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MGT455 Strategic Management CH2
Corporate Governance
30
Management
Undergraduate 4
09/27/2011

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Cards

Term
Corporation
Definition
mechanism established to allow diff. parties to contribute capital, expertise, and labor for their mutual benefit
Term
Board of Directors responsibilities
Definition
-set corp. vision, strat, goal, mission
-Hire/fire top mgmt
-control/monitor/supervise top mgmt
-review/approve use of resources
-care for shareholder interests
Term
Due Care
Definition
obligation of Board members to monitor and evaluate top mgmt
Term
Role of BoD in strategic mgmt (3)
Definition
-Monitor
-Evaluate and Influence
-Initiate and determine
Term
BoD continuum
Definition
shows possible degrees of involvement (low to high)
Term
Phantom
Definition
No degree of involvement
Term
Rubber Stamp
Definition
Officers make decisions, votes as officers recommend actions
Term
Minimal Review
Definition
Formally reviews issues
Term
Nominal Participation
Definition
involved to limited degree in perf/review of decisions
Term
Active Participation
Definition
Approves questions, makes final decisions on mission/strat/policies/objectives. Perform fiscal/mgmt audits
Term
Catalyst
Definition
Leading role in establishing mission/obj/strat/policies
Term
Inside Directors
Definition
officers/execs employed by corporation
Term
Outside Directors
Definition
Execs of other firms, not employees of corp.
Term
Agency Theory
Definition
Problems arise in corporations because agents (top mgmt) are not willing to bear responsibility for decisions unless they own substantial amnt of stock.
Term
Proponents of Agency Theory
Definition
-Inside Directors select less risky with quick payoffs
-larger proportion of outside favor growth through expansion
Term
Stewardship Theory
Definition
Because of Inside director long tenure with corp., they tend to identify with it more.
Term
Affiliated Directors
Definition
Handle legal or insurance work or important suppliers.
Term
Retired executive directore
Definition
used to work for the company
Term
Family Directors
Definition
Descendants of founder (significant portion of stock)
Term
Codetermination
Definition
Inclusion of corporation's workers on board. (union agmt's or ESOPs)
-pioneered by Germany (supervisory board and mgmt board)
Term
Direct interlocking directorate
Definition
two firms share a director or Exec of one sits on board of other
Term
Indirect Interlocking Directorate
Definition
two corps have directors who also serve on the board of a third firm (bank)
Term
Size of board
Definition
determined by corporation's charter and its bylaws. avg=10
Term
Lead Director
Definition
Consulted by Chair/CEO regarding board affairs and coordinates the annual evaluation of the CEO
Term
Sarbanes-Oxley Act 2002
Definition
-requires directors serving on audit committee be independent.
-formal procedures for whistle-blowers.
-CEO and CFO must certify financial info.
-disclose if there is a code of ethics for CEO/CFO
Term
Top MGMT responsibilities
Definition
getting things accomplished through and with others in order to meet objectives.
1)provide exec leadership and a strat vision
2)Manage strategic planning process
Term
Transformational Leaders
Definition
provide change and movement in an organization by providing a vision for that change
Term
Key Chars of Trans. Leaders (3)
Definition
1) CEO articule strategic vision
2) CEO present a role for others to identify with (role model)
3) Communicates high standards, shows confidence in followers abilities
Term
hubris
Definition
confidence blinds them to info that is contrary to decided course of action
Term
Bottom-Up/Top-down strat. planning
Definition
BU-appropriate in multidivisional corps in stable environments
TD-Turbulent environments
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