Sociology - Economics and Politics - Quick Guides

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Study GuideSociology–Economics and Politics1. Modern Corporations and Multinationals1.1 What Is a Corporation?Acorporationis a business that is legally separate from the people who own it. This means thecompany can:•Borrow and repay money•Sign contracts•Sue others or be suedBecause the corporation is its own legal entity, the owners are not personallyresponsible for thecompany’s debts.Corporations come in many sizes. Some are small, like a local retail store. Others are massive, suchasFord Motor CompanyorGeneral Electric, two of the largest corporations in the United States.1.2Ownership vs. ManagementLarge corporations raise money by sellingstocks. People who buy these stocks are calledshareholders, and they legally own part of the company.However, shareholders usually do not run the business day to day. Instead:•Shareholders elect aboard of directors•The board meets regularly•The board sets major policies and long-term goalsWhile many Americans own stock, most do not attend board meetings or have much direct influenceover company decisions. Management runs the company but must answer to the board andshareholders.

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Study Guide1.3 Interlocking DirectoratesSometimes, corporations with closely connected businesses share board members. This is known asaninterlocking directorate.For example:•A manufacturing company•A financial services company•An insurance companyIf these companies work closely together, they may share the same board members. As a result, asmall group of individuals can influence decisions across several related companies at once.1.4 What Is a Conglomerate?Aconglomerateis a large corporation made up of many smaller companies, calledsubsidiaries.These companies may or may not be in related industries.Conglomerates often grow bybuying and selling companies for profit, rather than focusing on thegoods or services those companies provide.1.5 Mergers and Job LossesWhen companies merge, large layoffs often happen. This is because many jobs overlap.For example:•A conglomerate buys a smaller company•Both companies have marketingdepartments•Only one department is neededAs a result, many—or even all—employees from the smaller company’s marketing department maylose their jobs. Similar layoffs often occur when two companies of similar size merge.

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Study Guide1.6 Monopolies, Oligopolies, and MultinationalsCorporations can also be grouped by how much control they have over a market.1.7 MonopoliesAmonopolyexists when one company controls all or nearly all of the sales of a product or service.In the United States:•Most monopolies areillegal•They eliminate competition•They allow companies to set unfair prices•Consumers are harmedMonopolies interfere with capitalism, which depends on competition.1.8 Legal MonopoliesSome monopolies are allowed, especially in industries where competition would be difficult.Utilities—such as electricity or water—are common examples.Even these industries have changed:•Telephone service became more competitive after the breakup ofAT&Tin the 1980s•Some regions now allow competition among electric power companies throughderegulation1.9 OligopoliesAnoligopolyexists when a small number of companies dominate a market.A classic example:

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Study Guide•U.S. auto manufacturers before the 1980s•Ford, Chrysler, and General Motorsproduced nearly all American-made carsAs globalization increased, foreign competition entered the market. Today, true oligopolies are muchless common.1.10 Multinational CorporationsMultinationalsare corporations that operate in many different countries.These companies:•Produce enormous amounts of goods•Generate more wealth than many small countriesBecause of their size and influence, multinationals are often controversial.1.11 Supporters’ ViewBusiness supporters argue that multinationals:•Bring jobs and industry to less-developed countries•Raise standards of living•Strengthen local economies1.12 Critics’ ViewCritics argue thatmultinationals:•Exploit low-paid workers•Use up natural resources•Cause serious environmental damage

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Study Guide1.13 Why This MattersUnderstanding corporations helps explain how the global economy works. From job creation toenvironmental impact, modern corporations—and especially multinationals—play a powerful role inshaping societies around the world.By learning how they operate, students can better understand business, government policy, andglobal economic issues.2. Labor Unions2.1 Why Workers Formed Labor UnionsAs large corporations grew, many workers began to feelisolated and powerless. One worker alonehad very little influence over company decisions. Employers often did not listen to individualcomplaints or concerns.Workers soon realized something important:A single voice could be ignored, but a united voice could not.This understanding led to the creation oflabor unions.2.2 What Is a Labor Union?Alabor unionis an organized group of workers who join together to improve their working conditionsand benefits. Unions speak on behalf of workers to demand things such as:•Better wages•Safer working conditions•Reasonable working hours•Job security andbenefitsBy working together, employees gain more bargaining power than they would have on their own.

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Study Guide2.3 The Rise of Labor UnionsLabor unions were especially strong during theearly and mid-twentieth century. During this time,unions played a major role in improving workplace standards and protecting workers’ rights acrossmany industries.2.4 Decline in Recent YearsIn more recent decades, labor unions in the United States havelost members and influence.Several factors have contributed to this decline, including:•Globalization, which has moved many jobs overseas•Corporate mergers, which often reduce the workforce•Downsizing, where companies cut jobs to lower costsThese changes have made it harder for unions to maintain their strength.2.5 What the Future May HoldEven though unions are weaker today, many experts believe they may become more important again.As globalization continues and companies grow larger, workers may once again look to unions for:•Greater job stability•Fair treatment•A larger share of the benefits created by the global economy2.6 Why Labor Unions Still MatterLabor unions remind us that workers are strongest when they work together. By uniting, employeescan protect their interests and ensure their voices areheard—even in an economy dominated bylarge corporations.

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Study Guide3. Politics and Major Political StructuresPolitics is all about how societies organize and run their governments. Just as there are manydifferent economic systems, there are also many differentpolitical systems. Each nation uses asystem that fits its history, culture, and values.3.1 What Do “Nation,” “State,” and “Nation-State” Mean?These words are often used interchangeably, but they actually have different meanings.•Anationis a group of people who share common customs, history, language, or origin.•Astateis a political organization that has the legal authority to use force when necessary.This includes control over the police, military, and laws.•Anation-statecombines both ideas. It is a political system that governs a group of peoplewho share common cultural traits and claims legal authority over them.Sociologists and political scientists prefer the termnation-stateinstead of “country” because it ismore precise and clearly defined.3.2 Major Political Systems in the Modern WorldThroughout history, many types of political systems have existed. Today, most modern nation-statesfall into one of three main categories:1.Totalitarianism2.Authoritarianism3.Democracy3.3TotalitarianismTotalitarianismis a political system in which the government has almost complete control over everyaspect of citizens’ lives.

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