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MGMT 3211 Chapter 1

business
an organizations that is engaged in making a product or providing a service for a profit
society
refers to human beings and to the social structures they collectively create; specifically refers to segments of humankind, such as members of a particular community, nation, or interest group
general systems theory
a theory that holds that all organisms are open to, and interact with, their external enviornments
interactive social system
the closely intertwined relationships between business and society
ownership theory of the firm
a theory that holds that the purpose of the firm is to maximize the long-term return for its shareholders. (Also called the property or finance theory of the firm)
stakeholder theory of the firm
theory that holds that the purpose of the firm is to create value for society
stakeholder
a person or group that affects, or is affected by, a corporation’s decisions, policies, and operations
market stakeholders
stakeholder that engages in economic transactions with a company
nonmarket stakeholders
stakeholder that does not engage in direct economic exchange with a company, but is affected by or can affect its actions
internal stakeholders
individuals who are employed by the firm, such as employees and managers
external stakeholders
individuals or groups that make important transactions with a firm but are not directly employed by the firm, such as customers or suppliers
stakeholder analysis
analytic process used by managers that identifies the relevant stakeholders in a particular situation and seeks to understand their interests, power, and likely coalitions
focal organization
the organization central to the stakeholder analysis being conducted
stakeholder interests
the nature of each stakeholder group, its concerns, and what it wants from its relationship with the firm
stakeholder power
the ability of one or more stakeholders to achieve a desired outcome in their interactions with a company. The five types are: voting power, economic power, political power, legal power, and informational power
stakeholder coalitions
alliances among a company’s stakeholders to pursue a common interest
stakeholder map
graphical representation of the relationship of stakeholder salience to a particular issue
boundary-spanning departments
departments, or offices, within an organization that reach across the dividing line that separates a company from groups and people in society
A business is any organization that is engaged in making a product or providing a service for a profit.
True
A stakeholder map is a useful tool, because it enables managers to see quickly how stakeholders feel about an issue and whether salient stakeholders tend to be in favor or opposed.
True
Businesses and society are independent of one another.
False
Government can be considered both a market and nonmarket stakeholder.
True
Market stakeholders include nongovernmental organizations and the media.
False
Nonmarket stakeholders are those that engage in economic transactions with the company as it carries out its primary purpose of providing society with goods and services.
False
Some scholars have suggested that managers pay the most attention to stakeholders possessing the least salience.
False
Stakeholders involved with one part of a company often may have little or no involvement with another part of the company.
True
The external environment of business is static.
False
The instrumental argument for the stakeholder theory of the firm says that companies perform better if they consider the rights and concerns of multiple groups in society.
True
The interests of different stakeholders often coincide.
True
The normative argument for the stakeholder theory of the firm says that the stakeholder view is simply a more realistic description of how companies really work.
False
The stakeholder theory of the firm argues that a firm’s sole purpose is to create value for its shareholders.
False
Urgency refers to the extent to which a stakeholder’s actions are seen as proper or appropriate by the broader society.
False
Walmart has been called a “template for 21st century capitalism.”
True
descriptive
more realistic description of how companies work
normative
stakeholder management is the right thing to do
instrumental
more effective corporate strategy

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