【正文】 Industry  Corporate  Divisional. 20B The first step of the strategic decision making process, as given in the book, is to a. review corporate governance. b. evaluate current performance results. () c. analyze strategic factors. d. scan the internal environment. e. scan the external environment.21B The focus of functional strategy is a. on stability, growth, or retrenchment. b. maximizing resource productivity. () c. on overall cost leadership differentiation. d. achieving overall direction. e. scanning the environment. Chapter Two Notes 13 CHAPTER TWO CORPORATE GOVERNANCE AND SOCIAL RESPONSIBILITYSUMMARY OF KEY POINTS ? Corporate governance is the relationship among the board of directors, top management, and the shareholders in determining the direction and performance of the corporation. The board of directors of the modern corporation is typically responsible for setting corporate direction, hiring and firing top management, monitoring top management and its use of resources, and stockholder interests. ? Boards can be placed on a continuum from passive to active regarding their involvement in the strategic management process through monitoring corporate activities, evaluating and influencing top management, plus initiating and determining a corporation39。s strategic management, this is no idle question. A good case can be made that a closelyhelp corporation has no need of a board. Since the owners are likely to pose both top management and board membership, the board bees superfluous at best and may even create more problems that it solves by getting in the way of management39。s task environment should be included so as to keep top management aware of key environmental considerations. Others may argue that only outsiders with no personal stake in the corporation (., not a member of a local bank or a key supplier, etc.) would be best able to bring the amount of objectivity needed to help make strategic decisions. A good argument can be started by suggesting that a representative from labor be a director. If this makes some sense, who should it be an employee of the corporation or an employee of another corporation? If the firm is not unionized, what then? Further discussion can be generated by suggesting that the position of the board reflect the key demographics of the corporation39。s meetings and agenda. This should improve the board39。 Require board members to own substantial amounts of stock in the corporation to ensure that they have a personal as well as professional stake in the welfare of the corporation.4. Do you agree with the economist Milton Friedman that social responsibility is a fundamentally subversive doctrine that will only hurt a business corporation39。s legal responsibilities which considering the usual inefficiencies of government will lead to higher costs and lower longrun business efficiency. If this appeal to financial considerations is not enough to justify socially responsible actions, an appeal to morality may be enough to swing the class toward a justification of ethical and even discretionary responsibilities. Nevertheless, this question should engender a lot of discussion on the topic.5. Is there a relationship between corporate governance and social responsibility?Since it is the job of the board to oversee the decisions and actions of top management, the board is the last opportunity of the pany to ensure that the firm’s actions do not hurt the environment of which the pany is a part. It can be argued that one way to increase a corporation’s social responsibility is to increase the presence and power of outside directors. The board can then be held more accountable for corporate actions. This has been the approach taken in the . through the SarbanesOxley Act to formalize greater board independence and oversight by demanding greater involvement in board decisions by outside directors. There appears to be increasing pressure on boards to balance the economic goal of profitability with the social needs of society.ADDITIONAL DISCUSSION QUESTIONSA1. How appropriate is the theory of laissezfaire in today39。s mission is its purpose, or the reason for its existence. It provides the fundamental, unique purpose that sets the pany apart from other firms of its type and identifies the scope of the pany39。s mission and vision by stating what the pany is now and what it wants to bee.A3. Tobacco panies are increasing their marketing efforts in Third World countries. Faced with a decline in tobacco usage in the developed countries, these corporations are using their advertising expertise and political connections to open new markets in Japan, Taiwan, Thailand, and South Korea, as well as in eastern Europe. In light of the accumulating evidence regarding the link between tobacco use and cancer, should the strategic managers in these tobacco panies be criticized for taking socially irresponsible actions? Should the government declare the making and selling of tobacco products illegal?This question should stir up the class as nonsmokers debate against smokers (or chewers)! It may also serve to bring up the issue of selfinterest. Why do nonsmokers brand tobacco panies irresponsible while smokers do not? Is the concern for social responsibility partly an issue of who gets hurt? Insofar as the nonsmokers are concerned, ask them to deal with the question of freedom of choice versus personal health (similar to laws regarding auto seat belts and motorcycle helmets). Is any pany making a product (such as guns or knives), which can hurt people, socially irresponsible? Insofar as smokers are concerned, is their personal desire to smoke coloring their view of the tobacco panies39。s way). The third reason is also one of enlightened selfinterest. If a pany develops a reputation for voluntarily doing socially useful activities even though it gains litt