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RSM100Y1 Study Guide - Midterm Guide: Fide, Model Theory, Charismatic Authority

Rotman Commerce
Course Code
Michael Szlachta
Study Guide

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III. Conducting Business Ethically & Responsibly
Ethics Individual standards or moral values regarding what is right/wrong or good/bad
Ethical behaviour conforms to individual beliefs & social norms about what is right & good
Unethical behaviour behaviour individual beliefs & social norms define as wrong & bad
Business ethics ethical / unethical behaviour by a manager or employee of an organization
Managerial ethics standards of behaviour that guide individual managers in their work
Conflict of interest occurs when an activity benefits an individual @ expense of employer
Code of ethics formal, written acknowledgement of company’s intent to do business ethically
Ethical Judgement Making: Data Gathering
Corporate social responsibility (CSR) refers to way in which a business tries to balance
commitments to organizational stakeholders
Organizational stakeholders are directly affected by the practices of an organization &
have stake in performance
Consumerism a social movement that seeks to protect & expand the rights of consumers in
their dealings with businesses
Collusion an illegal agreement among companies in an industry to fix prices for products
Stealth advertising (undercover/guerrilla advertising involves companies paying individuals
to extol virtues of products to others
Whistle-blower employee who discovers & tries to end companys unethical/illegal/socially
irresponsible actions by publicizing them
Cheque kiting involves writing a cheque from one account, depositing into a second account,
then immediately spending money from the 2nd account while money from 1st account is still in
Insider trading use of confidential information to gain from purchase or sale of stock
Spectrum of approaches to social responsibility
stance Defensive stance Accommodative
stance Proactive stance
Does as little as
possible to solve
social or
problems & denies
/ covers up
Does only what is
legally required &
nothing more
Meets all of its legal
& ethical
requirements, & in
some cases even goes
beyond what is
Actively seeks
opportunities to be
socially responsible

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Social audit a systematic analysis of how a firm is using funds earmarked for social-
responsibility goals & how effective expenditures have been
Triple bottom line reporting measuring the social, environmental & economic performance of
4 Steps to Establishing a Social Responsibility Program
Top Management Support Strategic Planning Appoint Director Social Audit Social
VI. Managing the Business Enterprise
Management process of planning, organizing, leading & controlling an enterprises financial,
physical, human & information resources to achieve goals of supplying various products /
Efficiency achieving the greatest level of output with a given amount of input
Effectiveness achieving the organizational goals that have been set
Planning process of determining the firms goals & developing a strategy for achieving them
Prediction markets creating a market where people can buy shares in various answers to
important questions that need to be answered
Strategic plans set by top management; reflect decisions about resource allocations, company
priorities, & steps needed to meet strategic goals
Tactical plans shorter-range plans concerned with implementing specific aspects of
company’s strategic plans. Typically involve upper & middle management
Operational plans developed by middle & lower level managers that set short-term targets for
daily / weekly / monthly performance
Organizing mobilizing the resources that are required to complete a particular task
Leading (or directing) involves the interactions between managers & subordinates as they
both work to meet firms objectives
Controlling process of monitoring a firms performance to make sure that it is meeting its
3 Basic Levels of Management
Top ManagersResponsible for a firms overall
performance & effectiveness & for
developing long-range plans for the
Middle ManagersResponsible for implementing decisions made
by top managers

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First-line ManagersResponsible for supervising the work of
Areas of Management Human Resources; Operations; Information; Marketing;
Technical skills skills associated with performing specialized tasks within a company
Human relations skills skills that enable managers to understand & get along with other
Conceptual skills a persons ability to think in the abstract, to diagnose & analyze different
situations, & to see beyond present situation
Time management skills productive use that managers make of their time
Decision making choosing one alternative from among several options
Decision-making skills skills in defining problems & selecting the best courses of actions
The Rational Decision-Making Process
1)Recognizing & defining the decision situation
2)Identifying alternatives
3)Evaluating alternatives
4)Selecting the best alternative
5)Implementing the chosen alternative
6)Following up & evaluating results
Problem decision decision that is necessary when actual results do not conform to those
Opportunity decision taking new initiatives/doing current activity more effectively even if no
problem exists
Organizational politics actions that people take as they try to get what they want
Intuition an inner sense or hunch usually based on years of experience & practice in
making decisions in similar situations
Escalation of commitment when a manager makes a decision & then remains committed to
its implementation in spite of clear evidence that it was a bad decision
Risk propensity how much a manager is willing to gamble when making decisions
Strategic management the process of aligning the organization with its external environment
Strategic goals the overall objectives that a business wants to achieve
Strategy broad set of organizational plans for implementing decisions made for achieving
organizational goals
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