MGT 400 Quiz 2 Exam Questions And Answers

A prime social responsibility of business is to safeguard consumers: By supplying consumers with products at the lowest possible cost. By providing new technology. While continuing to supply them with goods and services they want. While maintaining high profit margins. - ANS While continuing to supply them with goods and services they want. Institutional investors have little incentive to hold their shares and organize to change management policy. True False - ANS False Shareholders must rely exclusively on the board of directors to protect their interests. True False - ANS False Shareholders have become an increasingly powerful and vocal stakeholder group in corporations. True False - ANS True Investors may receive an economic benefit from the ownership of stock by receiving: Interest Dividends Capital Gains Both B and C, not A - ANS Both B and C, not A Dividends Capital Gains It is illegal in the United States to offer stock trade tips to clients based on public information. True False - ANS False Consumers make less rational choices when they have accurate information about a product. True False - ANS False The two main types of investors that own shares of stock in U.S. corporations are individuals and institutions. True False - ANS True The doctrine of strict liability extends only to the retailer who is involved in selling the product, not the manufacturer. True False - ANS False Consumer advocacy groups in the United States actively promote and speak for the interests of millions of consumers. True False - ANS True Environmental justice - ANS The effort to prevent inequitable exposure to risk, such as from hazardous waste, in disadvantaged communities. example, Native American tribes in Utah, Nevada, and New Mexico have organized to block the construction of nuclear waste disposal facilities on their land, saying the facilities would threaten their health, culture, and economic viability Superfund or CERCLA legislation passed in 1980 Established fund to clean up the most dangerous toxic waste sites in the U.S. Alternative Policy Approaches: Environmental standards - ANS Standard allowable levels of various pollutants are established by legislation or regulatory action and applied by administrative agencies and courts. The traditional method of pollution control Also called command-and-control regulation because the government commands business firms to comply with certain standards and often directly controls their choice of technology. Can be an environmental quality standard or emission standard. Alternative Policy Approaches: Market-based mechanisms - ANS Based on the idea that the market is a better control than extensive standards that specify precisely what companies must do. Cap-and-trade: allows businesses to buy and sell the right to pollute, a process. →Example: European Union's tradable permits Emissions charges or fees→Example: green taxes or eco-taxes Each business is charged for the undesirable waste that it emits, with the fee varying according to the amount of waste released. The result is, "The more you pollute, the more you pay." In this approach, polluting is not illegal, but it is expensive, creating an incentive for companies to clean up. Government incentives Environmental-quality standard - ANS polluters control their emissions to maintain air quality Emission standard - ANS manufacturing have a limit to the amount that they can put into the air Ecologically Sustainable Organization (ESO) - ANS a business that operates in a way that is consistent with the principle of sustainable development In other words, an ESO could continue its activities indefinitely, without altering the carrying capacity of the Earth's ecosystem. Such businesses would not use up natural resources any faster than they could be replenished or substitutes found. They would make and transport products efficiently, with minimal use of energy. They would design products that would last a long time and that, when worn out, could be disassembled and recycled. They would not produce waste any faster than natural systems could absorb and disperse it. They would work with other businesses, governments, and organizations to meet these goals. Is an "ideal," absolute standard against which real organizations can be measured. Some visionary companies are trying to achieve this. No companies, including Interface, have yet become truly sustainable businesses, and it will probably be impossible for any single firm to become an ESO in the absence of supportive government policies and a widespread movement among many businesses and other social institutions. Supportive government policies and widespread movement among many businesses and other social institutions will be needed for ESOs to succeed. Environmental Auditing and Reporting - ANS A way for leading companies to track their progress toward meeting sustainability goals companies that proactively manage environmental issues will tend to be more successful than those that do not. Effective sustainability management confers a competitive advantage in five different ways, as follows. Cost Savings Brand Differentiation Technological Innovation Reduction of Regulatory and Liability Risk