DATE, TIME AND PLACE

Duties come with being Part of an Organization OBEDIENCE OBEDIENCE – Laws, Rules and Customs DUE CARE DUE CARE – Participate and Inquire LOYALTY LOYALTY – Opportunities and Conflicts

Strictly Legal Perspective Strictly Personal Perspective Is It Legal? If “No,” Stop and Take Action Is It Balanced? Compare Risks and Benefits How Does It Make Me Feel? What is your Conscience telling You? Are You doing the “Right Thing?”

NATIONAL or CULTURAL LAYERED ORGANIZATIONAL FUNCTION or TEAM PERSONAL VALUES

Financial: Financial: Self-dealing or Insider Trading Professional: Professional: Outside Commitments infringe on Employer Resources Personal: Personal: Family/Employee Conflicts, Nepotism, Fraternization DEFINITION: DEFINITION: Employee’s Personal Interests Interfere (“Conflict”) with Obligations to Employer

7 STRUCTURE is HOW Firm does WHAT it’s decided to do… STRATEGY Drives STRUCTURE

8 FLAT Few (No?) Layers between Management and Staff; Horizontally-shaped How do Organizations LOOK ? HIERARCHICAL Pyramid-shaped; Strict Superior/ Subordinate relations; Authority and Responsibility concentrated at top

9

10  How to Solve the “Agency Problem?”  Governance and Management (Checks and Balances)

11 MONITORING Performance Review Reward or Punish IMPLEMENTATION Execute Ratified Decisions RATIFICATION Choose Initiatives to be Implemented  Contrast with Textbook at p INITIATION Generate Proposals, Utilize Resources or Structure Contracts GOVERNANCE MANAGEMENT

12 MONITORING STEP  Explain Strategic, Tactical, Ethical and Financial Successes and Failures  EVALUATE EVERYTHING…  Operations (Easy)  Strategic Objectives (Hard)  EQUALLY Reward and Punish

Supply Chain Management Mass Production (Batch) : Toyota Production System (TPS) Lean Manufacturing : Toyota Production System (TPS)

How to Balance Need, Availability and Cost? The Inventory Problem

LONG-RUN TOTAL AVERAGE COST CURVE Fixed Costs Variable Costs Maximum Capacity Cost Mix determined by Optimal Production Quantity

17 A T -W ILL E MPLOYEE “HIRED” to Perform Assigned Work “FOR” Firm  May have Protections and Benefits  Dischargeable without Notice ────────────────────── I NDEPENDENT C ONTRACTOR “CONTRACTED” to Furnish Services “TO” I NDEPENDENT C ONTRACTOR “CONTRACTED” to Furnish Services “TO” Firm  No Protections and Benefits from Firm; Employer may have Duty  Contractual, not Employment-based

SEXUAL HARASSMENT UNWELCOME Advances, Requests for Favors or Other Verbal or Physical Conduct UNWELCOME

STOCK OPTION STOCK OPTION Right to Buy Stock Contractually Specified: Amount, Timing and Price STOCK GRANT STOCK GRANT Right to Receive Stock Specified Amount that vests over Time INCENTIVE-BASED COMPENSATION and BENEFITS  Add to Text, p  OPTION VALUE = Difference between Option’s “Strike Price” and Stock’s “Market Price”

DEFINED BENEFIT Participant receives Specific Monthly Amount AdvantageNo Risk/Guaranteed Security Disadvantage Difficult-to-Define Employer Costs DEFINED CONTRIBUTION Benefit based on Participant’s Account (Employer/ Employee Contributions and Investment Earnings) AdvantagePredictable Employer Costs Disadvantage Investment Risks; Latecomer’s Penalty RETIREMENT PLANS  Supplement Text at p. 369

21 SECTION 6 ( )  Forms of Promotional Messages for Push versus Pull Strategies  Purpose for Messages at Stages of Product Life Cycle

STRONG DOLLARWEAK DOLLAR

Do Benefits outweigh Costs? BENEFITS Economic Growth Lower Prices Job Creation COSTS Shifting Job Distribution Diminished Sovereign Authority Multiple Tax and Regulatory Standards Is it worth it?

25 THREEINDEXES

26 EFFICIENT MARKET HYPOTHESIS

27 VALUE = EPS ÷ ERR