Chapter 3- Stakeholders

Question 1

Primary Interactions

Answer 1

with employees (unions),
shareholders, creditors, suppliers, customers, competitors,
wholesalers or retailers

Question 2

Secondary Interactions

Answer 2

with local communities,
governments, social activist groups, media, business support
groups and the general public

Question 3

Normative Stakeholders

Answer 3

those to whom organization has an obligation to and from; corporation accepts benefits

Question 4

Derivative Stakeholders

Answer 4

those from whom corporation has not accepted benefits, but they hold power over corporation

Question 5

Sustainable Pay

Answer 5

CONNECTION of executive compensation and environmental, social, and governance goals

Question 6

Managerial Responsibility

Answer 6

➢ 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

Question 7

Argument Against the Stakeholder Concept

Answer 7

1. Problems of categorization - how to identify and prioritize
   stakeholders
2. Challenges in meeting expectations - no clear statement of
   stakeholder expectations and complex trade-offs
3. Dilution of top management focus – stakeholders divert
   management attention away from measurable results
4. Impracticality of shared governance – impractical to have
   competing and conflicting interests govern corporation

Question 8

Argument for Stakeholder Concept

Answer 8

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

Question 9

Issue with Stakeholders relating to ethics, responsibilities, and sustainability

Answer 9

point in question where different views are held and hard to meet the needs of everyone

Question 10

Issue Management

Answer 10

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

Question 11

Benefits of Issue Management (5)

Answer 11

• 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

Question 12

Crisis

Answer 12

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

Question 13

Crisis Management

Answer 13

planning and removing much of the risk and uncertainty; gain control over event

Question 14

Fink’s Anatomy of Crisis

Answer 14

Prodromal Crisis, Acute Crisis, Chronic Crisis, Crisis Resolution

Question 15

Symmetric Relationship

Answer 15

Each party in a business relationship give equal efforts.

Question 16

Two-Way Relationship

Answer 16

Businesses’ need to understand the influence they have on stakeholders.

Stakeholders need to recognize how they influence a corporation.

Question 17

Business Owners

Answer 17

In an incorporated business, owners are those who hold equity.

There is a major owner, yet other people can buy into the company.

Question 18

Equity

Answer 18

Represents ownership in a company, typically with voting rights.

Question 19

Company Directors

Answer 19

Elected by stakeholders; influence on the company decisions.

oversee the fundamental functions; strategy, performance

firing and hiring CEO’s and higher management.

Question 20

Fiduciary Responsibility

Answer 20

Held by the Board of Directors which is a duty of care and trust.

Can’t make decision for personal gain or interest.

Question 21

Board of Directors

Answer 21

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.

Question 22

Independent Director

Answer 22

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.

Question 23

Employees

Answer 23

important stakeholder group because they do the day to day work that keeps a corporation running.

Can also be managers.

Question 24

Customers/ Consumers

Answer 24

Important to a company because they provide financial support to keep a business running.
PROVIDE REVENUE

Question 25

Lenders and Creditors

Answer 25

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.

Question 26

Suppliers

Answer 26

Provide the materials to stay in business. Without them, a business won’t be able to continue to produce their product.

Question 27

Service Professionals

Answer 27

Stakeholders that aren’t employees but provide services for fees.

Important because they allow corporations to receive the services they need to run smoothly.

Question 28

Management Consultants

Answer 28

experts in a particular field and are hired for their specific expertise.

Question 29

Pluralistic Society

Answer 29

influence or power is decentralized by dispersing it among a variety of institutions

Question 30

Stakeholders

Answer 30

individual, or group, who can influence and/or is influenced by the achievement of an organization’s purpose

Question 31

Stakeholder Crisis

Answer 31

Organizations should consider the interests and impacts on all

businesses have responsibilities beyond profit; sustainable and ethical practices that benefit stakeholders.