BGS Review Questions

Lesson 1
What are the characteristics of the BGS discipline?
o Evolving
o Multi-disciplinary
o Systems thinking
- Interdependent
- Equi-finality (different ways to arrive at same goal)
- Different goals, managing priorities
o Negative entropy
- Nature tends towards disorder
- B/G/S will tend towards disorder without management
o Inexact science
- Subjective truth (not absolute)
▪ Coherence (makes sense -> truth) -> persuasion
▪ Pragmatic (works -> truth) e.g. policy
▪ Normative (when enough people accept it -> truth)
- Based on interpretation
- Social constructs

Use examples to briefly explain the systems perspective.

o Systems thinking
- All organisms are open to, and interact with their external environments
- Positive interactions with society benefit a firm
- Businesses must adapt to changes in their environment
- Interdependence
- Equi-finality (different ways to arrive at same goal)
- Different goals, managing priorities
o Examples
- Eg. Apple in the market for digital technology
▪ Customers, government, competitors, suppliers, media, communities,
employees etc
▪ Positive interactions between groups will benefit Apple
▪ Interdependence between different groups

Explain the stakeholder typology of legitimacy, power, and urgency.

o Legitimacy – perceived validity or appropriateness of a stakeholder’s claim to a stake
o Power – the ability of a stakeholder to produce an effect
o Urgency – refers to the degree to which the stakeholder’s claim demands immediate
attention
Briefly discuss the diagnostic typology of organizational stakeholders.

Use an example to explain the stakeholder map.

(x) Stakeholder analysis

1. Who are the relevant stakeholders?
2. What are the interests of each stakeholder?
3. What is the power of each stakeholder?
4. How are coalitions likely to form?

Use examples to discuss market and non-market stakeholders.

o Market stakeholders (aka Primary Stakeholders)
- Engage in economic transactions with the company as it carries out its primary
purpose of providing society with goods & services
- Eg. Employees, suppliers, distributers, customers, creditors, stockholders

o Non-market stakeholders (aka Secondary Stakeholders)

 - Groups/ people that are affected by/ can affect the company’s operations although
they do not engage in direct economic exchange with the firm
- Eg. General public, business support groups, community, media, government, NGOs

Discuss the 6 dynamic forces that shape the business and society relationship.
o Changing societal expectations
o Growing emphasis on ethical reasoning and actions
o Globalization
o Evolving government regulations and business response
o Dynamic natural environment
o Explosion of new technology & innovation
How are Stakeholder Coalitions Likely to Form?
o Stakeholder groups with common interests will form temporary alliances to pursue these
common interests
o Coalitions are very dynamic (can change at any time)
o Coalitions are increasingly international
o Internet has enabled coalitions to form quickly, across political & geographical boundaries
o International alliances, coupled with media interest, can be a very powerful strategic force
for companies

What are the 5 types of stakeholder power?

o Voting power (eg. Shareholders in board of directors)
o Economic power (eg. Gov sanctions, boycotts by consumers)
o Political power (eg. Gov legislation)
o Legal power (eg. Suing firm for damage)
o Informational power (eg. Access to valuable data to rate firms)
Lesson 2
Apply Ngiam’s framework to explain the Singapore success story.

o Movement towards a knowledge-based economy, boosted by good governance and strategic

pragmatism
o Result of continuous generation exploitation, application and diffusion of knowledge in
economic activities

o Good governance: 4 phases - low cost low tech, low cost med tech, high cos med tech, high
cost high tech  growth from primary agriculture -> secondary manufacturing -> tertiary
services -> knowledge
o Constant enhancement of knowledge in economy

o Strategic pragmatism: Underpinning pillars - political and institutional, educational and social,
financial and banking
- POLITICAL/ INSTITUTIONAL - leadership succession, elite deployment, creative civil service,
free press *POLITICAL STABILITY
- SOCIAL/EDUCATIONAL - change of curriculum & educational goals (KNOWLEDGE-BASED
ECONOMY), spontaneous society (critical thinking)
- FINANCIAL/ BANKING - to finance enterprises to innovate

o Policies not based on ideology, but pragmatism

o Financial sector as a pillar - to build up reserves, establish secure financial framework to
attract financial investments
- Criticisms in the past: Autocratic, limited freedom of speech
▪ Defense: necessary, inherited law from the British

Discuss the impact of globalization on Singapore.

o Labor mobility
- Across borders
o From labor-intensive to capital and skill-intensive industries
- Structural unemployment
o Economies become more interconnected
- Increased competition
- More vulnerable to external shocks (uncertainty)
o Economic growth (for SG, brought about by FDI)
 - Not always the case (income disparity)
- QOL falls (stress levels)
o Emigration of Singaporeans
- Brain drain
o Dilution of local culture & identity
- Westernization, individualism

o Rise in foreign share of domestic production and income

o Shift from public housing to expensive high-end properties
o High reliance on servicing foreign financial cash flows

Briefly discuss the Singapore dreams and Singapore Dilemmas.

Dreams
o Personal
- 5Cs (materialistic)
- Work-life balance
- Job security

- Home ownership

o Government
- Economic progress
- ‘Playground of the rich'
Dilemmas
o Income inequality
o Cultural dilution (economic development vs heritage)
o Social unrest/ conflict (foreign talent vs local talent)
o Work life balance (economic growth vs social welfare)
o Meritocracy vs elitism

o Downgrading of flats (home ownership vs increase in property price)

Briefly discuss the process of globalization.
o Increasing movement of goods, services, and capital across national borders
o Is considered a process – an ongoing series of interrelated events
- International trade and financial flows integrate the world economy, leading to the
spread of technology, culture, and politics
- Globalization is not simply a trend or a fad but, rather, an international system

What are the cost/benefits of globalization?

What drives the acceleration of globalization?
o The world’s economy is becoming increasingly integrated
- Higher share of output is being exported across national borders
- One-fourth of all goods and services produced worldwide is sold to other nations,
rather than domestically

o In earlier years, most exports were of goods. An important recent trend is the globalization
of services, such as travel, insurance, financial, and information services

o Driven by several factors:

- Technological innovation
▪ Easier to communicate with stakeholders all over the globe in real time
- Transportation systems
▪ Improvements enable the fast and cheap movement of goods and services
from one place to another (eg. Containerization)
- The rise of major transnational corporations
▪ Bigger, well-capitalized, firms are better equipped to conduct business
across national boundaries than smaller firms (have more resources)
- Social and political reforms
▪ Rise of Pacific Rim growth economies, collapse of communism in Central and
Eastern Europe have opened new regions to world trade

EXTRA:
Characteristics of Business environment: Social environment:
- Hard-working workforce - Stable and safe
- Pro-business regulations - Multi-racial
- English-speaking environment - Quality of life
- Good infrastructure - Ageing population
- Low corruption - Increasingly xenophobic
- Open economy (invite MNCs to SG) - Conservative/traditional
- Competitive
- Small domestic market

Challenges of Singapore’s Business Government Society

- Increased property rent due - Employment - Ageing population

to scarce land - Increasing - Low birth rate
- Increased costs due to expectations - Work life balance
inflation from open by citizens - Income inequality
economy - Leadership - Increased diversity
- Need to maintain global succession (in our value system)
competitiveness (eg. Sexuality,
 generation gap)

Lesson 3
Draw a diagram to describe Ansoff’s Strategic Issue Management framework.

Briefly describe the issues management process.

1. Identify Issue
- Anticipating emerging concerns
2. Analyze Issue
- Evaluating issue; understanding how it will evolve and affect the organization
3. Generate Options
- Evaluating action options, involves complex judgments that take into account “non-
quantifiable” factors like the company’s reputation
4. Take Action
- Once option is chosen, must design and implement it
5. Evaluate Results
- Must assess results of the program and made adjustments as needed
How do companies identify issues?
 Scan the environment
 Identify emerging issues and trends (leading forces as predictors of social change)
- Leading events
- Leading authorities/advocates (of activist groups)
- Leading literature (books)
- Leading organizations
- Leading political jurisdictions (new legislations/court decisions)

What are the benefits of issues management?

 Companies develop better overall reputations
 Develop better issue-specific reputations
 Perform better financially
 Provides a bridge to crisis management

Briefly describe the issue development life cycle process.

What are the stages in business stakeholder relationship? (THINK: WILMAR)

Over time, the nature of business’s relationships with its stakeholders often evolve through a series
of stages
 Inactive – companies ignore stakeholder concerns
 Reactive – companies act only when forced to do so, and then in a defensive manner
 Proactive – companies try to anticipate stakeholder concerns
 Interactive – companies actively engage stakeholders in an ongoing relationship of mutual
respect, openness and trust

Briefly describe the four groups of corporate crisis.

Corporate crisis: a significant business disruption that stimulates extensive news media or social
networking coverage; has the potential to negatively affect the health, reputation or credibility of
the organization
 Act of God
- Natural disasters like earthquakes, floods
 Mechanical problems
- Faulty equipment
 Human errors
- Miscommunication, improper employee behavior
 Management decision or indecision
- Lack of urgency or cover-up of misdeeds (eg. Wilmar)

What are the practical steps in managing a crisis?

An effective crisis management plan must include:
 Get ready before the crisis hits
 Communicate quickly, but accurately
- Create internal communication system that can be activated when crisis occurs
 Use the internet
- To decrease public fear/ provide assistance
 Do the right thing
- Do not make excuses, be sympathetic
 Follow up, where appropriate, make amends to those affected

1. Activation plan
- Internal stakeholders (set up crisis management team w/ key decision makers)
- External stakeholders (emergency numbers)
2. Communication plan
- Centralization of information
- What to tell? (what content and how much to say)
- Who to tell?
3. Crisis management team
- Executive group
- Action group (eg. PR, need media training of employees beforehand)
 - Parallel group (sets of executive + action groups)
4. Plan-to-plan
- Damage control (isolate the problem)
- Problem solving mechanism (investigation, sourcing external help)
- Recovery plan (follow up, normalize the situation back to original state)
Lesson 4
Differentiate between charity & stewardship principles.
Charity Principle - good thing to do
 Business should give voluntary aid to the needy (rich must give to the poor)
 Eg. Corporate philanthropy, voluntary actions

Stewardship Principle - smart thing to do

 Business, acting as a public trustee, should consider interests of all stakeholders
 Commonly employed by public listed companies
- Shareholders unlikely to agree to charity w/o any returns in the long run
 Enlightened self interest

Explain the pyramid of CSR using examples.

CDL/Wilar?

How to balance:
 Have minimum standards on CSR (need not
maximize profits)
 Compensate model (do charity to avoid
complying with some laws)

What are the 6 common CSR initiatives?

1. Cause promotions (promotions for a cause)
2. Cause-related marketing (donating revenue from sale of product)
3. Social marketing (support campaigns, usually initiated by gov)
4. Corporate philanthropy (charity donations)
5. Community volunteering (employees volunteering)
6. Socially responsible business practices (conducting discretionary business practices)
Discuss the 4 phases of corporate social responsibility.
 Corporate social stewardship, 1950s – 1960s
 Corporate social responsiveness, 1960s – 1970s
 Corporate/business ethics, 1980s – 1990s
 Corporate/global citizenship, 1990s – 2000s

Discuss the concept of self-enlightened interest.

• Economic and social goals come together in companies that practice enlightened self-interest
o Firm leadership can see it is in company’s self-interest in long term to provide true
value to customers and help employees grow and behave responsibility
• Do socially responsible companies sacrifice profits by promoting the social good?
o NO! Moderately positive association between CSR with firm performance
o Corporate social and environmental responsibility is likely to pay off

Explain the concept of multiple responsibilities of business.

• Economic responsibilities
- + social  from enlightened self-interest
• Legal responsibilities
- A firm must abide by laws and regulations governing society
- Legal rules set the minimum standard for business
- Current legal standards for CSR are minimum public expectations
- Companies can choose to go beyond the legal standard and strive for higher levels of
social responsibility
 Social responsibilities
- Stakeholders expect businesses to use power responsibly for society
- Promote interests of entire company, not any single stakeholder group
- Should focus on long-run profits than immediate returns
• Iron law of responsibility – in the long run, those who do not use power in ways that society
considers responsible will tend to lose it
Discuss the stages of Corporate Citizenship.

Discuss the concept of corporate power.

• Corporate power refers to the capability of corporations to influence government, the
economy and society based on their organizational resources
- (+) commanding more resources, producing at low costs, bring new
products/technologies to developing countries
- (-) disproportionate influence on politics, shape tastes, divide markets

• Economic power of corporations relative to nations in terms of revenue

o Toyota’s revenue is comparable to Hong Kong’s GDP, Walmart/ Norway, BP/
Denmark
• Size and global reach of MNCs (tremendous power)
o Influence consumer behavior & demand + lifestyle
o Society is dependent on MNCs for job creation, community well-being, SOL,
banking & financial services, health care etc
o Ability to make contributions to campaigns (influence on governments)
o Globalization
o ENVIRONMENTAL DAMAGE
o Ability to help those in need
▪ Eg. Relief efforts, tools to aid disaster control
• Advantage over smaller companies
o Lower cost of production because of economics of scale
o More resources & reserves to withstand market fluctuations

What are the benefits of social audit?

A systematic evaluation of an organization’s social, ethical and environmental performance
1. Help businesses know what is happening within their firm
2. Understand what stakeholders think about and want from business
3. Tell stakeholders what the business has achieved
4. Strengthen the loyalty and commitment of stakeholders
5. Enhance the organization’s decision making
6. Improve the business’s overall performance

Stakeholder engagement: Goals: Range of approaches

- Mutual understanding - Ignore vs attend to concerns
- Trust - Direct vs indirect (through 3rd party/media)
- Pacify stakeholders - Confrontational vs cooperative
- Buy time - Offensive (sue them, target/discredit person) vs
defensive (press conference)
Lesson 5
Ethics –
• A conception of right and wrong conduct
• Tells us whether our behavior is moral or immoral
• Deals with fundamental human relationships—how we think and behave toward others and
want them to think and behave toward us

• Types of ethical principles:

- Teleological theories: focus on consequences of the action they produce
- Deontological theories: focus on duties/obligations (absolute right or wrong)
- Aretaic theories: focus on virtue

Briefly discuss any 4 different views of ethics.

• “Might is right” (Greek philosopher Thrasymachus)
- most powerful define what is right (eg. North Korea Kim Jong-un)
• “Morals are mores” (Ethnic approach)
- different communities define their own ethical norms (eg. Honor killing)
• “Man is the measure” (Radical individualism)
- Individual, not God/moral law, is the ultimate source of value (-) subjective
• “The human race is the basis of right”
• “Right is moderation” (Aristole’s golden mean)
- if too extreme, no longer right (eg. Tactless  honest  dishonest)
• “Right is what brings pleasure (Hedonism)
- have the right to do anything to pursue happiness
• “Right is the greatest good for the greatest number” (Utilitarianism).
• “Right is desirable for its own sake”
- is right as long as benefit oneself
• “Right is indefinable” (G.E. Moore)
- relative
• “Good is what God wills” (Christian perspective)
- religious (-) different interpretations across/within religion (eg. ISIS)

Briefly discuss the three approaches to business ethics. (Conventional, Principles, Ethical test)
Briefly discuss the principles approach to ethics.
Briefly discuss the ethical tests approach to ethics.
Give an example to explain the concept of distributive and procedural justice. – NKF

1. Conventional approach
• Based on how normal society today views business ethics
• Comparison of decision or practice to prevailing societal/ industry norms
- Social constructs
- If everyone is doing it, should be acceptable (big pharma)

2. Principles approach
 Based upon the use of ethics principles to direct behaviour, actions and policies
- Utilitarianism: focuses on acts that produce the greatest ratio of good to evil for
everyone (maximum good for maximum number of people)
 - Rights

- Justice:
o Distributive
 Fairness in the distribution of rights or resources
 Compare what you give and what you get (outcomes)
 Eg. Equity (get what you contributed) vs equality (everyone gets the same) vs need
(you get what you need)
o Procedural
 Fairness and transparency of the process by which decisions are made
 Eg. Court appeals

- Care: What is the most caring thing to do?

- Virtue ethics
- Servant leadership
- Golden rule: you should do unto others as you would have them do unto you

3. Ethical test
 Based on short, practical questions to guide ethical decision making and behaviour
- Test of common sense
- Test of one’s best self (am I compromising on my ethical standards? – a forced
choice is probably a bad choice)
- Test of making something public (do I have anything to hide? – transparency)
- Test of ventilation (what would others say? (-) tend to talk to others/friends who
conform to same inclination)
- Test of purified idea (talk to people of moral/legal authority)

Briefly discuss the relationship between law and ethics.

 Both define proper & improper behavior
 Laws are society’s attempt to formalize public’s ideas about right & wrong (i.e. ethics)
 Ethics are more complex as they deal with human dilemmas that frequently go beyond areas
not covered by the law
 Improving ethical standards goes beyond complying with the law (voluntarily)
Briefly discuss how to improve the ethical climate of an organization.
Corporate culture – a blend of ideas, customs, traditional practices, company values and shared
meanings that help define normal behavior for everyone who works in the company
 Ethical climate: the unspoken understanding among employees of what is acceptable behavior
◦ Ethics (Individual) -> Ethics (Organizational)?
◦ Components – describe how individuals, companies and society face moral dilemmas
 Egoism (self-centered approach/ profit-driven)
 Benevolence (concern-for-others approach, focus on teamwork and social responsibility)
 Principle (integrity approach, rules/ laws/ regulations)
◦ Dependent on circumstances, groupthink phenomenon

◦ Systems/ structure
▪ Reward system - may encourage unethical behavior when results-oriented
▪ Communication system

◦ Programmes
▪ Ethics audit
▪ Whistle-blowing

◦ People (Ethics training to establish a consensus throughout the organization)

▪ Leadership
▪ Employees
Lesson 6
Briefly discuss the roles of government in business.
1. Prescribes the rules of the game for business.
2. Purchases business’ products and services.
3. Uses its contracting power to get business to do things it wants.
4. Is a major promoter and subsidizer of business.
5. Is the owner of vast quantities of productive equipment and wealth.
6. Is an architect of economic growth.
7. Is a financier.
8. Is the protector of various interests in society against business exploitation.
9. Directly manages large areas of private business.
10. Is the repository of the social conscience and redistributes resources to meet social
objectives.
 economic, rule-maker, social, political

 Public policy – A plan of action undertaken by government officials to achieve some broad
purpose affecting a substantial segment of a nation’s citizens
- Economic policies: affects the economy (eg. Fiscal/monetary policies)
- Social assistance policies: social services for citizens (eg. Healthcare/education)

 Regulatory
- Economic regulations: modify the normal operation of free market and forces of
demand and supply (eg. Control prices/wages, allocation of resources)
- Social regulations: aimed at important social goals, protect consumers and
environment and provide workers with safe and healthy working conditions (eg.
Pollution laws, safety and health laws, job discrimination laws)
- (-) high costs (financial and political risks)

 Non-regulatory (preferred)
o Investment (in infrastructure and education to empower business)
o Incentives
 Tax exemptions
 Tax relief
 Subsidies
 Grants
o Policies (eg. Public, manpower that will affect running of business)
o Government is a “buyer” (consulting/training services, IT) and “employer” (teachers,
army) of business
o Direct investment (invest in equity of companies, sit on board of directors)
o Moral suasion

What are the reasons for regulation of business by government?

 Market failure
 Negative externalities Economic arguments
 Natural monopolies
 Ethical arguments
o Utilitarian argument in support of safe working conditions
 o Fairness and justice arguments to set standards and develop regulations to protect
employees, consumers and other stakeholders

Why should business be/not be involved in politics/ government?

SHOULD SHOULD NOT
 A pluralistic system invites many  Managers are not qualified to engage in
participants political debate
 Economic stakes are high for firms  Business is too big, too powerful
 Business counterbalances other social o Disproportionate influence
interests  Business is too selfish to care about the
 Business is a vital stakeholder of common good
government  Business risks its credibility by
participating in partisan politics

 Access to government information  Does not want to reveal too much

(incentives scheme, intention of policy information to government (to avoid
changes) taxes)
 Ability to influence government policies to  Separation between political and
business’s advantage economic power (to prevent abuse of
 Increased credibility/legitimacy of power, lowering public interests)
business (BUT, gov must have low  Increased risks by getting too close to the
corruption) government (business + political risks)
 More market leads for businesses

What are the 3 types of business strategies to influence government?

Briefly discuss the constituency-building/grassroots strategy.

Information – where businesses seek to provide government policymakers with information to

influence their actions
 Lobbying
- Lobbyists communicate and try to persuade others to support an organization’s
interest or stake as they consider a particular law or policy
 Direct communications
- Business invite officials to participate in activities that will improve government
officials’ understanding of management and employee concerns (eg. Business
roundtable- many CEOs meet)
 Expert witness testimony (in public forums)
- Business provide facts, anecdotes, or data to educate or influence government
leaders at public forums like congressional hearings
Financial-incentives – where businesses provide incentives to influence government policymakers to
act in a certain way, such as making a contribution to a political action committee that supports the
policy maker
 Political action committees (PACs)
- Independently incorporated organizations that can solicit contributions and then
channel those funds to candidates seeking political office
o When an industry becomes the target of proposed regulations, firms within the
industry often increase their political spending
 Economic leverage
o When a business uses its economic power to threaten a city, state or country unless
a desired political action is taken

Constituency-building/grassroots – businesses seek to gain support from other affected

organizations to better influence government policymakers to act in a way that helps them
 Stakeholder coalitions
o Mobilizing various stakeholders to support its political agenda
 Advocacy advertising
o Advertisements that focus on the company’s views on controversial political issues
rather than their products
 Trade associations
o Coalitions of companies in the same or related industries, formed to coordinate their
grassroots mobilizations campaigns
 Legal challenges
o Attempting to overturn a law after it has been passed

Briefly discuss the three levels of business political involvement.

Lesson 7
What are the forces of change accelerating ecological crisis?
 Population explosion
- Not distributed uniformly, mainly in LDCs
- Increasing strain on earth’s resources since each additional person will use raw
materials and add pollutants
 World income inequality
- Inequality can be measured in 2 ways: wealth and income
- The poor (below poverty line) are mainly in sub-Saharan Africa, South Asia, East Asia
and the Pacific
- Gap between rich and poor is increasing
- Environmental problem bc people at either extremes tend to behave in more
environmentally-destructive ways
o Rich – consume more fossil fuels, wood and meat
o Poor – misuse natural resources (eg. Deforestation) for fuel to cook food
and keep warm
 Rapid industrialization of many developing nations
- Industry requires energy from burning fossil fuels, releasing pollutants
- Green revolution – increasing crop yields by use of pesticides, herbicides and
chemical fertilizer
- Rising incomes -> higher rates of consumption (therefore production) and waste
- (+) reducing poverty and slowing population growth
- (-) economic development contributed to growing ecological crisis

Discuss how effective environmental management makes firms more competitive.

 Technological innovation
- Lead to imaginative new methods for reducing pollution and increasing efficiency
 Reduction of regulatory risk
- Companies that are proactive wrt their environmental impacts are often better
positioned than competitors to respond to new government mandates
 Strategic planning
- Companies that cultivate a vision of sustainability must adopt sophisticated strategic
planning techniques

 Cost savings
 Product differentiation (attract environmentally aware customers with reputation)

What are the major global environmental issues?

 Climate change (global warming)
- Due to increasing concentrations of CO2 and other pollutants produced by human
activity (greenhouse gases)
- Eg. Burning of fossil fuels, increased emissions of nitrous oxides, black carbon (sooty
smoke from incomplete combustion of diesel engines and wildfire), deforestation,
beef production (methane)
 Ozone depletion
- Bluish gas of O3
- Causes: chlorofluorocarbons (CFCs), manufactured chemicals formerly widely used
as refrigerants, insulation, solvents and propellants in spray can
 Resource scarcity
 - Fresh water: only 0.1% of earth’s water available for human use, fresh water is
renewable, water shortages caused regional conflicts
- Arable land: threatened with decline from soil erosion, loss of nutrients, water
scarcity, salinization and poor drainage

 Decline of biodiversity
- Biodiversity: the number and variety of species and range of genetic makeup
- Species extinction
- Genetic diversity is vital to each species’ ability to adapt & survive (link to bio)
- Many benefits for human society (eg. Medicinal value of plants in forests)
- Main cause: destruction of rainforests, esp in tropics for commercial logging,
conversion of forest to plantations (WILMAR) to produce cash crops
 Threats to marine ecosystems
- Marine ecosystems: oceans, salt marshes, lagoons and tidal zones that border them,
as well as diverse communities of life they support
- Eg. Fish population, coral reefs, costal development, ocean acidity
- Salt water covers 70% of earth’s surface
- Key threats: exploitation of fish populations, decline of coral reefs, coastal
development in ecologically fragile areas, ocean acidification

What are the stages of corporate environmental responsibility?

1. Pollution prevention – Focuses on minimizing or eliminating waste before it is
created
2. Product stewardship – focus on all environmental impacts associated with the full Advancing
life cycle of the product (design  use  disposal)
3. Clean technology – developing innovative new technology that supports
sustainability, providing environmental benefits rather than just preventing harm

Briefly describe the role of technology in business.

 E-commerce
- Buying and selling of goods and services between businesses, organizations and
individuals electronically via internet-based systems
 Transforming prevailing business models
- Customers expect to view in-store inventory online, and want to be able to buy
online and pick up at a brick-and-mortar store
- Omnichannel: every distribution channel must work together to deliver a unified and
consistent customer experience (eg. Amazon)
 Role of robotics at work
- Collaborative machines: new breed of machines designed to work alongside people
in close settings and changed how small manufacturers did business
- Can replace workers that could be injured from doing the work previously assigned
to humans (eg. Driverless cars)
- (-) job elimination

What are the ethical challenges involving technology?

 Loss of privacy
- Individuals are under a technology microscope with vast amounts of data collected
to be analyzed in great detail (eg. Google analytics)
- Exacerbated by use of smartphones
 Free speech issues
- Eg. Amos yee
Briefly explain why hackers hack.
Hacktivists: individuals or groups who hack into government or corporate computer networks and
then release information to embarrass or gain leverage against them (eg. Anonymous)
 Motivation to profit from their computer skills and willingness to break the law for payment
 Politically motivated
 Gain media attention
 Raise public awareness
- White hatters: individuals employed by businesses or governments to hack their
systems deliberately to discover possible vulnerabilities of their own systems
- Grey hatters: hackers working on their own, often seeking media attention, but
inclined to share hacking exploits with businesses they hacked to gain financial
benefits from them (threatening)

(x) What is an ecologically sustainable organization (ESO)?

 Companies that operate consistently with principles of sustainable development
 Is an “ideal,” absolute standard against which real organizations can be measured
 Some visionary companies are trying to achieve this
 Supportive government policies and widespread movement among many businesses and
other social institutions will be needed for ESOs to succeed

(x) Briefly discuss the socially beneficial uses of technology.

Technology: practical applications of science and knowledge to commercial and organizational
activities
 Technology and education
- Enables students in poor and remote communities to access the world’s best
libraries, instructors through the internet (bring education online)
 Medical information via the internet
- By 2009, primary source for health information for 70% of Americans
- Emerging trend of digital medical records, link to other health care providers

(x) Briefly discuss technology as a powerful force in business.

 Internet
- Global network of interconnected computers, enabling users to share information
along multiple channels linking individuals and organizations
- In 2008, china surpassed USA with most internet users by country
- Some limitations in China as government attempted to convert all identification
records to their digital database systems
 E-business
- Buying and selling goods and services between businesses, organizations and
individuals electronically via internet-based systems
- Controversial issue where it has a significant impact on online gambling
 M-commerce
- Provides consumers with electronic wallet when using their mobile phones
- (-) unwanted and unsolicited mobile text messages and incidents of malware and
spyware

(x) Briefly discuss the threats from (internet) technology.

 Social networking
 - Ethical challenges (??)
 Blogs and vlogs
- Ethical question – bloggers being paid by marketing firms to promote or attack
products on the market (eg. Xiaxue’s gushcloud/singtel expose)
 Spam and unsolicited commercial email
- Organizational and individuals have adopted use of spam blockers, but sometimes
difficult to sort out bad emails
- Government has attempted to monitor, control and prosecute spammers using
internet for illegal activity
- UK and US have anti-spam legislation
 Phishing
- Practice of duping computer users into revealing their passwords or other private
data under false pretense
 Pharming
- Domain name system (PNS) poisoning, a hacking technique that redirects a user’s
computer from a legitimate website to another site by altering the user’s computer
or router (eg. Bank websites)
 Internet censorship
- Many believe that information on the internet should be universally accessible. But
some believe that restrictions should be placed on some categories of information
- Eg. China government operates one of the most sophisticated systems of internet
censorship, requires all China-based websites to register with the government and
blocks access to many kinds of information including material critical of the
government (cannot use Facebook in China)
- Or North Korea

(x) Briefly discuss what business can do to protect the information privacy.
 Privacy policies
 Maintaining information security
 Honeypots: a system used by security professionals to lure hackers to a fabricated website
that can track all their movement
 Chief Information Officer (CIO): responsible for managing technology, including security
issues
 Protecting intellectual property (eg. Patents, copyrights, trademarks)

 Develop an incident-response plan for cyberattacks (complement the effort to prevent

access to information but also focuses on what to do when breach occurs)
 Reduce criminal intrusion of their sites by paying hackers (white hatters) to identify
weaknesses in the company’s information systems

(x) Cost & benefits of environmental regulation

Lesson 9

Who are stockholders and why do they want stock ownership?

o Stockholders (or stakeholders) are the legal owners of business corporations.
o They have legal rights to the company:
- To receive dividends, if declared
- To vote in business decisions (voting rights?)
- To receive annual reports on company’s financial position
- To bring shareholder suits against the company and officers
- To sell their own shares of stock to others

o To produce a greater return than from alternative investments (when stock price
rises (capital appreciation) and dividends)
- Bull markets (share prices increase overall) vs bear market (fall overall)

What is corporate governance?

o Process by which a company is controlled, usually through board of directors
- Elected group of individuals (usually CEOs of other companies) who will get to
choose the CEO of the company (THINK: ceo pay video)

Discuss executive compensation.

o An important mechanism for aligning the interests of the corporation and its
stockholders with those of its top managers  May result in excessive CEO pay
o Impacts:
(+) Simply rewarded for outstanding performance
(+) Incentive for innovation and risk-taking
(+) Not many individuals are capable of running today’s large, complex companies
(+) Comparable to other large organizations (eg. Hospitals)  normative truth?
(-) Inflated executive pay may hurt the ability of firms to compete with foreign rivals
(-) Causes resentment among hardworking lower-level employees (effort  pay)
(-) Preside over failure as they do over success

o Distributive justice: allocation of CEO and employees’ pay

o Procedural justice:
- Board of directors decide pay of CEO
- 5-10 minutes to decide, no due diligence
 - At the expense of shareholders (more CEO pay, less dividends)

o Initially done through share options, whereby shares are bought and then sold a few
years later when market price is higher
(+) align interests of CEO and shareholders as share prices increase
(-) depends on stock prices, companies need to ensure performance meets
expectations, may results in manipulation of financial statements
 White-collared crimes: forgery (Enron scandal)
o Now, consulting and auditing services must not be done by same company (unlike
what Arthur Anderson did for Enron) as there is conflict of interest

Briefly explain shareholder activism.

Firms are more assertive in promoting interests of their members.
o Social investment
- Use of stock ownership to promote social, environmental and governance
objectives
- Done through selecting stocks according to various social criteria, OR
- Using corporate governance process to raise issues of concern

o Stock screening
- To select which companies to invest
- Socially responsible investing in buying/selling stocks

o Stockholder Lawsuits
- Owners have a right to bring lawsuits if they think their company has been
damaged by actions of company officers/directors
- Eg. Insider trading, inadequate stock buyout price, timely disclosure of material
information
 A person gains access to confidential information about a company’s
financial condition and then uses that information, before it is publicized,
to buy or sell company’s stock (ILLEGAL!)

o Socially responsible shareholder resolutions

- A resolution on an issue of CSR placed before shareholders for a vote at
company’s annual meeting
- The Securities and Exchange Commission (SEC) allows shareholders to place
resolution concerning appropriate social issue on the proxy ballot
 Government agency to protect stockholder interests/rights by ensuring
stock markets are run fairly and investment information is fully disclosed
 Generates revenue to pay for its own operations