Midterm Strategic Management

According to Milton Friedman, the social responsibility of business is to

• increase its profits

• create value for stakeholders

• take care of the society

• work on addressing social issues

What is the definition of stakeholders?

• Those who have a stake in an organization.

• Those who affect or are affected by the realization of an organization's purpose.

• It is just another term for shareholders.

• The managers of an organization.

Who originally developed stakeholder theory?

• Joseph Schumpeter

• Milton Friedman

• Adam Smith

• Ed Freeman

Who are typically considered primary stakeholders?

• employees, customers, suppliers, communities, and shareholders

• media, government, and competitors

• shareholders, financiers, and investors

• employees, customers, communities, society, and environment

Stakeholder interests are

• primarily based on financial returns

• standalone (no synergies among stakeholders)

• joint

• not as important as shareholder interests

What is a normative argument?

• It refers to how things are done in reality.

• It shows how one factor affects another.

• It is about what ought to be done according to a someone's value position.

• It is based on logic.

What is an instrumental view of stakeholder theory? 

• it describes how business works in reality.

• It is a belief that creating value for stakeholders results in higher financial returns.

• It is a supposition that each stakeholder should be provided with an appropriate instrument.

• It is about creating value for all stakeholders because it is just the right thing to do.

According to stakeholder theory, how can trade-offs be resolved? 

• By prioritizing shareholders.

• By focusing on financial returns.

• By leveraging imagination and creativity.

• By ignoring shareholders.

What is the main idea of the story about Jose Lopez at General Motors (GM)? 

 

• He had a successful career at GM - he was promoted from the GM operations in Europe to the GM headquarters in the US.

• He achieved a lot of savings in purchasing by squeezing suppliers, which made GM benefit in the short term but suffer in the long run.

• He is a GM hero who helped the company stop bleeding and become profitable again.

• He managed the GM Procurement according to stakeholder principles.

What talking about shareholder value maximization, what was NOT said by Milton Friedman?

• Managers are not trained in doing social projects

• Managers should not be afraid of challenging legal boundaries if needed

• Managers should do social projects if these projects lead to higher profits

• Managers should invest in social initiatives out of their pocket, not corporate budget