ethics
standards of moral behavior that is, behavior accepted by society as right versus wrong
compliance-based ethics code
Ethical standards that emphasize preventing unlawful behavior by increasing control and by penalizing wrongdoers
integrity-based ethics codes
Ethical standards that define the organization's guiding values, create an environment that supports sound behavior, and stress a shared accountability among employees
whistleblowers
insiders who report illegal or unethical behavior
Corporate Social Responsibility (CSR)
a business's concern for the welfare of society
Corporate philanthropy
the dimension of social responsibility that includes charitable donations
Corporate social initiatives
enhanced forms of corporate philanthropy directly related to the company's competencies
Corporate responsibility
the dimension of social responsibility that includes everything from hiring minority workers to making safe products
Corporate Policy
The dimension of social responsibility that refers to the position a firm takes on social and political issues
Insider Trading
An unethical activity in which insiders use private information to further their own fortunes of those of their family and friends
Social Audit
A systematic evaluation of an organization's progress toward implementing socially responsible and responsive programs
Sole Proprietorship
a business that is owned, and usually managed, by one person
partnership
a legal form of business with two or more owners
corporation
a legal entity with authority to act and have liability apart from its owners
unlimited liability
the responsibility of business owners for all of the debts of the business
general partnership
a partnership in which all owners share in operating the business and in assuming liability for the business's debts
limited partnership
a partnership with one or more general partners and one or more limited partners
general partner
an owner who has unlimited liability and is active in managing the firm
limited partner
an owner who invests money in the business but does not have any management responsibility or liability for losses beyond the investment
limited liability
the responsibility of a business's owners for losses only up to the amount they invest; limited partners and shareholders have this
master limited partnership (MLP)
a partnership that looks much like a corporation (in that it acts like a corporation and is traded on a stock exchange) but is taxed like a partnership and thus avoids the corporate income tax
limited liability partnership (LLP)
a partnership that limits partners' risk of losing their personal assets to only their own acts and omissions and to the acts and omissions of people under their supervision
conventional (C) corporation
a state-charted legal entity with authority to act and have liability separate from its owners
S corporation
a unique government creation that looks like a corporation but is taxed like sole proprietorships and partnerships
limited liability company(LLC)
a company similar to an S Corporation but without the special eligibility requirements
merger
the result of two firms forming one company
acquisition
one company's purchase of the property and obligations of another company
vertical merger
the joining of two companies involved in different stages of related business in order to reduce the cost of making the final product
horizontal merger
the joining of two firms in the same industry due to economics of scale in which the company can save on transport costs and hold more power/leverage
conglomerate merger
the joining of firms in the completely unrelated industries in order to either make a financial statement or make both companies look good
leveraged buyout (LBO)
an attempt by employees, management, or a group of investors to purchase an organization primarily through borrowing
franchise agreement
an arrangement whereby someone with a good idea for a business sells the rights to use the business name and sell a product or service to others in a given territory
franchiser
a company that develops a product concept and sells others the right to make and sell the product
franchise
the right to use a specific business's name and sell its products or services in a given territory
franchisee
a person who buys a franchise
cooperative
a business owned and controlled by the people who use it-producers, consumers, or workers with similar need who pool their resources for mutual gain
CPA (Certified public accountant)
an accountant who has passed certain examinations and met all other statutory and licensing requirements of a United States state to be certified by that state
stock options
a compensation system that gives employees the right to purchase shares of stock at a set price, even if the value of the stock increases above that price
agency theory
suggests that public corporations can function effectively even though their managers are self-interested and do not automatically bear the full consequences of their managerial actions.
improper accounting practices
top ethical issue
inelastic items
price does not change based in economy
elastic demand
A situation in which consumer demand is sensitive to changes in price
bear market
a stock market with declining stock prices
bull market
a market characterized by rising prices for securities
dow jones
The average price of 30 selected industrial stocks, used as a measure of general market trends. (Also known as the DOW).
Standard and Poor
index, measures value of creditness, stock value; uses stock form 500 companies of all sizes
company organizational alignment
Structure, System, and Culture must align with the product being marketed
technological platform
becomes standard
capital gain
money gained from an investment; this gets taxed less than income as the governments way of encouraging it
passive investor
invests money but Not actively engaged in trading of securities
debt financing
funds raised through various forms of borrowing that must be repaid
equity financing
Funds raised from operations within the firm or through the sale of ownership in the firm.