Term
| What is the goal of corporate social strategy |
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Definition
| Integrate non-market forces (Political, Economic, Social, and Technological) into your market strategy. |
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Term
| What 2 strategic acquisitions did BP make in the 21st century? |
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Definition
The Solarex acquisition made BP Solar the largest solar energy company in the world.
BP launched the ‘Beyond Petroleum’ campaign and began re-branding with the Helios logo. |
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Term
| How did BP's move enhance brand equity and corporate reputation? |
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Definition
Differentiate from competitors.
Tap into new customer segments.
Employee retention/recruiting concerns.
Attract green/socially-responsible investors (SRIs). |
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Term
| What risks did BP undertake when adopting Solarex? |
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Definition
Heightened public expectations, especially from NGOs.
Greenpeace awarded BP the Greenwash of the year.
- Ultimately criticized because they clearly were still primarily focusing on petroleum |
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Term
| When do NGOs typically take political or direct action? |
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Definition
When market inefficiencies exist:
Lack of property rights, market power abuses, quality concerns, externalities (pollution), etc… |
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Term
| The socially efficient production level |
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Definition
1. Produce and sell product that consumers value more than the costs of production.
2. Avoid producing and selling product that consumers value less than the costs of production. |
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Term
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Definition
| Difference between what customers are willing to pay and the price they have to pay. |
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Term
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Definition
| Difference between the price sellers receive and the minimum supply price needed to cover costs. |
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Term
| Where does social efficiency occur? |
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Definition
| At the market equilibrium if all costs and value are accounted for in the D&S curves. |
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Term
| What do taxes imposed on sellers do to the supply curve? |
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Definition
| Cause an inward shift of the supply curve (decreased supply). |
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Term
| What do subsidies to the seller do to the supply curve? |
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Definition
| Cause an outward shift of the supply curve (increase supply). |
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Term
| What does productive regulation on sellers do to the supply curve? |
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Definition
| Cause an inward shift of the supply curve (decreased supply). |
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Term
| What are voters viewed to be? |
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Definition
Rationally ignorant
-It is costly for you to become informed on most political issues.
-It is not likely that your individual vote will make a difference. |
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Term
| What are politicians thought to be? |
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Definition
Vote-Maximizers
-Regardless of their ultimate motivation, the ability of politicians to achieve their goals depends on their election or re-election.
-Thus, Politicians try to provide information about themselves (and their rivals) at no charge to voters. |
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Term
| Bureaucrats (civil servants) are considered to be what? |
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Definition
Budget-Maximizers
-Bureaucrats are not elected, but are hired into office much like what occurs in the private sector.
-Bureaucrats seek promotions, higher pay, prestige, job security, etc…,which all become more possible with a bigger budget |
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Term
| 4 possible types of inefficiencies in the public sector |
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Definition
The Shortsightedness Effect.
Lack of Operational Efficiency.
Lobbying/Rent Seeking.
The Special Interest Effect. |
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Term
| Describe the shortsightedness effect |
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Definition
Politicians support projects that have:
Clearly defined current benefits,
and future costs that are difficult to identify. |
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Term
| Due to its lack of profit motive, what occurs in government? |
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Definition
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Term
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Definition
| Devoting resources to influence public policy formation in order to bring more income to your interests. |
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Term
| When does the cost of lobbying produce significant inefficiencies? |
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Definition
| When its main affect is solely income redistribution |
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Term
| 3 main functions of Lobbyists |
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Definition
Find political opportunities and threats.
Inform politicians and influence public opinion.
Form coalitions: identify groups with ‘similar’ interests |
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Term
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Definition
| Small group of people receive benefits at the expense of a large group. |
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Term
| What group generally has a better chance of gaining political power? |
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Definition
Small, concentrated groups can gain political power.
-The individual benefits of taking action often exceed the potential individual costs. |
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Term
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Definition
Widely Dispersed Costs and Benefits
No special interest groups take action on either side of the issue.
Example: Social Security
Lobbying does not occur |
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Term
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Definition
Concentrated Benefits, Widely Dispersed Costs
One special interest group is active in favor of an issue.
Example: Subsidizing Foreign Advertising
Lobbying will likely be successful |
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Term
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Definition
Concentrated Benefits, Widely Dispersed Costs
Active special interest groups are on both sides of the issue.
Example: Minimum Legal Drinking Age
Outcomes depend on the relative strength of lobbying |
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Term
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Definition
Widely Dispersed Benefits, Concentrated Costs
One special interest group is active against an issue.
Example: Nuclear Waste Dumps
Successful lobbying will be costly |
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Term
| 3 types of property rights |
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Definition
Communal
Government
Private Property |
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Term
| Describe communal property rights |
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Definition
No single owner, everyone has access while it lasts.
Over-utilization occurs, and no one has incentive to conserve for the future. |
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Term
| Government property rights |
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Definition
| Property decisions made by a small group of elected political representatives. |
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Term
| What incentives do Secure Private Property rights give owners |
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Definition
-Create value with property (benefit others)
-Maintain property and conserve for the future
-Innovate and create new technologies
-Engage in voluntary exchange |
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Term
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Definition
| Right to exclude all others from using, producing, or selling an invention. |
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Term
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Definition
| A word, name, symbol, or device that is used in trade with goods to indicate their source. |
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Term
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Definition
| Right to exclude all others from reproducing, distributing, or performing a work |
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Term
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Definition
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Term
| What is the only variable of crime government controls? |
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Definition
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Term
| How do the government and consumers influence the likelihood of stopping a crime? |
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Definition
Government can affect this with detection technology
Criminals can affect this with their technology |
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Term
| Difference between explicit and implicit costs |
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Definition
Explicit costs: when a monetary payment is made.
Example: Wages paid to labor.
Implicit costs involve the firm’s resources, but do not have a monetary payment.
Example: Opportunity cost of the owner’s investment. |
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Term
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Definition
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Term
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Definition
| What firms could get by investing in businesses with similar risk. |
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Term
| Entrepreneur and their roles |
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Definition
-Someone who tries to exploit opportunities that exist within markets.
-Offer New products or open new markets
-Create a lower cost technology
-Find new resources |
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Term
| Intrepreneur and their roles |
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Definition
An entrepreneurial individual that is employed by a firm.
-Needed to keep ahead of rival firms.
-Needed to improve overall efficiency.
-An effort to keep the brightest minds within the corporation.
-Incentive to incorporate more profitable projects. |
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Term
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Definition
| Highest with low taxes, low regulation, secure property, and consistent legal structure. |
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Term
| What is economic growth linked to? |
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Definition
Economic Freedom
-Economic freedom creates an environment that is conducive to entrepreneurship.
-Then entrepreneurial change leads to growth. |
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Term
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Definition
| When a professional individual has a private interest, sufficient enough to influence the pursuit of their official duties |
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Term
| 3 Key elements of Conflict of Interest |
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Definition
Professional
Private or Personal Interest
Official Duty |
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Term
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Definition
| Use your position to secure personal benefits |
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Term
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Definition
| Use your position to secure benefits for a third party (anyone who is not yourself) |
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Term
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Definition
| Receiving bribes or non-monetary gifts |
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Term
| Misuse of Inside Information |
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Definition
| Using Confidential Information |
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Term
| Misuse of Employer's Property |
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Definition
| Personally gaining from employers property without consent |
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Term
| Outside Employment or Moonlighting |
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Definition
| Holding multiple employment positions at one time, which biases professional behavior |
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Term
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Definition
| Holding a sequence of employment positions where you carry a bias from one job to the next |
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Term
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Definition
| The abuse of entrusted power for private gain |
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Term
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Definition
Decisions made by low-level bureaucrats.
-Often centered on local/regional regulations, licenses, or discretionary spending |
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Term
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Definition
Decisions made by high-level politicians.
-Often centered on national policy formation, infrastructure decisions, military equipment procurement, or allocation of subsidies. |
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Term
| Describe the perception of corruption as "Sand" |
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Definition
| Corruption is associated with (1) reduced GDP growth, (2) reduced foreign direct investment,(3) increased income inequality, and (4) a misallocation of government property |
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Term
| Describe the perception of corruption as "oil" |
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Definition
| Corruption helps to speed up commerce in an environment controlled by heavy bureaucracy and excessive regulation |
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