Walmart has been called a "template for 21st century capitalism." True False
2.
A business is any organization that is engaged in making a product or providing a service for a profit. True False
3.
Businesses and society are independent of one another. True False
4.
The stakeholder theory of the firm argues that a firm's sole purpose is to create value for its shareholders. True False
5.
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 False
6.
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. True False
7.
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. True False
8.
Market stakeholders include nongovernmental organizations and the business support groups. True False
9.
Government can be considered both a market and nonmarket stakeholder. True False
10.
The interests of different stakeholders often coincide. True False
11.
Stakeholders involved with one part of a company often may have little or no involvement with another part of the company. True False
12.
Some scholars have suggested that managers pay the most attention to stakeholders possessing the least salience. True False
13.
Urgency refers to the extent to which a stakeholder's actions are seen as proper or appropriate by the broader society. True False
14.
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 False
15.
The external environment of business is static. True False
Multiple Choice Questions
16.
Which statement is not correct about the business-society interdependence?
A.
Business is a part of society.
B.
Business is separated from the rest of society by clear boundaries.
C.
Business activities impact other activities in society.
D.
Actions by governments rarely affect business.
17.
Which of the following examples best illustrates the boundary exchanges a company would encounter according to the general systems theory?
An industrial company installs new equipment in its plant to comply with environmental regulations.
A software company develops an application for a client.
A purchasing department employee negotiates a price on parts from a supplier.
All of the above.
18.
Which of the following is the result of the inseparable relationship between business and society?
All business decisions have a social impact.
The vitality of business depends on society's actions and attitudes.
The survival of business is independent of society.
Both A and B, but not C.
19.
Which of the following statements is not true about the interactive social system?
Business and society need, as well as influence, each other.
The boundary between business and society is clear and distinct.
Business is a part of society, and society penetrates far and often into the business.
Business and society are both separate and connected.
20.
A firm subscribing to the ownership theory of the firm would mainly be concerned with providing value for its:
Shareholders.
Customers.
Board of Directors.
Community.
21.
Corporations that run their operations according to the stakeholder theory of the firm create value by:
Innovating new products.
Increasing their stock price.
Developing their employees' professional skills.
22.
Which argument says that stakeholder management realistically depicts how companies really work?
Descriptive argument.
Instrumental argument.
Normative argument.
Fiduciary argument.
23.
The instrumental argument says stakeholder management is:
A more realistic description of how companies really work.
More effective as a corporate strategy.
Simply the right thing to do.
Determined by the amount of stock owned in the firm.
24.
The fiduciary duty of managers benefits a firm's:
Employees.
25.
The main reason a number of European countries require public companies to include employee members on their boards of directors is so that:
The employees will be available to answer other board members' questions.
Management will not have to attend the meetings.
Employees interests will be explicitly represented.
Employees will have more power than any other stakeholder.
26.
Stakeholder groups can include:
Business support groups.
Environmental activists.
27.
Which one of the following is considered to be a nonmarket stakeholder of business?
Nongovernmental organizations.
Creditors.
Stockholders.
28.
Which of the following is not considered to be a nonmarket stakeholder?
Government agencies.
Activist groups.
Non-governmental organizations.
29.
All of the following are external stakeholders of the firm except:
Managers.
Suppliers.
30.
The phenomenon of a person or group holding multiple stakeholder duties is referred to as:
Role sets.
Primary stakeholder(s).
Ownership theory.
None of the above.
31.
A stakeholder analysis:
Creates equality among all stakeholder interests.
Allows managers to examine two primary questions.
Involves understanding the nature of stakeholder interests.
32.
The five types of stakeholders' power recognized by most experts are:
Voting, economic, political, legal, and informational power.
Social, legal, environmental, economic, and political power.
Social, regulatory, voting, governance, and information power.
Economic, informational, legal, shareholder, and political power.
33.
Which of the following statements is (are) correct about stakeholders' power?
Different stakeholders have different types and degrees of power.
Shareholders' voting power is limited to the percentage of share owned by the shareholder.
It uses resources to achieve a desired decision or outcome.
34.
Customers can exercise economic stakeholder power by:
Voting on a proposed merger for the company and a competitor.
Boycotting products if they believe the goods are too expensive.
Attending the company's annual meeting.
Applying for a job with the company.
35.
Which of the following is not an example of stakeholders' economic power?
A supplier halts shipments to a business customer that demanded very low prices.
A social group protests a government's decision to raise taxes.
A local community boycotts a grocery store suspected of inaccurate weight scales.
An equal rights group refuses to do business with a company that has a discriminatory hiring policy.
36.
When a community group sues a company for health effects caused by the unsafe disposal of toxic chemicals, this is an exercise of a stakeholder's:
Legal power.
Voting power.
Economic power.
Political power.
37.
What stakeholder group(s) can exercise legal power?
38.
What kind of power might a local community use to influence a company's decisions?
Publicizing an issue.
Lobbying government policy makers for regulations.
Challenging whether a business activity should continue to operate.
39.
With the explosive growth of technologies that facilitate the sharing of information, this kind of stakeholder power has become increasingly important:
Informational power.
40.
Stakeholders have been able to form international coalitions more successfully through use of:
Government regulation.
Community involvement.
Communications technology.
Unions.
41.
When something stands out from a background, is seen as important, or draws attention it is:
Urgent.
Salient.
Powerful.
Legitimate.
42.
Stakeholders stand out to managers when they exhibit:
Integrity, power, and legitimacy.
Power, legitimacy, and urgency.
Integrity, loyalty, and power.
Legitimacy, loyalty, and urgency.
43.
A stakeholder map is a useful tool because:
It enables mangers to see quickly how stakeholders feel about an issue.
It allows managers to evaluate what outcomes are likely regarding an issue.
It helps managers discourage or dissolve stakeholder coalitions.
44.
Departments, or offices, within an organization that reach across the dividing line that separates the company from groups and people in society are:
Inter-departmental divisions.
Geographical location areas.
Boundary-spanning departments.
Organizational maps.
45.
Interactions between business and society occur:
Within a finite natural ecosystem.
Only during an environmental crisis.
When business employees and the community are of similar cultural backgrounds.
When legislation is passed requiring interaction.
Short Answer Questions
46.
Describe how general systems theory can be applied to a business.
47.
Supporters of the stakeholder theory of the firm make three core arguments for their position. Define and provide examples of each.
48.
Compare and contrast the relationships a firm may have with market and non-market stakeholders.
49.
Discuss why a manager should, or should not, be considered a stakeholder.
50.
Explain the process called stakeholder analysis. Include a description of its four key questions.
51.
What is a stakeholder map? Why is it a useful tool?
52.
Describe and give examples of the external forces that shape the relationship between business and society.
Chapter 01 The Corporation and Its Stakeholders Answer Key
True / False Questions
1.
Walmart has been called a "template for 21st century capitalism." TRUE
Accessibility: Keyboard NavigationDifficulty: 1 EasyLearning Objective: 01-01 Understanding the relationship between business and society and the ways in which business and society are part of an interactive system.
A business is any organization that is engaged in making a product or providing a service for a profit. TRUE
Businesses and society are independent of one another. FALSE
The stakeholder theory of the firm argues that a firm's sole purpose is to create value for its shareholders. FALSE
Accessibility: Keyboard NavigationDifficulty: 1 EasyLearning Objective: 01-02 Considering the purpose of the modern corporation.
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 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
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
Accessibility: Keyboard NavigationDifficulty: 1 EasyLearning Objective: 01-03 Knowing what a stakeholder is and who a corporation's market and nonmarket and internal and external stakeholders are.
Market stakeholders include nongovernmental organizations and the business support groups. FALSE
Government can be considered both a market and nonmarket stakeholder. TRUE
The interests of different stakeholders often coincide. TRUE
Accessibility: Keyboard NavigationDifficulty: 1 EasyLearning Objective: 01-04 Conducting a stakeholder analysis and understanding the basis of stakeholder interests and power.
Stakeholders involved with one part of a company often may have little or no involvement with another part of the company. TRUE
Some scholars have suggested that managers pay the most attention to stakeholders possessing the least salience. FALSE
Urgency refers to the extent to which a stakeholder's actions are seen as proper or appropriate by the broader society. FALSE
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
The external environment of business is static. FALSE
Accessibility: Keyboard NavigationDifficulty: 1 EasyLearning Objective: 01-06 Analyzing the forces of change that continually reshape the business and society relationship.
Accessibility: Keyboard NavigationDifficulty: 2 MediumLearning Objective: 01-01 Understanding the relationship between business and society and the ways in which business and society are part of an interactive system.
Accessibility: Keyboard NavigationDifficulty: 3 HardLearning Objective: 01-01 Understanding the relationship between business and society and the ways in which business and society are part of an interactive system.
Accessibility: Keyboard NavigationDifficulty: 2 MediumLearning Objective: 01-02 Considering the purpose of the modern corporation.
Accessibility: Keyboard NavigationDifficulty: 2 MediumLearning Objective: 01-03 Knowing what a stakeholder is and who a corporation's market and nonmarket and internal and external stakeholders are.
Accessibility: Keyboard NavigationDifficulty: 2 MediumLearning Objective: 01-04 Conducting a stakeholder analysis and understanding the basis of stakeholder interests and power.
Accessibility: Keyboard NavigationDifficulty: 3 HardLearning Objective: 01-04 Conducting a stakeholder analysis and understanding the basis of stakeholder interests and power.
Accessibility: Keyboard NavigationDifficulty: 1 EasyLearning Objective: 01-05 Recognizing the diverse ways in which modern corporations organize internally to interact with various stakeholders.
Accessibility: Keyboard NavigationDifficulty: 2 MediumLearning Objective: 01-06 Analyzing the forces of change that continually reshape the business and society relationship.
Answers may vary.
Difficulty: 3 HardLearning Objective: 01-01 Understanding the relationship between business and society and the ways in which business and society are part of an interactive system.
Difficulty: 3 HardLearning Objective: 01-02 Considering the purpose of the modern corporation.
Difficulty: 3 HardLearning Objective: 01-03 Knowing what a stakeholder is and who a corporation's market and nonmarket and internal and external stakeholders are.
Difficulty: 3 HardLearning Objective: 01-04 Conducting a stakeholder analysis and understanding the basis of stakeholder interests and power.
Difficulty: 3 HardLearning Objective: 01-06 Analyzing the forces of change that continually reshape the business and society relationship.
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