USN:
PES INSTITUTE OF TECHNOLOGY – BANGALORE SOUTH CAMPUS
Hosur Road (1Km before Electronic City), Bangalore -560100
INTERNAL TEST # 1
BUSINESS, GOVERNMENT AND SOCIETY – 12MBA21
Course: MBA Semester II
Faculty: Mr.Nagabhushana
Date:
03/03/2014
Note:
Time Allowed: 90 Minutes
Max. Marks: 50 (Fifty Marks)
Time: 11.30 AM – 1.00 PM
Answer all the Questions.
Write note on power dimensions of business.
Corporate power is exercised in seven spheres corresponding to the key business
environments
Economic power comes from the use of property and resources to influence events and
people.
Technological power influences the direction, rate, characteristics, and consequences
of innovations.
Political power is the ability to influence governments.
Legal power is the ability to shape laws and regulations.
1
(a)
Cultural power is influence over values, habits, and institutions.
(3 marks)
Environmental power is the impact of a company on nature.
Power over individuals is exercised over employees, managers, stockholders,
consumers, and citizens.
Two perspectives on business power
The dominance theory
The pluralist theory is that in a pluralistic society such as the United States business
power is adequately checked by democratic values, the Constitution, laws, markets,
government, labor unions, advocacy groups, and public opinion.
Explain the historical forces changing the business environment.
There are nine deep historical forces, each a cause of change in the business
environment.
(b)
(7 marks)
Industrial revolution refers to a series of changes that create industrial economies.
World GDP between 1950 and 2000 exceeded all that came previously in human history.
This industrial growth places social institutions under great strain.
Inequality is a timeless motive force in all political systems. Income inequality
between industrialized and undeveloped nations is pronounced and growing. However,
although income inequality is slowly rising, the percentage of people living in poverty
worldwide is declining. And the Human Development Index, a statistical tool used by
the United Nations to measure human progress, shows increases in overall human
welfare since 1900.
Population growth will remain rapid and is faster in less industrialized, non-Western
nations. It will peak in 2075, decline for a century, then rise again.
Technology is a powerful force for change today. Since the late 1700s there have been
five waves of innovation, each bringing economic growth but also changes that disrupt
society.
Globalization, defined as growing networks of economic, political, social, military,
scientific, or environmental interdependence, is a long-term environmental force going
back to prehistoric times. Today it exposes transnational corporations to demands of
more varied stakeholders, including anticorporate, antiglobalization activists.
Nation-states are international actors that define many rules and incentives in global
markets. In the past, nations sought to expand their wealth and power by seizing
territory. Today, many nations instead seek aggrandizement through international trade.
Dominant ideologies are a persistent force. An ideology is a set of reinforcing beliefs
and values that creates a worldview. Ideologies such as constitutional democracy,
progress, social Darwinism, and the Protestant Ethic have reinforced industrial
capitalism. With globalization has come a Darwinian competition in the marketplace for
ideas and the elimination or marginalization of many religions, languages, and cultural
beliefs.
Great leadership is found in all historical eras. Two views about it exist. One is
historian Arnold Toynbee’s idea that leaders are situated by fortune to rise at the
intersection of powerful social forces. The other is that of essayist Thomas Carlyle, who
wrote that great leaders are masters of their own fate and shape history themselves rather
than simply representing irresistible causes.
Chance is a force that may explain otherwise inexplicable environmental changes.
(c)
Bring out differences between market capitalism model and stakeholders model.
(10 marks)
What is the importance of corporate governance?
The presence of strong governance standards provides better access to capital and aids
economic growth. Corporate governance also has broader social and institutional
dimensions. Properly designed rules of governance should focus on implementing the
values of fairness, transparency, accountability, and responsibility to both shareholders
and stakeholders. In order to be effectively and ethically governed, businesses need not
only good internal governance, but also must operate in a sound institutional
environment. Therefore, elements such as secure private property rights, functioning
2(a) judiciary, and free press are necessary to translate corporate governance laws and
regulations
into
on-the-ground
practice.
Good corporate governance ensures that the business environment is fair and transparent
and that companies can be held accountable for their actions. Conversely, weak corporate
governance leads to waste, mismanagement, and corruption. It is also important to
remember that although corporate governance has emerged as a way to manage modern
joint stock corporations it is equally significant in state-owned enterprises, cooperatives,
and family businesses. Regardless of the type of venture, only good governance can
deliver sustainable good business performance.
(3 marks)
Write down OECD principles on corporate governance.
(b)
I. Ensuring the Basis for an Effective Corporate Governance Framework
II. The Rights of Shareholders and Key Ownership Functions
III. The Equitable Treatment of Shareholders
IV. The Role of Stakeholders in Corporate Governance
V. Disclosure and Transparency
VI. The Responsibilities of the Board
Explain “Market model” of corporate governance.
(7 marks)
The features of Market model” of corporate governance
(c)
Dispersed ownership
Developed capital market
High disclosure
Majority Non executive directors in board
Shareholder equality
(10 marks)
(10 marks)
3
Case Study:-
Marks: 2*5=10
Occupy Wall Street movement
The Occupy Wall Street protest, a people-powered movement that began on September
17, 2011 in Liberty Square in Manhattan’s Financial District, has gathered steam for a
month and spread to over 100 cities in the United States and actions in over 1,500 cities
globally. As the Anti-greed protesters rallied globally denouncing bankers and politicians
over the international economic crisis, it remains to be seen whether the movement will
succeed in bringing changes.
Answer the questions given below
1) Bring out relevant models of BGC relationship in view of above mentioned
movement.
2) Suggest appropriate BGS relationship model as solution to the above mentioned
crisis.
Key: Stakeholders model can be a solution to the problem.