Chapter 3- Stakeholders Flashcards
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 and the general public
Normative Stakeholders
those to whom organization has an obligation to and from; corporation accepts benefits
Derivative Stakeholders
those from whom corporation has not accepted benefits, but they hold power over corporation
Sustainable Pay
CONNECTION of executive compensation and environmental, social, and governance goals
Managerial Responsibility
➢ Identify stakeholders influenced by, or having an influence
on, the corporation
➢ Understand how corporation currently views stakeholders
➢ Examine how each stakeholder will or might influence
corporation
➢ Assess opportunities and threats, and magnitude
➢ Rank stakeholders by influence
➢ Prepare programs or policies detailing how to cope with
stakeholders
Argument Against the Stakeholder Concept
- Problems of categorization - how to identify and prioritize
stakeholders - Challenges in meeting expectations - no clear statement of
stakeholder expectations and complex trade-offs - Dilution of top management focus – stakeholders divert
management attention away from measurable results - Impracticality of shared governance – impractical to have
competing and conflicting interests govern corporation
Argument for Stakeholder Concept
Responding to stakeholders = good business
Ignoring stakeholder interests can have substantial
economic consequences
Identifies the full range of individuals and groups from
whom loyalty is needed
Provides systematic approach to recognizing
stakeholder expectations and deciding whether to
respond
Issue with Stakeholders relating to ethics, responsibilities, and sustainability
point in question where different views are held and hard to meet the needs of everyone
Issue Management
systemic process by which the corporation can identify, evaluate, and respond to economic, social, and environmental issues that may impact significantly upon it
Benefits of Issue Management (5)
- Corporations 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
Crisis
turning point, a crucial time, and a situation that has reached a critical point
Crisis Management
planning and removing much of the risk and uncertainty; gain control over event
Fink’s Anatomy of Crisis
Prodromal Crisis, Acute Crisis, Chronic Crisis, Crisis Resolution
Symmetric Relationship
Each party in a business relationship give equal efforts.
Two-Way Relationship
Businesses’ need to understand the influence they have on stakeholders.
Stakeholders need to recognize how they influence a corporation.
Business Owners
In an incorporated business, owners are those who hold equity.
There is a major owner, yet other people can buy into the company.
Equity
Represents ownership in a company, typically with voting rights.
Company Directors
Elected by stakeholders; influence on the company decisions.
oversee the fundamental functions; strategy, performance
firing and hiring CEO’s and higher management.
Fiduciary Responsibility
Held by the Board of Directors which is a duty of care and trust.
Can’t make decision for personal gain or interest.
Board of Directors
Typically made up of owners or shareholders.
Collective voice of a group of people.
The more shares you have in a company, the more votes you have towards the board.
Independent Director
An individual who is unrelated to the company.
Non- biased opinions without invested interest, because their not affiliated with the company.
Selected based on expertise and knowledge in a specific area.
Employees
important stakeholder group because they do the day to day work that keeps a corporation running.
Can also be managers.
Customers/ Consumers
Important to a company because they provide financial support to keep a business running.
PROVIDE REVENUE
Lenders and Creditors
Provide money to help a business achieve their goal. NOT INVESTORS.
Equity ⇏ debt
They can be institutions or individuals. Important to rely on your lenders to speak to your track record.
Suppliers
Provide the materials to stay in business. Without them, a business won’t be able to continue to produce their product.
Service Professionals
Stakeholders that aren’t employees but provide services for fees.
Important because they allow corporations to receive the services they need to run smoothly.
Management Consultants
experts in a particular field and are hired for their specific expertise.
Pluralistic Society
influence or power is decentralized by dispersing it among a variety of institutions
Stakeholders
individual, or group, who can influence and/or is influenced by the achievement of an organization’s purpose
Stakeholder Crisis
Organizations should consider the interests and impacts on all
businesses have responsibilities beyond profit; sustainable and ethical practices that benefit stakeholders.
