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Genba 145
Business & Soc Exam 1
| Question | Answer |
|---|---|
| Business Definition | any organization that provides goods or services to satisfy human needs and wants. At its core, business is about Value Creation |
| Value Creation | Taking resources like land, labor, and capital, and transforming them into products or services that people desire |
| Sole Propietorship | When an individual pursues business for a profit |
| Partnership | When two or more people agree to contribute resources to start and operate a business together |
| Corporation | Legal entities that exist separately from their owners |
| LLC | A hybrid business form combining advantages of the sole proprietorship, partnership, and corporation |
| Cooperatives | Owned by members for their mutual benefit (Credit Unions, agricultural co-ops) |
| Non-Profit | Create business models to fund missions rather than return profits to owners (Goodwill, Salvation Army) |
| B-Corps | These companies not only operate with profit as the focus, but also with social interests in mind such as environmental sustainability or providing development opportunities for their communities (Patagonia, Ben & Jerry's) |
| Key Functions of Business (4) | Production, Employment, Innovation, Wealth Creation |
| Production (Key Business Function) | Organizing resources to create goods and services |
| Employment (Key Business Function) | Providing jobs and livelihoods |
| Innovation (Key Business Function) | Developing new technologies and products that improve life |
| Wealth Creation (Key Business Function) | Generating profits and tax revenue that support governments and communities |
| Business and Society Interdependence | One cannot exist without the other, dynamic |
| How does Society shape Business | through laws (antitrust, regulations), social movements, consumer demand |
| How does Business shape Society | by creating jobs, innovating new technologies, lobbying governments, influencing media, and shaping lifestyles |
| Monistic (Form of Society) | Power and authority are centralized and held by a SINGLE leader, party, or ideology | Diversity of thought is suppressed by a SINGLE ruling party | ONE dominant worldview |
| Pluralistic (Form of Society) | Power is distributed among MANY groups and institutions where MULTIPLE voices and competing interests are recognized and protected | power is SHARED | diversity in viewpoints, stability from checks and balances |
| Anarchistic (Form of Society) | NO central authority or governments | order maintained through LOCAL customs, voluntary cooperation, and power held by SMALL groups/clans | absence of gov, decisions made through consensus | high personal freedom but instability & high conflict ris |
| Revolution of Rising Expectations | the growing belief that businesses should serve their shareholder, but also employees, customers, communities, and society at large |
| Iron Law of Responsibility | In the long run, those who do not use power responsibly will lose it |
| Agrarian Economy | Manual Labor, Handmade Goods (ancient times -- mid 170s) |
| Industrial Economy | Industrial Revolution, Machine Production and Urbanization (1760s-1800s) |
| Globalized Economy | Reduced trade barriers, internet and digital assets (1900s-Present) |
| Corporate Social Responsibility (CSR) | A business's obligation to make decisions that ultimately benefit society |
| Economic Model (History Perspective) | Fulfillment of self-interest (need for profit) leads to fulfillment of social interest |
| Legal Model (History Perspective) | Businesses can be somewhat limited in their actions (based on laws) |
| Social Model (History Perspective) | Businesses also have a responsibility to society (meet ethical responsibility) |
| Stakeholder Model (History Perspective) | Expands upon business responsibility to society and also requires broader conceptualization of stakeholders |
| Stakeholders | All those directly affected by the behavior of the organization and that hold a stake in its performance |
| Shareholders | An individual or entity that owns a share of stock in a corporation, making them a partial owner of that corporation |
| Shareholder Primacy (Friedman) Long Version | The Social Responsibility of Business is to Increase its Profits; government's responsibility to decide and carry out social policies through democratic processes, NOT for corporate execs to take on themselves |
| Shareholder Primacy (Friedman) Main Point | Focusing on PROFIT creates jobs, innovation, and prosperity |
| Stakeholder Management Model (Freeman) | Challenges traditional profit-oriented view | a "new story of business" focused on purpose, values, and creating value for all stakeholders | assume that businesses will always try to take advantage of others for their own interests |
| Stakeholder Relationships (Freeman's Six Ideas) | Business is about building long-term relationships with customers, employees, suppliers, communities, and shareholders |
| Stakeholder Interdependence (Freeman's Six Ideas) | These groups depend on one another, and companies succeed when they create value for all |
| Trade-offs as Failures (Freeman's Six Ideas) | Instead of seeing conflicts as inevitable trade-offs (like profit vs environment), leaders should use creativity to find solutions that benefit multiple groups |
| Purpose, Values, and Ethics (Freeman's Six Ideas) | Companies must embed these into everything they do, not treat ethics as separate from business |
| Physical Limits and Opportunities (Freeman's Six Ideas) | Businesses must recognize environmental constraints while using creativity to turn sustainability challenges into opportunities |
| People are Complex (Freeman's Six Ideas) | Humans are motivated not just by money but also by mastery, autonomy, and purpose |
| Shareholder Definition | an individual (or entity) who owns shares in a company |
| Stakeholder Definition | a member of society who has a perceived or tangible interest in a company's values |
| Four Basic Consumer Rights | Safety, Be Informed, Choice, Be Heard |
| Historical Catalysts for Consumer Rights | The Jungle (1906); Pure Food & Drug Act | Ralph Nader’s Unsafe at Any Speed (1965) |
| The Psychology of the Consumer Movement | Issue if products promise to give you something they cannot, advertising to vulnerable populations appealing to negative psychological states | the emotional and psychological appeals resonate with consumers more than product functions/features |
| Decision Perspective - Shareholder | rational, deductive, outcome-focused |
| Decision Perspective - Stakeholder | contextual, tradeoff-aware, process-focused |
| Premise (Argument) | the considerations/facts |
| Valid Reasoning (Argument) | accurate inferences |
| Conclusion (Argument) | what we are trying to prove |
| Validity vs. Soundness | validity regards the conclusion, soundness regards the reasoning |
| Cognitive Bias | a systematic error in thinking that occurs when people process and interpret information, leading to irrational judgments or distorted perceptions of reality (affects premises - what we accept as true or relevant) |
| Logical Fallacies | Error in reasoning that undermine the logic of an argument |
| False Premises | derived from cognitive biases |
| Inaccurate conclusions | derived from logical fallacies |
| Confirmation Bias (Cognitive Bias) | Cherry-picking evidence (Fallacy) |
| Self-serving bias (Cognitive Bias) | moral rationalization (fallacy) |
| Negativity bias (Cognitive Bias) | slippery slope (fallacy) |
| Bandwagon effect (Cognitive Bias) | appeal to consensus (fallacy) |
| Ad Hominem | attacking the person, not the argument |
| Straw Man | misrepresenting someone's argument to make it easier to attack |
| Appeal to Popularity (Ad Populum) | popularity does not prove truth |
| Ways to reduce errors in reasoning | make assumptions explicit, separate facts from values, actively seek disconfirming evidence, watch for common fallacies, consider stakeholders systematically, slow down high-stakes decisions, test the argument not just the outcome |
| Utilitarian Ethical Theory (teleology) | MAXIMIZE BENEFITS greatest good for greatest amount of people |
| Kantian Ethical Theory (deontology)* | MORALITY/ethics matters most; can't place value on human life; how you do something matters more than end result |
| Aretaic Ethical Theory (virtue)* | INTENTION focuses on being a good person, earliest form of ethical theories, emphasizes MOTIVE - people doing the right thing for the right reason |
| Trolley Problem (Utilitarian Approach) | Pulling lever to save 5 but 1 dies |
| Trolley Problem (Kantian Approach) | Not pulling lever because you morally cannot be responsible for 1 death |
| Rational-Decision Making Model (6 Steps) | Identify/Define the Problem, Identify Criteria, Weigh Criteria, Generate Alternatives, Evaluate Alternatives, Compute Optimal Decision |
| Sound when the premises are ___ | true |
| Unsound when the premises are ___ | untrue |
| Soundness | whether premises are true or false |
| Validity | Conclusions are true |
| Valid when... | premises are true and reasoning for the conclusion makes sense |
| Invalid when... | premises are true but the reasoning for the conclusion does not make sense |
| Confirmation Bias Example | All data supports this strategy... |
| Self-serving bias example | It's ethical because it benefits us |
| Negativity bias example | Any change will destroy value |
| Bandwagon effect example | Everyone agrees, so it's right |
| Stakeholder model (simple example) | focused on creating value for all |
| Shareholder model (simple example) | focused on creating value for those who are financially tied to the company |
Created by:
lexi.welte
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