Emerging Issues in Management (Mgmt 440) Professor Charles H. Smith Course Introduction/The Study of Business, Government and Society (Chapter 1) Spring 2010

Course Introduction Introduction/call roll. Adds. Review syllabus. My – My website – Warning! A course that deals with ethical and legal issues often involves some kind of wrongful conduct (illegal, immoral or both); due to this wrongful conduct, cases and examples presented in class may contain offensive material; presented for educational value, not “shock” value.

Law vs. Ethics “Law” – rules created by society’s ruler(s) which must be followed by everyone in society. “Ethics” – your own rules, such as personal beliefs, religious doctrine, moral code, cultural traditions, etc.; may result in waiver of legal right or violation of law.

Law vs. Ethics cont. Examples of ethics becoming law –Religious doctrine like rules about killing another person now found in homicide laws. –“Regulatory” laws such as insider trading statutes passed after stock market abuses in 1920’s lead to crash of –Federal Arbitration Act enacted due to policy of encouraging out-of-court dispute resolution. –Student examples.

Law vs. Ethics cont. Examples of following law without being ethical –MLB team changes name from Anaheim Angels to Los Angeles Angels of Anaheim – breach of contract? –Using racial or religious slur – free speech? –Hiring friend who meets minimum job qualifications instead of better-qualified stranger – discrimination? –Student examples.

Law vs. Ethics cont. Examples of how ethics can result in waiver of legal rights by refusing to –Get a tattoo. –Have your body pierced. –Wear a hat indoors (men only). –Student examples.

Law vs. Ethics cont. Examples of how ethics can result in violation of law –Using illegal substances such as marijuana. –Violence as revenge for being wronged. –Using false name or other false information to get job (and get paid for doing it). –Student examples.

Introduction to Business, Government and Society Definitions on pages 4-7 –Business – profit-generating activity; e.g., big business like Microsoft, small business like liquor store, student examples. –Government – regulates business through laws and institutions; e.g., insider trading statutes enforced by SEC, student examples.

Introduction to BGS cont. Definitions on pages 4-7 cont. –of human relations comprised of ideas, institutions and material things –Society – network of human relations comprised of ideas, institutions and material things Idea – intangible thought or basis for action; e.g., thinking of burning an American flag, student examples. Value – enduring belief or ethic; e.g., sexual celibacy or monogamy, student examples. Material things – tangible goods; e.g., equipment in this room, student examples.

Introduction to BGS cont. Definitions on pages 4-7 cont. –Ideology – values creating world view; e.g., democracy, student examples. –Institution – formal relationship; e.g., your workplace, student examples. –Social contract – underlying agreement between business and society or basic obligation of business to society; e.g., business provides jobs to people even during recession; student examples.

How Institutions Support Markets

How Institutions Support Markets cont. Concentrate on the following – –Judicial Substantive law – determines rights and responsibilities. Procedural law – provides dispute resolution processes. Student examples of both. – –Cultural Family institutions. Religious institutions. Educational institutions. Student examples of all three.

Market Capitalism Model

Market Capitalism Model cont. Market acts as buffer between business and nonmarket (social and political) forces. Market economy – production moves beyond subsistence level to trade level. Capitalism –Means of production is privately owned. –Business motivated by desire for profit. –Limited government interference.

Dominance Model

Dominance Model cont. Popular with critics of business. Corporations and other large business interests control system that enriches elite at expense of masses. Populism – popular in late 19 th Century –Reaction to dominance model. –Oppressed/disadvantaged people sought to take power from elite; e.g., Sherman Antitrust Act of –Discuss later in greater detail.

Countervailing Forces Model

Countervailing Forces Model cont. Features flow of interactions among main elements of society. Look at “The Public” – all factors can influence spending decisions; student examples. “Overarching conclusions” on page 15.

Stakeholder Model

Primary Stakeholders Stockholders (owners). Customers.Employees.Communities.Governments.

Secondary Stakeholders Media.Competitors. Suppliers (vendors). Trade associations. Political interest groups. Creditors.Unions.

Secondary Stakeholders cont. Political parties. Religious groups. Earth’s biosphere. Future generations. The poor. Educational institutions.

Who are the Stakeholders? Start with the lists on the previous slides – one of the big issues with this model is identifying stakeholders. Which stakeholders on these lists are more important to you generally? To the majority generally? Why? Should any stakeholders on these lists be disregarded? Why?

Stakeholder Model Case Studies To be reviewed with small groups during next class – who/what are the stakeholders as to the following –Exxon Mobil case study at pages –Same-sex marriage issue. –Class cutbacks at Cal State Fullerton.