CH3 - Stakeholders and Issues

Question 1

Pluralist society

Answer 1

influence or power is decentralized by dispersing it among a variety of institutions
-> not one institution is completely independent of others
-> Each institution has some autonomy to pursue own interests

Question 2

Stakeholder

Answer 2

dindividual, or group, who can influence and/or is influenced by the achievement of an organization’s purpose
-> reason for managers to identify them : obtain resources, maintain legitimacy of business

Question 3

Freeman (1984) quote and meaning

Answer 3

“If you want to manage effectively, then you must take your stakeholders into account in a systematic fashion.”
-> managers must seek out stakeholders

Question 4

Relationship between corp. and stakeholders

Answer 4

Relationship is two-way:
-> corps. must understand how activities influence stakeholders
-> stakeholders must consider their responsibilities to the corporation

Question 5

Examples of Stakeholders

Answer 5

Owners, directors, employees, customers, lenders and creditors, suppliers, competitors, NGOs, society at large, educational inst., government, etc.

Question 6

Categorizing stakeholders (according to Frederick, Davis and Post)

Answer 6

-> primary interactions : with employees (unions), shareholders, creditors, suppliers, customers, competitors, wholesalers or retailers
-> secondary interactions : with local communities, governments, social activist groups, media, business support groups, general public

Question 7

Categorizing stakeholders (Mintzberg)

Answer 7

Stakeholders are either external or internal to the organization

Question 8

Categorizing stakeholders (according to Phillips)

Answer 8

Normative stakeholders : those whom organization has an obligation and from whom corp. accepts benefits
Derivative stakeholders : those from whom corp. has no accepted benefits, but they hold power over the corp.

Question 9

Responsibility of a Manager around stakeholders

Answer 9

-> identity them
-> understand how corp. views them
-> examine how each one can/will influence corp.
-> assess opportunities, threats and magnitude
-> rank them by influence
-> prepare programs/policies how to cope with them

Question 10

CEO as manager, special stakeholder compensation

Answer 10

-> High CEO compensation raises ethical implications
-> Changing executive compensation :
- contributes to income inequity

Question 11

4 arguments against the stakeholder concept

Answer 11

1 - problem of categorization: how to identify and prioritize
2 - challenges in meeting expectations: no clear statement of s.h. expectations and complex trade-offs
3 - dilution of top management focus: s.h. divert management attention away from measurable results
4 - impracticality of shared governance: impractical to have competing and conflicting interests govern corporation

Question 12

4 arguments for the stakeholder concept

Answer 12

1 - responding to s.h. = good business
2 - ignoring stakeholder interests can have substantial economic consequences
3 - identifies the full range of individuals and groups from whom loyalty is needed
4 - provides a systematic approach to recognizing stakeholder expectations and deciding whether to respond

Question 13

Issue meaning

Answer 13

point in question where different views are held of what is or what ought to the corporate performance-based management or s.h. expectations.

Question 14

Issues Relating to
Ethics, Responsibilities,
and Sustainability

Answer 14

1- controversial inconsistency based on expectation gaps
2- Involving management perceptions of changing legitimacy
3- Occur with or between views of what is and/or what ought to be corporate performance
4- Imply and actual or anticipated resolution that creates significant impact on organization

Question 15

Issues Management def

Answer 15

systemic process by which the corp. can identity, evaluate and respond to economic, social, and environmental issues that may impact significantly upon it

Question 16

Purpose of Issue Management

Answer 16

-> Minimize surprises relating to events or trends in society by serving as an early warning system
-> prompts managers to be more systematic in coping with issues and stakeholder concerns
-> mechanism for coordinating and integrating management of issues

Question 17

Benefits of Issues Management

Answer 17

-> corps. more likely to maintain competitive advantage
-> behavior more consistent with societal expectations
-> less likely to make a serious social or ethical mistake
-> detect issues earlier and develop appropriate responses
-> reduces vulnerability and enhances credibility

Question 18

Issue Life Cycles

Question 19

what is a crisis

Answer 19

turning point, a crucial time, and a situation that has reached a critical point