Essay on Exam 3 Review

Assumptions of a Perfect Market:
Perfect Information
Perfect Mobility
Rational Actors
Perfect Competition and the Invisible Hand
Limited Government Interference
Friedman:
Market is an excellent arbiter between parties.
When markets fail, gov’t can step in.
Social responsibility is “subversive” (form of theft)
Profits should pass to the owners to use how they deem fit Profit Maximization | = | Social Responsibility |

Carroll’s Definition of CSR- “The social responsibility of business encompasses the economic, legal, ethical & discretionary expectations that society has of organizations at a given point in time.

Why can’t the Market do it?
Not perfect information
Not perfect mobility
Not perfect competition (unregulated monopolies, price fixing, geographic price differences, and advertising matters although it shouldn’t in a perfect market)
Why can’t the Law do it?
Time lag
Problems making the law (lobbying, under informed legislators, laws from compromise)
Problems implementing the law (technical complexity, enforcement challenges, costly, laws can be counterproductive)
Stone:
Sustainability Definition: * “Meeting the needs of the present without compromising the ability of future generations to meet their own needs” * Managing your financial, social & environmental risks by focusing on the “triple bottom line,” profit, people & planet * Thinking this way can make a firm more RESILIENT over time (can survive shock)

Sustainability Stages:
1) Compliance as opportunity (strategies for sustainability start with a legal threat)
2) Sustainable value chains (Improve efficiency throughout the value chain--supply chains, operations)
3) Sustainable offerings (Develop or modify products/services with sustainability in mind)
4) New business models (Find new ways of creating & capturing value that leverage sustainability)
5) Next practice platforms (Reconsider the ways we do business through a sustainability lens.

Seeking Excellence (What Really Works)
Must Haves: Strategy, Execution, Culture, Structure (SECS)
Nice to Haves: Talent, Leadership, Innovation, Mergers/Partnerships (TILM)

Creating a Culture of Leadership
Providing people with challenges & opportunities to lead early in their career.
Helping people broaden their experience base.
Encouraging networking and relationship building.
Pushing responsibilities to lower levels of the organization.
Reward those developing young leaders.

Key Principles of TPS--Toyota Production System
Workers & managers should experiment as frequent as possible.
Managers should coach, not fix
Firms “win” because their competitive edge is HARD to imitate
Firms knowledge can be VERY HARD for others to imitate
PDCA: Plan, Do, Check, Act

Codified or Explicit Knowledge- Formal systematic knowledge that can be written down & communicated easily from 1 person to another (dictionary, standard operating procedures, product design specs).

Tacit Knowledge- Highly personal, innate feel that a craftsman has for their craft. Hard to formalize, richer knowledge coming from intense, repeated efforts over a long period of time (making a guitar, baking bread).

5 Reasons to Follow: (FBFIB)
1) Fear of Retribution- If I don’t follow, I may lose my job.
2) Blind Hope- We must do something, I hope this works!
3) Faith in Leader- What a great person, if anyone knows the answer, they do!
4) Intellectual Agreement-

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