Term
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Definition
| Non-profit organizations that are formed without participation of any government. |
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Term
| What do NGO's typically form around? |
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Definition
A social movement to organize members around the cause.
- NGOs are thus also often referred to as ‘civil society organizations |
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Term
| What gives NGO's an advantage over firms that have many issues to think about? |
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Definition
| They are usually narrowly focused around a single cause |
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Term
| Why is the number of NGOs rising? |
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Definition
1. Communication costs are rapidly decreasing
- Easier to organize and manage campaigns.
2. Public trust in corporations is declining
- Easier to sway public opinion against firms.
3. Government bureaucracy is getting thicker
- Policy-option can involve long delays.
4. Businesses are becoming more global
- Inter-government action is hard to bring together. |
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Term
| What is the definition of private politics? |
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Definition
| When NGO activists directly engage private firms with their concerns instead of, or in addition to, trying to influence policy formation |
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Term
| what are the 4 normal stages of political issues |
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Definition
| Development, Politicization, Legislative, and Implementation. |
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Term
| Development Stage of Political Development |
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Definition
Concern about an issue develops from dissatisfaction of an interest group.
Initially the issue lacks broad appeal or widespread public support. |
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Term
| Politicization stage of the Normal Political Development |
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Definition
Issue commands more public attention.
Politicians publicly adopt issue as a campaign platform. |
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Term
| Legislation Stage of Normal Political Development |
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Definition
Bill moves through the political process (House and Senate) to become law, or to get rejected.
Majority yes votes needed to pass the legislation. |
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Term
| Implementation Stage of Normal Political Development |
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Definition
Regulators introduce, implement, and enforce final rules.
Rules and interpretations can be challenged in the courts. |
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Term
| Which 2 stages of Normal Political Development are replaced by NGOs? |
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Definition
| The Legislative and Implementation Stages |
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Term
| How does an NGO replace the Legislative phase of Political Development? |
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Definition
Replaced with NGOs making direct demands on firms.
Issue Threats: boycotts or negative PR.
Promise Reward: PR endorsements or funding |
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Term
| How does an NGO replace the Implementation stage of Political Development? |
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Definition
replaced with resolution of the NGO-firm dispute.
Bargaining by the two sides to come to an agreement.
May result in firm action, or may agree to disagree. |
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Term
| What characterizes a good target for an NGO campaign? |
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Definition
Well-recognizable brand name.
Firms that have a leadership position in the industry.
Consumer product firms (down-stream firms).
Firms producing products with low-switching costs.
Sometimes, the ‘worst offenders’ are targeted, but not always.
Firms that have shown interest in the NGO’s issue in the past. |
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Term
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Definition
| When firms incorporate sustainable business ventures in an effort to increase profits. |
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Term
| In what ways do firms incorporate sustainable business ventures in an effort to increase profits? |
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Definition
- Improve internal efficiencies (cost reductions).
- First mover advantage with industry technology.
- Manage regulatory risks
- Manage growing social risks and opportunities (NGOs).
- Enhance brand equity and corporate reputation. |
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Term
| In what ways can a company manage regulatory risks? |
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Definition
Preempt, stall, or shape future regulation.
Take advantage of government subsidies. |
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Term
| Why would a company enhance brand equity and corporate reputation through sustainable practices? |
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Definition
| Differentiate from competitors. Tap into new customer markets. Employee retention/recruiting concerns. Attract green/socially-minded investors. |
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Term
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Definition
| A firm’s production imposes costs on a third party without their consent. |
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Term
| What are the effects of external damages? |
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Definition
Supply under-estimates the true production costs.
From the view of efficiency, too many units are produced. |
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Term
| What are the incentive mechanisms to "Go Green"? |
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Definition
Government Taxation.
Tradable Pollution Permits.
Assign Accountability for Waste.
Subsidize Green Technology.
Green NGO incentives and pressures. |
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Term
| How does the government combat external damages? |
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Definition
| Tax to decrease supply and increase consumer prices. |
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Term
| Tradable Pollution Permits |
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Definition
| Government issues pollution permits that pertain to a permissible level of pollution and then government lets the firms trade the permits as needed. |
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Term
| How can pollution permits be given out? |
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Definition
| can be given out to firms for free, or they can be initially auctioned, or sold, to the firms in the industry. |
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Term
| What do tradable pollution permits specify? |
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Definition
| specifies the type of pollution, amount of pollution, and time period of use. |
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Term
| What are the assumptions of the pollution permit model? |
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Definition
One unit of output produces one unit of pollution (Q = Pollution)
Marginal Abatement Costs (MAC) are measured as lost profit from decreasing output to reduce pollution (no other technology is available). |
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Term
| What can alleviate external damages? |
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Definition
Assigning accountability for a firm’s waste
-Secondary markets for waste products will evolve |
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Term
| What can governments do to encourage companies to go green? |
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Definition
Governments can offer subsidies
Examples:
Tax Credits for green investments.
Grant money for green R&D.
Government-Industry Partnerships. |
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Term
| Why do green NGOs strategically target specific companies? |
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Definition
| To evoke industry wide movement toward green technology. |
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Term
| How do NGOs partner with industry to collaborate on green technology and certifications? |
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Definition
Share in R&D expenditures (Environmental Defense).
Certify Green Features (US Green Building Council) |
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Term
| Describe Assymetric Information in regards to demand (Used Cars) |
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Definition
Performance problems with the cars are not revealed to potential consumers.
--Consumers pay too much for the products.
--From the view of efficiency too much is consumed |
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Term
| Assymetric Information in regards to supply (Worker Safety) |
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Definition
Health risks from producing butter-flavored micro-wave popcorn are not revealed to workers.
Workers will be under-compensated.
From the view of efficiency too much labor is supplied |
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Term
| How does the government ensure consumer and worker safety? |
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Definition
Through productive regulation
-Different agencies regulate different aspects of the marketplace. |
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Term
| Example of government ensuring consumer and worker safety through productive regulation |
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Definition
| The FTC Shuts down Miss Cleo for false promise of free psychic readings, abusive tele-marketing, and tricky billing tactics |
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Term
| What forms when customers perceive that government quality regulations are insufficient? |
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Definition
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Term
| 3 examples of Private regulation |
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Definition
Best Western:
Owns no hotels, but allows hotels to use its logo (for a fee) if it meets its own quality standards.
Underwriters Laboratories:
Private firm that establishes standards for electrical equipment and then tests equipment (for a fee) to see if it meets their standards
CARFAX.com:
Provides information about a car’s history (for a fee). |
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Term
| What are 4 nice features of tradable pollution units? |
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Definition
-The overall level of pollution will be gradually reduced as the number of permits is usually decreased over time
-More permits go to those firms who value them the most (the high abatement cost firms).
-Low abatement cost firms can gain profits by selling un-used pollution permits.
-Environmental groups can groups can buy the permits and effectively reduce pollution more. |
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Term
| Criticism of tradable pollution units |
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Definition
| The initial allocation of permits may go to the most politically connected firms. |
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Term
| Public Regulation Details |
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Definition
-Don’t always consider the costs of regulation
-Funded through taxes paid by all individuals
-Tend to respond to only media scares |
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Term
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Definition
-Profitability depends on the efficiency of their regulations
-People that benefit from regulation pay for it
-Based on the need for regulation from within the industry |
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Term
| When will socially minded NGOs take action? |
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Definition
| Whenever they believe public and private regulation are insufficient at ensuring quality. |
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Term
| What are the 7 lessons to take away from the Starbucks case? |
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Definition
1. Socially responsible companies are likely targets, but also attractive collaborators.
2. Don’t wait for a crisis to collaborate.
3. Think strategically about relationships with NGOs.
4. Recognize that collaboration comes with some compromise.
5. Appreciate the value of the NGOs independence.
6. Understand that building relationships with NGOs takes time and effort.
7. Think more like an NGO by using communication strategically. |
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