MGMT 326 Midterm II

1) Understand how governments and businesses work together? (Ch. 7)

Why do they work together well sometimes?
1. Seek mutually beneficial goals. They see each other as key partners to
achieve common objectives.
2. A crisis can sometimes join government and business forces (WWII)
3. In other situations, the government can provide subsidies, grants, or other
forms of assistance to help businesses expand and stabilize.
Why are they at odd sometimes?
1. Objectives are in conflict and results in an adversarial relationship.
2. Businesses generally dislike government regulation or constraints
3. Illegitimate politicians may rise to power in the country of business.

2) Define key elements of the Public Policy Process? (Ch. 7)

A plan of action by the government to achieve a purpose that affect citizens.
1. Public policy inputs: external pressures push a gov. to address problems.
2. Public policy goals: established to assure citizens of change
3. Public policy tools: incentives/penalties used to achieve goals.
4. Public policy effects: the outcomes from government regulation.

3) Identify why governments turn to Regulation? (Ch. 7)

To establish rules of conduct for citizens and businesses.
1. Market failure: marketplace fails to adjust prices for the true costs of a
firms behavior.
2. Negative externalities: the manufacture or distribution of a product gives
rise to unplanned or unintended costs (spillover effects).
3. Natural monopolies: without competition, firms could raise prices as
much as they want.
4. Ethical arguments: consequences, fairness issues.

4) Understand the cost of regulation to government? (Ch. 7)

The test of cost-benefit analysis helps the public understand what is at stake when
new regulation is sought.
1. Government agencies have to enforce government regulations
2. Spending on U.S Regulatory Activities
3. Staffing of US Regulatory activities

5) Should businesses be involved in the political process? (Ch. 8)

6) Who are the major participants in the political process? (Ch. 8)

Various stakeholder groups, representing many varied concerns and populations,
have a voice in politics and the public policy process:
1. Citizens
2. Corporations
3. Politicians
4. Non-governmental Groups: Environmentalists, Social Activists

7) Understand the types of corporate political strategies? (Ch. 8)

A corporate political strategy is activities by organizations that help it gain
political power and competitive advantages.
1. Information strategy - Businesses provide government officials with
information to influence their actions.
2. Financial-incentives strategy - Businesses provide incentives to
influence government officials.
3. Constituency-building strategy Businesses seek collaboration from other
stakeholders (the public) to better influence government officials.
8) Know the 3 levels of business involvement in the political process. (Ch. 8)

9) Understand the term sustainability. (Ch. 9)

The quality of not being harmful to the environment or depleting natural
resources, and thereby supporting long-term ecological balance.

10) What factors are combining to accelerate the ecological crisis the world faces? (Ch. 9)
Three critical factors have combined to accelerate the ecological crisis that make
sustainable development more difficult:
1. Population growth
2. World income inequality
o Countries and people at either extreme of income tend to behave in
more environmentally destructive ways than those in the middle
3. Rapid industrialization of many developing nations
11) What is the earths carrying capacity? What does it mean? (Ch. 9)
A fixed limit of the Earths ecosystem/natural resources. The worlds resource: air,
water, soil, minerals, and so forth, is essentially finite, or bounded. We have only
one Earth; the ecosystem itself is not growing. If human societies use up resources
faster than they can be replenished, and create waste faster than it can be
dispersed, environmental devastation will be the inevitable result.

12) What are global environment issues and how do they affect business and society? (Ch. 9)

1. Climate Change: Changes in the Earths climate caused by increasing

concentrations of carbon dioxide and other pollutants produced by human activity.
o Causes include:
Burning of fossil fuels
Increased emissions of nitrous oxides
Black carbon
Deforestation
Beef production
2. Ozone Depletion: bluish gas, composed of three bonded oxygen atoms, that
floats in a thin layer in the stratosphere between 9 and 28 miles above the planet.
3. Resource Scarcity:
o Water
o Land
o Green Environments
4. Lack of Biodiversity: the number and variety of species and the range of their
genetic makeup.
o Scientists estimate that species extinction is occurring at 100 to 1,000
times the normal, background rate due to pollution and habitat destruction.
o Genetic diversity is vital to each species ability to adapt and survive and
has many benefits for human society as well.
o A leading cause: Destruction of rain forests, particularly in the tropics.
The reasons for destruction of rain forests include commercial
logging, cattle ranching, and conversion of forest to plantations to
produce cash crops.
5. Threats to Marine Ecosystems: oceans, salt marshes, lagoons, and tidal zones
that border them, as well as diverse communities of life they support.
o Salt water covers 70 percent of the earths surface and supports many
species.
o Key threats to these ecosystems:
1. Exploitation of fish populations
2. Decline of coral reefs
3. Coastal development in ecologically fragile areas
4. Ocean acidification

Commons: a shared resource, such as land, air, or water that a group of people use
collectively.
Paradox of the commons: if all individuals attempt to maximize their own private
advantage in the short term, the commons may be destroyed, and all users, present
and future, lose.
The only solution is restraint, either voluntary or through mutual agreement.

Tragedy of the commons: freedom in commons brings ruin to all.

Example: Fishermen

13) Understand the difference between command & control VS market-based

regulatory approaches? (Ch. 10)
Command and Control regulation - the government commands businesses to
comply with standards and controls their choice of technology.
Market-Based Regulation - based on the idea that the market is a better control
than government standards that specify precisely what companies must do.
1. Cap-and-Trade: businesses are allowed to buy and sell the right to pollute
2. Emissions Charges or Fees: businesses are charged for the waste it emits.

14) What is the cost benefit analysis of environmental protection? (Ch. 10)
Cost-Benefit Analysis - A systematic method of calculating the costs and benefits of a
project or activity that is intended to produce benefits.

15) What is technology? (Ch. 11)

Technology: application of science & knowledge to commercial and organizational
activities. Qualities:
1. Always changing; something new
2. Widespread effects: Ripples through society
3. Acts as a multiplier in its own development

16) What is the digital divide? (Ch. 11)

Gap between those that have access to technology and those that dont.
Less advantaged individuals and societies may not enjoy the same benefits
By 2013, nearly 98 percent of American homes were able to access the Internet

17) Describe ethical challenges from scientific breakthroughs. (Ch11)

1. Genetically modified or engineered foods
o Altering the natural makeup of a living organism and allowed scientists to
insert virtually any gene into a plant and create a new crop
2. The sequencing of the human genome
o The identification of human genes is critical to the early diagnosis of lifethreatening diseases, the invention of new ways to prevent illnesses.
3. Biotechnology and the stem-cell research
o Tissue engineering and stem-cell research
o Offer the promise that failing human organs and aging cells could be
rejuvenated or replaced with healthy cells or tissues grown anew

18) What is the relationship between technological innovation and privacy? (Ch. 12)
Individuals are under a technology microscope with vast amounts of data
collected each minute and available to be analyzed in great detail.
Governments have stepped in to protect individuals and their personal information
Cybercrime: criminal activity done using computers and the Internet
Hackers and Hacktivists: individuals who hack government or corporate
computer networks to collect stakeholders personal information for thrill or
profit.

19) How do nations and governments take control of information? (Ch. 12)
In non-democratic regimes, governments censor and restrict citizen access to
information.
o The Chinese government operates one of the most sophisticated systems
of Internet censorship in the world.
o The Pakistani government broadened an existing ban on social networking
sites
o North Korea is one of the worlds most recognized censors of the Internet
In democratic countries, the role of government is more likely to look out for the
public good and protect intellectual property

20) What is a CIO?

An individual who is entrusted the responsibility for managing technology and the
privacy and security issues of a company

21) What are the Board of Directors responsibilities?

Board of directors - An elected group of individuals who have to establish
corporate objectives, develop broad policies, and select top-level personnel to carry
out these objectives and policies.
o Structured to best serve the interests of the corporation and shareholders

22) What is insider trading?

Insider trading
o Happens when a person gains access to confidential information about a
companys financial condition
o Uses that information, before it become public knowledge, to buy or sell the
companys stock for a profit
Is illegal under SEC Act of 1934, meaning against the law to:
o Steal nonpublic information and use it to trade a stock
o Trade a stock based on a tip from someone who had an obligation to keep quiet
o Pass information to others with an expectation of gain