What is the Laissez-faire/market capitalism model? (American revolution - mid 1930s) | Competition will keep prices to a minimum, people should have the freedom to pursue their own self interest. Managers should focus only on the bottom line. |
| What is Mutualism? | A relationship where both organisms benefit, in this case businesses and society |
| What is Commensalism? | A relationship where one organism benefits, and the other is unaffected. For example, a business profits, and society is unharmed but not benefitted |
| What is Parasitism? | A relationship where one organism benefits while the other is harmed. For example, a business profits but emits harmful gasses into the air that cause health problems |
| What are market stakeholders? Examples? | Entities that engage in economic transactions with the firm. They include shareholders, employees, creditors, suppliers, wholesalers, distributors, retailers, etc. |
| What are non-market stakeholders? Examples? | Entities that do NOT engage in economic translations with the firm. They include competitors, trade associations, colleges, media, community, the environment, the government, etc. |
| What is stakeholder salience? | Where managers prioritize stakeholder interests and concerns. |
| What three things does stakeholder salience assess? | Stakeholder power, stakeholder legitimacy, and urgency |
| What dynamic force describes the change of social expectations from 1970-today regarding business CSR? | Changing Social Expectations |
| What dynamic force describes being in the right place at the right time, or circumstances beyond your control? | Chance |
| Does a higher GINI score indicate more income inequality or less? | It indicates higher income inequality. |
| What is wealth? | What a family owns minus what they owe. |
| What % of people in the top 20%, IN 1996, were in the top 20% in 2005? (same as bottom to top) | 4% |
| What is a better indicator of income mobility than race? | Family income (leading to educational success and higher incomes) |
| T/F: Business should be proactive and interactive with stakeholders, not inactive or reactive. | True |
| Do radar screens focus on the future or the past? | They focus on the future. |
| What radar screen involves culture and ideology? | The Social Environment Screen |
| What is the best single definition of "culture"? | "the way we do things around here" |
| What is a Host Country? | A country the business does business in, domestic and foreign |
| What radar screen involves the physical environment, things like climate change? | The Geophysical Screen |
| What radar screen did Kodak cameras neglect when they focused on their direct competition instead of innovation? | The Tech Screen |
| High interest rates, changing minimum wages, and inflation are all aspects of the ________radar screen. | Economic |
| When the economy demands more of a product than can be supplied, it can cause... | ...demand pull inflation. |
| What is the Inflation Expectation Feedback Loop? | When people see inflation, demand higher wages, things they produce become more expensive, and then more inflation results. |
| The NFL's controversy with Kaepernick was an example of what radar screen? | The Political radar screen (and social?) |
| Regulations are a portion of what radar screen? | The legal radar screen |
| Binding arbitration is generally legal. What is it? | "...a process where an arbitrator makes a decision that both parties must accept as final and legally enforceable, meaning they waive their right to a trial." |
| Can businesses promote religious views? | Yes, in some cases. |
| What screen analyzes competitors (hmmm)? | The Competitor screen! |
| When the owner of sweet alchemy drove around and delivered to customers that would not leave their homes during covid, what radar screen was being demonstrated? | The Customer screen |
| What is one way "economic connectness" measured? [Student Expert] | Friendships between the rich and the poor |
| What is the iron law of responsibility? | Businesses that do not use their power in ways that society deems responsible will lose it. |
| What are the three stages of Corporate Social Responsiveness? | It's all about me. It's about the community the corporation affects. It's about all of us. |
| What were the reasons UBS was not a good example of CSR? [Student Expert] | They defrauded municipalities and non-profits in 2012, accepted deposits from Nazi's but would not allow Jews to take relatives' money out during WW2, and helped U.S. citizens conduct tax evasion by hiding money in offshore accounts |
| What is Social Darwinism? | Essentially, survival of the fittest. People should die because it'll leave the strongest left. It applauds people for not giving charitable contributions. |
| When managers give away shareholder's money via "donations" they would be acting _____ _____ (without authority, beyond their power) when their charters do not allow it | ultra vires |
| What does the latin phrase "ultra vires" translate to? | "beyond the power" |
| What did Andrew Carnegie's The Gospel of Wealth say? | The wealthy owe a duty to society that calls for philanthropic giving. |
| What is the Sherman Antitrust Act? | It prevents downright monopolies and promotes fair competition (1890) |
| What are the five Social Responsibilities of the Businessman (1954) coined by Howard Bowen? | (abridged) 1. managers must consider social implications 2. businesses have resources to improve civic life 3. corps must use power responsibly or risk losing it 4. it benefits businesses to improve society 5. voluntary action is good |
| What was the divestment movement? | University students demanded that their endowment movements "divest" of stocks in companies that did business with South Africa during apartheid. |
| What is the maximum APR for a member of the U.S. military (Federally)? Why? [Student Expert] | 36%, so military members have stable financials and aren't susceptible to foreign bribes |
| What did the HHL (fake photo analysis company) find? | When HHL advertised CSR, 25% more people applied and current employees did better work |
| What effect does CSR initiatives have on CEO employement? | When the company is doing well, CSR helps CEOs keep their job. When companies are doing poorly, CSR can cause CEOs to lose their jobs. |
| What are some arguments for CSR? | 1. It balances power and responsibility 2. It promotes long-term profits of a business 3. It improves corporation reputation |
| What did Warren Buffet say on the topic of reputation? | "It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you'll do things differently." |
| What are the three types of corporate philanthropy? | Gifts of money, products (in-kind), and labor |
| What type of corporate philanthropy is most likely to be part of a strategic plan? | in-kind contributions, because they promote their product to potential new customers |
| What is social capital? | Social capital is not only natural resources, but also tech, organizational skills in the community, and the presence of good government (Simon argues it is responsible for 90% of what people earn in wealthy societies) |
| What is Social Reporting? | The dissemination/publication of a social audit, promoting transparency and firm reputation. |
| What are some arguments against CSR? | Friedmanism, lowering economic efficiency and profits, unequal costs among competitors, hidden costs to stakeholders, requiring skills businesses may lack, placing responsibility on business rather than government, and imposing corp views on society |
| What's the difference between B-Corps and benefit corporations? | "a benefit corporation is a legal entity recognized by state law, while a B Corp is a certification awarded by the nonprofit B Lab based on social and environmental performance" (AI Overview) |
| What is the threshold for Washington's new (2024) non-compete law? | Less than $123,000 for employees, less than $300,000 for independent contractors |
| What should you do if you make less than $123,000 and come across a non-compete clause? | Sign it anyway, it's not legally enforceable. Once a few more people are hired, send HR an anonymous note informing them of the law. |
| What's a zero-sum game? | The gains one party receives is equivalent to the losses another receives in result (higher wages) |
| What are the five external forces that have shaped the modern workforce? [textbook] | Government intervention, structural change, competitive pressure, technology, and demographic change |
| What were the details of the New York 1911 Triangle Fire? [Student Expert] | Jewish women and young children worked in sweatshops, and Triangle would lock factory doors during the workday to prevent loafing. This caused 146 deaths when a fire broke out. |
| What are the exceptions to the employment "at will" rule in the U.S.? | There is a union contract, an ordinary employment contract, a breach of duty/good faith (switching someone to the midnight shift, "constructive discharge"), a violation of public policy, union activities, and discrimination |
| What is The Fair Chance Act? [Student Expert] | Prevented employers from asking if applicants had any criminal convictions ("Ban the box"), but had unintended consequences where employers would resort to racial discrimination |
| Can binding arbitration be required in sexual harassment cases? | No. |
| A business that employs an independent contractor is relieved from having to... | 1. keep time records 2. withhold taxes, remit taxes to government 3. Pay workers compensation insurance 4. fringe benefits, including medical, vacation, stock options 5. comply with Federal anti-discrimination laws that only apply to trad employees |
| What are the facets of Washington's "economic realities" test? | 1. Working relationship permanence 2. Degree of skill work entails 3. Investment in materials by the worker 4. The worker's opportunity for profit or loss 5. Control the employer has over the worker 6. Is service a major part of employer business? |
| What's preemption? | A law set by a higher level of government that trumps lower-level law (ex. Fed trumping state) |
| Does the First Amendment prevent firing decisions based on speech? | Only for government entities. Some states limit outside your job, but WA is not one of them. |
| What part of the government did the Facebook whistleblower Frances Haugen go to first when telling the public of their promotion of eating disorders? | The securities and exchange commission (SEC), because Facebook needed to report risks quarterly and EDs are a risk |
| What are "protected classes"? | Groups of protected people (race, color, religion, sex, or national origin) in employment discrimination |
| When did U.S. federal law make it illegal to discriminate in employment? | 1964, the Civil Rights Act |
| What does the debate of affirmative action entail? [Student Expert] | Creating plans that make goals to target and benefit historically marginalized people... gets complicated when the best qualified people do not land the job |
| What is Trump's view on DEI? What did he change in the government? | "...ended the tyranny of DEI..." "...and our country will be woke no longer" DEI is now directly opposed in the Federal government, including federal contracters |
| What is Quid Pro Quo sexual harassment? | Where job opportunities/promotions are given/denied on the basis of sexual favors, often in a supervisor/supervisee situation. |
| What is Hostile Environment sexual harassment? | Where employees must put up with a work environment where sexual jokes/comments are pervasive or unreasonably interfere with a person's work performance |
| What does the multi-part non-dispositive test of sexual harassment assess? | 1. Verbal/physical 2. Frequency 3. Hostile or patently offensive 4. Co-worker or supervisor 5. Did others join in, participating in the objectionable conduct? 6. Was the conduct directed at more than one person? |
| How do companies protect themselves in the event of sexual harassment? | 1. Having a clear (zero tolerance) policy that is communicated 2. Creating a complaint procedure (including reporting without retaliation) and acting quickly to resolve problems |
| Why are there often rules regarding dating in the workplace? | There is often an unequal work status, creating a situation where a person might feel pressured. |
| What is Japan's life expectancy rate? | 87 years for women, the world's longest (5 years longer than the U.S.) |
| How many additional people retired during Covid? (Covid Accelerated Retirements) | 2 million |
| What is the proper role of government? | Promoting the general welfare (from the preamble to the U.S. Constitution) |
| What are the two goals of business? | 1. To make a profit for its owners 2. (disagreement here) ethical/reputational goal to some level of CSR |
| What happens when a business's activities conflict with our government's desire to "promote the general welfare"? | Regulations are made |
| What is Friedman's "Cadillac Effect"? | He uses the example of a cadillac to challenge regulations, saying that it is like forcing everyone to buy a cadillac and no cheap models |
| Is it easier to train to be an EMT or a barber? | Barbers require more hours and expertise than EMTs |
| In Vietnam, Tod witnessed a guy cutting hair by setting up a chair on the sidewalk and plugging equipment directly into the power supply. What is this an example of? | Too little regulation. |
| What was the pollution in India despite pollution regulations an example of? What was the solution? | Unenforced regulations. The solution was to randomize auditors and offer fines/awards based on the quality of audits. |
| What book is "He was aiming for the heart but ended up hitting the public's stomach," a remark on? | The Jungle by Upton Sinclair, a book about meat manufacturing that made readers concerned for the food they were eating rather than labor conditions. It helped Roosevelt's goal for food regulations. |
| What were the Securities acts of 1933 and 1934? | 1933: Disclosure act -- Requires anyone selling or offering a security to file a registration statement and prospectus 1934: Requires independent auditors to audit publicly traded companies so shareholders and potential shareholders are informed |
| What is a Prospectus? | A summary of a security and outline of risks required prior to the sale of the security |
| When was the beginning of less government regulation? (Other than Trump administrations) | The 1950s, with Jimmy Carter |
| When was there more government regulation in the 20th century? | The mid 1960s through early 1970s (EPA, Civil Rights Acts, OSHA, Consumer Product Safety Act) |
| When was the period of deregulation? What things were deregulated? [Student Expert] | Late 1970s-1990s-- the deregulation of Airlines (ability to set their own routes resulting in hub and spoke system), trucking deregulation-- easier market entry, lower employee salaries |
| When did greater regulation of financial markets and greater regulation and scrutiny of internal corporate conduct occur? | 2000 +, Sarbanes Oxley in response to Enron and the Dot-com crash of 2003. |
| What are some of the ways Trump is going about deregulating? | Firing federal regulators, not appointing regulators, closing federal agencies, appointing people that do not believe in the historic mission of agencies to run those agencies, not spending money, attempting to roll back/eliminate regulations, etc. |
| What's public policy? | What the government chooses to do, or not to do (constrained by its lawful authority to act). When it acts, it does it through legislation, administrative rule making, executive orders, common law, and initiatives (WA). |
| T/F: Public policy goals are niche and specific. | False. Goals are broad and subjective, different policy makers may have strikingly different goals. One person's goals may be another person's burden. |
| Restaurants in King County are required to publicly post food inspection reports. What portion of public policy is this an example of? | Instruments/tools, including penalties and incentives (carrots and sticks) |
| When minimum wage increased, it caused increases in minor health violations. What portion of public policy is this an example of? | Effects: the outcomes include both intended and unintended results. |
| What are Tod's reasons for regulations? | 1. Market failure 2. Externalities 3. Natural monopolies 4. To promote ethical conduct 5. If self regulation doesn't work 6. Tort lawsuits are inadequate 7. So consumers don't rely on Caveat Emptor 8. Guard rails 9. Cost-benefit analysis |
| What's a Tort lawsuit? | "A tort is a civil wrong, other than breach of contract, that causes a claimant to suffer loss or harm, resulting in legal liability for the person who commits the tortious act. " -Wikipedia (like someone damaging your car without insurance) |
| What's an externality? | An expense, cost, or byproduct that is born by the public (not the business or consumer). |
| What is Caveat Emptor? | "let the buyer beware," ex. calorie labels |
| What are the four choices that the government has to deal with externalities? | 1. Tell producers to pay (pass to customers through price) 2. Tell consumers to pay (garbage) 3. Tell the public to pay (cleaning it up) 4. If 1, 2, and 3 are not practical, ban the activity |
| What reason for regulation is insider trading an example of? | Guard Rails |
| What are social regulations? | They focus on a concern for public welfare and safety, like banning palcohol (some states) and increasing chicken coop sizes (California) |
| What is fiscal policy? | The patterns of taxation (by the government) and spending. |
| What is Regulatory Impact Analysis? | Required when major new Federal rules have a predicted annual impact of > $100 million: 1. A statement of the need for the rule 2. An examination of alternative approaches 3. An evaluation of the benefits and costs of the rule and the alternatives |
| Do small businesses and large businesses carry the same burden with Federal and State regulations? | No, small businesses carry a disproportionate amount of costs (though they might be the same physical $$$) |
| What is Substantive deregulation? Examples? | Changing existing rules/laws. Things like airline and trucking deregulation, changing the "value of a statistical life" |
| What is Procedural deregulation? | Changing how existing rules/laws are ENFORCED/implemented |
| What is Structural deregulation? Examples? | Actions that undermine the core concepts of government agencies. Things like ignoring the rules, placing obstructionists in charge of agencies, reducing funding, and firing regulators and experts. |
| What is a statistical life? | If 10,000 people experience a 1/10,000 risk of death, the value of that risk is 1 statistical life (the number of people likely to die) |
| What are the 5 different types of substantive deregulation? | 1. Changing the law 2. Changing the equations 3. reducing command and control in favor of incentive or flexible enforcement controls 4. sunset laws 5. preemption |
| What's the difference between command and control and incentive control? | Command and control programs tell industry "you must do it this way" Incentive controls/flexible enforcement tell an industry "meet this particular result" (they don't care how) |
| What are sunset laws? | Where regulations include a built-in expiration date where it will expire unless re-authorized. |
| What are the 3 different types of structural deregulation? | 1. Reducing the $ available to enforcement agencies (starving the beast) 2. Choosing people hostile to the mission of an agency to lead the same agency and set policies 3. Not appointing regulators (boards) |
| What is the impoundment control act? [Student Expert]? | It requires the President to notify Congress of any withholding and allows Congress to review and approve or reject such actions within a specified time frame. |
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