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Class Objectives/Business Relationship Overview (Ch. 9-11). 1. Describe an overview of the legal processes to change the social contract. 2 Identify the ethical issues underlying changes to the social contract 3. Analyze the levers of power among society, government, and business.

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Class objectives business relationship overview ch 9 11
Class Objectives/Business Relationship Overview (Ch. 9-11)

  • 1. Describe an overview of the legal processes to change the social contract.

  • 2 Identify the ethical issues underlying changes to the social contract

  • 3. Analyze the levers of power among society, government, and business.

  • 4. Analyze the processes of change in relation to Information Technology & Microsoft cases.

Gov. - Bus. Overview


Regulation if it is crazy why it is happening
Regulation—If it is crazy, why it is happening?

  • Share some stories

    • Defining Ketchup

    • Height of the letters on pickle jars

  • Doctor told me $40,000 gets a law ($80,000)

  • If business can buy lobbyists, where is the regulation coming from?

Gov. - Bus. Overview


Primary sources of american law
Primary Sources of American Law

  • US Constitution

  • Statutes, or laws, passed by government

  • Regulations by government agencies

  • Case law

Gov. - Bus. Overview


Regulatory law
Regulatory Law

  • Constitution

    • substantially affect interstate commerce

    • Promote the general welfare

  • Regulatory powers of the states

Gov. - Bus. Overview


Statutory law
Statutory Law

  • Federal

  • State

  • Uniform Laws by the NCC

    • 200 laws adopted by all the states

    • Uniform Commercial Code -- 1952

Gov. - Bus. Overview


Uniform commercial code statutory law cont
Uniform Commercial Code (Statutory Law cont.)

  • Commercial transactions

    • Sales, leases

    • Banking & Financing

    • Shipping and Warehousing

    • Investments

  • Uniformity among jurisdictions

    • all 50 states, DC, & Virgin Islands

Gov. - Bus. Overview


Administrative law
Administrative Law

  • Congress/Executive Branches create Agencies

    • FTC

    • OMB

  • Rulemaking

  • Investigation and Enforcement

  • Adjudication

    • Administrative Law Judge

Gov. - Bus. Overview


Supreme court interpretations over time
Supreme Court Interpretations Over Time

  • Power/restricted power of state

  • Commerce issues “Affected with the public interest “

  • Corporations get “Equal protection of the laws”

  • Monopoly competition is contrary to law

  • Shipping across state lines makes it federal

Gov. - Bus. Overview


Elements for a contract review
Elements for a Contract--Review

  • Agreement

  • Consideration

  • Contractual Capacity

  • Legality

Gov. - Bus. Overview


Agreement review
Agreement --Review

  • Offer—charter to operate

    • Dartmouth: Not terminated by state

Gov. - Bus. Overview


Agreement cont review
Agreement (cont.)--Review

  • Acceptance

    • Unequivocal

    • Communication

Gov. - Bus. Overview


Consideration regulation key
Consideration/Regulation--Key

  • Legally sufficient value

  • Bargained for exchange

    • Both get legal detriment

Gov. - Bus. Overview


Underlying reasons for regulation
Underlying Reasons for Regulation

  • Changing the Social Contract

    • Flaws in the market

    • Social, Political & Other

  • Why the changes—ETHICS!

Gov. - Bus. Overview


Define ethics
Define Ethics

  • What

    • Concepts of right and wrong

    • Good and evil

  • To:

    • Benefit society, and

    • Improve the human condition

Gov. - Bus. Overview


Underlying reasons flaws
Underlying Reasons--Flaws

  • Natural monopoly—Salt mine, water rights—Hispanic culture, Kalamazoo hospital

  • Natural resources regulation—Muskegon Lumber in Chicago

  • Destructive competition—Garbage in Portland

  • Externalities—Down the river

Gov. - Bus. Overview


Underlying reasons feel better and safer
Underlying Reasons – Feel better and safer

  • Quality of life—child seats, air emissions

  • Protecting individual rights--FDA

  • Resolution of national/global problems—Tariffs

  • Regulate/benefit special groups—EEOC

  • Conserve natural resources—

Gov. - Bus. Overview


Historical patterns
Historical Patterns

  • Traditional industry regulation—CAB

  • Second Managerial Revolution

    • Functions across all industries—Current theory

Gov. - Bus. Overview


Governmental power
Governmental Power

  • Recall the models of business power

  • Evaluate governmental power

Gov. - Bus. Overview


Governmental power1
Governmental Power

  • Prescribe rules of game

  • Major purchaser--$542B/$8.9T—7%

  • Contracting power

  • Promotes & Subsidizes

  • Owns wealth—In Oregon what do they own?

Gov. - Bus. Overview


Governmental power cont
Governmental Power—Cont.

  • Architect of economic growth

  • Legal protections

  • Manage through regulations

  • Tax and redistribute wealth

  • Protect National Security—Drug enforcement

  • National arbiter of disputes

  • Foreign affairs diplomacy

Gov. - Bus. Overview


The governmental regulation process
The Governmental Regulation Process

  • How are they made

  • Attempts to turn the tide

Gov. - Bus. Overview


Present and future
Present and Future

  • Costs & benefits of complying

  • Demands for new regulations

  • Mixed economy

Gov. - Bus. Overview


Airline degegulation
Airline Degegulation

  • Fair and efficient competition

  • Net gains for major stakeholders of airlines?

Gov. - Bus. Overview


Cab fair and efficient competition
CAB: Fair and Efficient Competition

  • PAT Growth =4%, fares down 35%

  • Hub and spoke—did deregulation do that?

  • Fares – unequal for regions/inequitable on planes

  • Low cost carriers disappearing; concentration

Gov. - Bus. Overview


Cab fair efficient competition cont
CAB Fair Efficient Competition- cont.

  • New entrants don’t

    • Exclusionary pricing

    • CSRs

    • Code sharing

    • Frequent flier

    • Fare discounting

    • Alliances

Gov. - Bus. Overview


Cab stakeholders better worse
CAB Stakeholders – Better/Worse

  • Airline stockholders

  • Airline businesses

  • Customers

    • Fares

    • Service

    • Safety

  • Employee welfare

  • Communities

  • Federal Government

Gov. - Bus. Overview


Business government relationship reforming ch 10
Business Government Relationship/Reforming (Ch. 10)

  • Describe an overview of the legal processes to change the social contract.

  • Identify the ethical issues underlying changes to the social contract

  • Analyze the levers of power among society, government, and business.

  • Analyze the processes of change in relation to Information Technology & Microsoft cases.

Gov. - Bus. Overview


Monsanto company biotechnology
Monsanto Company--BioTechnology

  • Is more regulation necessary?

    • FDA

    • USDA

    • EPA

  • What are the advantages and disadvantages?

Gov. - Bus. Overview


Monsanto issue management
Monsanto – Issue Management

  • Social Response

  • Issue Management

Gov. - Bus. Overview


Patterns of social response
Patterns of Social Response

  • Rejection

  • Adversary strategy

  • Resistance strategy

  • Compliance

  • Accommodation

  • Proactive strategy

Gov. - Bus. Overview


Pressures for social response
Pressures for Social Response

  • Government – jaw boning

  • Community interests & demands

  • Environmental concerns

  • Competitive responses

  • Stockholder/investor pressures

  • Philanthropy

  • Crises

Gov. - Bus. Overview


Implementation procedures
Implementation Procedures

  • Issues Management

  • Crisis management

  • Corporate philanthropy

  • Business in education

Gov. - Bus. Overview


Issues management
Issues management

  • What is it?

    • Identify important social issues

    • Potential of concern to the company

    • Develop responses

Gov. - Bus. Overview


Issues management methodology
Issues management methodology

  • Intuition

  • Scenario planning

  • Probability/Impact matrix

  • Setting priorities

  • Shaping public opinion

  • Legislation

  • Compliance

Gov. - Bus. Overview


Reforming the regulatory process
Reforming the Regulatory Process

  • Congressional legislation is more deficient than administration

  • Government vs. Business expertise

  • Rely more on the free market

    • Privatize

    • Deregulate

    • Incentive controls

Gov. - Bus. Overview


Reforming the regulatory process cont
Reforming the Regulatory Process (cont.)

  • Recent Congressional Initiatives

    • Cost/Benefits, easing, planning

  • Improve administration

    • Mining and Western lands issues

  • Reduce conflicts among administration

  • Increase speed of decisions

  • Performance based management

Gov. - Bus. Overview


Class objectives political process 11
Class Objectives/Political Process (11)

  • Describe an overview of the legal processes to change the social contract.

  • Identify the ethical issues underlying changes to the social contract

  • Analyze the levers of power among society, government, and business.

  • Analyze the processes of change in relation to Information Technology & Microsoft cases.

Gov. - Bus. Overview


Archer daniels midland
Archer-Daniels-Midland

  • Ethanol=MBTE

    • 10% gas mix reduces emissions

    • Renewable, less dependent on oil

    • 5.4 tax credit/gallon

    • Tax credit for production

  • Case against

    • $7B lost revenue

    • Public pays more for corn

    • Public pays more for beef

Gov. - Bus. Overview


Adm ethanol reform ethics
ADM/Ethanol Reform & Ethics

  • Reform

    • House opposed

    • Senate approved

    • Newt engineered passage—why?

  • Ethical

    • Yes--?

    • No--?

Gov. - Bus. Overview


Political process
Political Process

  • Shaped by balance of powers & rights

  • Historical diffusion of business political levers

Gov. - Bus. Overview


Lobbying vs special interest groups
Lobbying vs. Special Interest Groups

  • Business--Money/Money/Money

    • Peak & Trade Associations

  • Lobbying

  • Elections—PACs & Loopholes

  • Special interest groups evolve—courts & actions & ethics

Gov. - Bus. Overview


Federal express legislation
Federal Express--Legislation

  • Legislation—ICC Act dropped “express”

    • RLA

      • Railroads and express company(s)

      • Minimal protection for unions/workers

    • NLRA

      • Protection for unions/workers in organizing

      • City by city

    • Truck drivers are non-air carrier?

      • Far more drivers than pilots

      • Air express is their business

Gov. - Bus. Overview


Federal express lobbying
Federal Express--Lobbying

  • Republicans

    • Technical oversight

  • Democrats

    • Attack on worker’s rights

    • Solely to profit one company

  • Tactics

    • FAA bill--$19B

      • Conference committee, Hollings, 8-6

    • Filibuster by Kennedy

    • Democrats 17 joined to kill it

Gov. - Bus. Overview


Anti trust theories
Anti-trust Theories

  • Structure--Avoid concentrations

    • Structure: sales or assets as %

    • Result: Inflation, inefficiencies, no competitors

  • Performance—Seek efficient business performance

    • Innovation, lower costs/prices, capacity, = profit, service

Gov. - Bus. Overview


U s merger guidelines
U.S. Merger Guidelines

  • Market definition—structure in regions & products

  • Adverse competitive effects—performance: collusion & anti-competitive?

  • Entry—still possible?

  • Expected efficiency gains—passed on to consumers?

Gov. - Bus. Overview


Microsoft isps csps
Microsoft—ISPs & CSPs

  • DOJ

    • IE primarily/exclusively/better

    • ISP gets positioning power

  • MS

    • Cross licensing—mutual benefit

    • Where is the harm?

Gov. - Bus. Overview


Microsoft oems
Microsoft—OEMs

  • DOJ

    • Restricted OEM changes to Windows

    • Structure theory

  • MS

    • Standard practice: no modifications

    • Where is the harm?

    • Concentration is less 1% of PC Industry

    • Service, costs, prices, innovation

Gov. - Bus. Overview


Class objectives
Class Objectives

  • Describe an overview of the legal processes to change the social contract.

  • Identify the ethical issues underlying changes to the social contract

  • Analyze the levers of power among society, government, and business.

  • Analyze the processes of change in relation to Information Technology & Microsoft cases.

Gov. - Bus. Overview


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