Chapter 01 – The Corporation and Its Stakeholders
1. (p. 3) General Motors has been called a “template for 21st century capitalism.”
2. (p. 4) A business is any organization that is engaged in making a product or providing a
service for a profit.
3. (p. 4) Businesses and society are independent of one another.
4. (p. 6) The stakeholder theory of the firm argues that a firm’s sole purpose is to create value
for its shareholders.
5. (p. 6) The instrumental argument for the stakeholder theory of the firm says that companies
perform better if they consider the rights and concerns of multiple groups in society.
Chapter 01 – The Corporation and Its Stakeholders
6. (p. 6) The normative argument for the stakeholder theory of the firm says that the stakeholder
view is simply a more realistic description of how companies really work.
7. (p. 8) Nonmarket stakeholders are those that engage in economic transactions with the
company as it carries out its primary purpose of providing society with goods and services.
9. (p. 13) Each stakeholder group has only one source of power in relation to a firm.
10. (p. 14) The interests of different stakeholders often coincide.
11. (p. 15) Stakeholders involved with one part of a company often may have little or no
involvement with another part of the company.
12. (p. 16) Some scholars have suggested that managers pay the most attention to stakeholders
possessing the least salience.
Chapter 01 – The Corporation and Its Stakeholders
13. (p. 16) Urgency refers to the extent to which a stakeholder’s actions are seen as proper or
appropriate by the broader society.
14. (p. 17) A stakeholder map is a useful tool, because it enables managers to see quickly how
stakeholders feel about an issue and whether salient stakeholder tend to be in favor or
opposed.
15. (p. 19) The external environment of business is static.
16. (p. 4) Which statement is not correct about the business-society interdependence?
Difficulty: Medium
17. (p. 5) Which of the following examples best illustrates the boundary exchanges a company
would encounter according to the general systems theory?
Chapter 01 – The Corporation and Its Stakeholders
18. (p. 5) Which of the following is the result of an inseparable relationship between business
and society?
Difficulty: Medium
19. (p. 5) Which of the following statements is not true about the interactive social system?
Difficulty: Hard
20. (p. 6) A firm subscribing to the ownership theory of the firm would mainly be concerned
with providing value for its:
Difficulty: Medium
21. (p. 6) Corporations who run their operations according to the stakeholder theory of the firm
create value by:
Chapter 01 – The Corporation and Its Stakeholders
22. (p. 6) Which argument says that stakeholder management realistically depicts how
companies really work?
Difficulty: Easy
23. (p. 6) The instrumental argument says stakeholder management is:
Difficulty: Easy
Difficulty: Medium
25. (p. 7) A number of European countries require public companies to include employee
members on their boards of directors, so:
Chapter 01 – The Corporation and Its Stakeholders
26. (p. 7) Stakeholder groups can include:
Difficulty: Easy
27. (p. 9) Which one of the following is considered to be a nonmarket stakeholder of business?
Difficulty: Easy
28. (p. 9) Which of the following is not considered to be a nonmarket stakeholder?
Difficulty: Medium
29. (p. 11) The phenomenon of a person or group holding multiple stakeholder duties is referred
to as:
Chapter 01 – The Corporation and Its Stakeholders
30. (p. 11) A stakeholder analysis:
Difficulty: Medium
31. (p. 12) The four types of stakeholders’ power recognized by most experts are:
Difficulty: Medium
32. (p. 12 – 13) Which of the following statements is (are) correct about stakeholder’ power?
Difficulty: Hard
33. (p. 13) Customers can exercise economic stakeholder power by:
Chapter 01 – The Corporation and Its Stakeholders
34. (p. 13) Which of the following is not an example of stakeholders’ economic power?
Difficulty: Hard
35. (p. 13) When a community group sues a company for health effects caused by unsafe toxic
chemicals disposal, it is an exercise of a stakeholders’:
Difficulty: Medium
36. (p. 13) What stakeholder group(s) can exercise legal power?
Difficulty: Easy
37. (p. 13) What kind of power might a local community use to influence a company’s
decisions?
Chapter 01 – The Corporation and Its Stakeholders
38. (p. 15) Stakeholders have been able to form international coalitions more successfully
through use of:
Difficulty: Easy
39. (p. 16) When something stands out from a background, is seen as important, or draws
attention it is:
Difficulty: Medium
40. (p. 16) Stakeholders stand out to managers when they exhibit:
Difficulty: Hard
41. (p. 17) A stakeholder map is a useful tool because:
Chapter 01 – The Corporation and Its Stakeholders
42. (p. 17) Departments, or offices, within an organization that reach across the dividing line
that separated the company from groups and people in society are:
Difficulty: Easy
43. (p. 20) Interactions between business and society occur:
Difficulty: Medium
44. (p. 20) Harnessing human imagination to create new approaches to the concerns of modern
Difficulty: Medium
45. (p. 21) A successful business must meet its:
Chapter 01 – The Corporation and Its Stakeholders
46. (p. 5) Describe how the general systems theory can be applied to a business.
47. (p. 6 – 7) Supporters of the stakeholder theory of the firm make three core arguments for their
position. Define and provide examples of each.
48. (p. 8 – 11) Compare and contrast the relationships a firm may have with market and non–
market stakeholders.
49. (p. 9) Discuss why a manager should, or should not, be considered a stakeholder.
50. (p. 12 – 16) Explain the process called stakeholder analysis. Include a description of its four
key questions.
Chapter 01 – The Corporation and Its Stakeholders
51. (p. 16 – 17) What is a stakeholder map? Why is it a useful tool?
52. (p. 19 – 20) Describe and give examples of the external forces that shape the relationship
between business and society.