Stakeholders

Question 1

According to Freeman’s definition, what is a stakeholder?

Answer 1

Freeman’s 1984 definition defines a stakeholder as “Any group or individual who can affect or be affected by the achievement of an organization’s objectives.”

Question 2

How does Freeman’s definition emphasize the relationship between stakeholders and organizations?

Answer 2

Freeman’s definition highlights that stakeholders can both be affected by and affect an organization, demonstrating a bi-directional relationship.

Question 3

What are some examples of stakeholders typically associated with organizations?

Answer 3

Shareholders, management, employees, trade unions, customers, suppliers, and communities are common examples of stakeholders.

Question 4

What factors determine the complexity and range of stakeholders relevant to an organization?

Answer 4

The size and activities of the organization determine the complexity and range of stakeholders relevant to it. Larger and more complex organizations can have a wider variety of stakeholders.

Question 5

Why are stakeholders important in business ethics and strategic analysis?

Answer 5

Stakeholders are important because they make demands or claims on organizations, influencing their actions and outcomes.

Question 6

What do stakeholders typically want from an organization?

Answer 6

Stakeholders may want to influence the organization’s actions or be concerned about how the organization affects them, seeking changes in those effects.

Question 7

What is the difference between direct and indirect stakeholder claims?

Answer 7

Direct stakeholder claims are made by those with their own voice and are usually clear (trade unions, shareholders etc), while indirect claims come from stakeholders unable to express themselves directly. (eg. future generations, environment)

Question 8

What are some reasons for stakeholders being unable to make direct claims?

Answer 8

Reasons include powerlessness, non-existence (e.g., future generations), voicelessness (e.g., natural environment), or remoteness from the organization (e.g., distant producer groups).

Question 9

What challenge arises with indirect stakeholder claims?

Answer 9

Indirect claims require interpretation by others, making it difficult to determine the reliability of spokespersons for these stakeholders and incorporate their claims into decision-making processes.

Question 10

What is the purpose of the Mendelow framework in strategic analysis?

Answer 10

The Mendelow framework helps understand the influence of each stakeholder on an organization’s objectives and strategy by assessing their power and interest.

Question 11

How is influence measured in the Mendelow framework?

Answer 11

Influence is calculated as the product of a stakeholder’s power (ability to influence) and interest (willingness to care).

Question 12

What is a challenge associated with the Mendelow framework?

Answer 12

Measuring each stakeholder’s power and interest accurately can be difficult, and the stakeholder map is not static, as events can cause stakeholders to change positions.

Question 13

How does the Mendelow framework suggest organizations should treat stakeholders with neither interest nor power?

Answer 13

According to the framework, stakeholders with neither interest nor power can be largely ignored, but moral and ethical considerations may differ.

Question 14

What is the significance of stakeholders in the bottom right quadrant of the Mendelow map?

Answer 14

Stakeholders in the bottom right quadrant are high-interest and high-power stakeholders, often with the highest influence.
They are considered the “Key players”
The presence of multiple stakeholders in this quadrant can lead to decision-making challenges and strategic ambiguity.

Question 15

How can stakeholders with high interest and low power increase their influence according to the Mendelow framework? and what is the management strategy for them?

Answer 15

Stakeholders with high interest and low power can increase their influence by forming coalitions with other stakeholders to exert greater pressure. This shift can move them to a higher influence position on the map, and the management strategy for them is to ‘keep informed.’

Question 16

What is the management strategy recommended for stakeholders with high power but low interest in the Mendelow framework?

Answer 16

The management strategy for stakeholders with high power but low interest is to ‘keep satisfied,’ as re-awakening their interest can move them into the high-influence sector.

Question 17

What is the primary distinction in categorizing stakeholders?

Answer 17

Stakeholders can be categorized as internal (inside the organization eg. employees and management) or external ( customers, competitors, suppliers).
Some stakeholders will be more difficult to categorise, such as trade unions that may have elements of both internal and external membership.

Question 18

How does the Evans and Freeman model differentiate stakeholders?

Answer 18

It distinguishes between narrow stakeholders (most affected by organization’s policies, employees, mgmnt, SH, customers) and wide stakeholders (less affected). like government and wider community

Question 19

What is the key difference between primary and secondary stakeholders, according to Clarkson?

Answer 19

Primary stakeholders influence the organization’s survival, while secondary stakeholders do not directly impact its immediate survival.

Question 20

What distinguishes active stakeholders from passive stakeholders, as per Mahoney?

Answer 20

Active stakeholders seek to participate in the organization’s activities (management, employees, regulators, environmental pressure groups) while passive stakeholders do not actively engage in policy making. (most SH, govt, local communities)

Question 21

What distinguishes “known about” stakeholders from unknown stakeholders?

Answer 21

Known about stakeholders are acknowledged by the organization, while unknown stakeholders (eg nameless sea creatures, undiscovered species) are not. Seeking out unknown stakeholders is sometimes considered a moral duty to adopt minimal impact policies.

Question 22

what are recognised and unrecognised stakeholders?

Answer 22

If an organization considers a stakeholder’s claim as illegitimate, it may not recognize that claim, leading to non-consideration in decision-making.

Question 23

What makes the categorization of legitimate and illegitimate stakeholders challenging?

Answer 23

Stakeholder legitimacy is subjective and depends on individual viewpoints. What one considers legitimate, another might consider illegitimate. eg. one person’s terrorist is another’s “freedom fighter”
-While terrorists will usually be considered illegitimate, there is more debate on the legitimacy of the claims of lobby groups, campaigning organisations, and non-governmental/charitable organisations.

Question 24

difference between voluntary and involuntary stakeholders?

Answer 24

Voluntary stakeholders engage with the organization willingly, (eg. employees with transferrable skills who could work elsewhere) while involuntary stakeholders become stakeholders without choosing to do so. (environment, future gens, competitors, neighbors)

Question 25

8 ways in which stakeholders can be categorised?

Answer 25

-Internal and External Stakeholders
-Narrow and Wide Stakeholders
-Primary and Secondary Stakeholders
-Active and Passive Stakeholders
-Voluntary and Involuntary Stakeholders
-Legitimate and Illegitimate Stakeholders
-Recognized and Unrecognized Stakeholders
-Known About and Unknown Stakeholders

Question 26

What is the stakeholder/stockholder debate about?

Answer 26

The debate centers on whether shareholders (stockholders) are the only stakeholders with a legitimate claim to influence an organization’s decisions and objectives.

Question 27

What do supporters of the stockholder theory argue?

Answer 27

Stockholder theory proponents believe that organizations are owned by shareholders, and directors have a moral and legal duty to prioritize shareholders’ claims when making decisions.

Question 28

What is the main argument of stakeholder theorists?

Answer 28

Stakeholder theorists argue that businesses, as members of society and enjoying it’s protection have a duty to recognize the claims of various stakeholders beyond just shareholders when making decisions and setting strategies.

Question 29

How do stakeholder theorists view the responsibilities of businesses?

Answer 29

Stakeholder theorists see businesses as responsible citizens of society, obligated to consider a multitude of claims, not just those of shareholders, in their decision-making processes.

Question 30

What are the two contrasting motivations discussed in stakeholder theory?

Answer 30

Instrumental motivations:
The instrumental view suggests that organizations consider stakeholder opinions only if they align with more significant economic objectives, such as profit maximization or compliance with governance standards.

Normative motivation: The normative view focuses on what should be done, based on moral principles, while the instrumental view focuses on what is done to achieve economic objectives.

Question 31

What moral framework does the normative view often draw from, and who is associated with it?

Answer 31

The normative view often draws from Immanuel Kant’s moral philosophy, emphasizing moral duties towards stakeholders and the importance of social cohesion.

Question 32

When might organizations acknowledge stakeholder claims in the instrumental view?

Answer 32

Organizations may recognize stakeholder claims if failing to do so would threaten the loyalty or commitment of an important stakeholder group, potentially impacting economic performance and profitability.

Question 33

What is “the seven positions along the continuum” by gray, owens and adams?

Answer 33

they have classified seven different views on social responsibility:
Pristine Capitalists
Expedients
Social Contract Position
Social Ecologists
Socialists
Radical Feminists
Deep Ecologists

Question 34

Pristine Capitalists

Answer 34

Pristine capitalists believe in maximizing shareholder wealth above all else. They view any actions that reduce shareholder wealth, even for social responsibility, as detrimental and unauthorized.

Question 35

Expedients

Answer 35

Expedients share the goal of maximizing shareholder wealth but may adopt social responsibility measures to improve their strategic positioning and reputation, ultimately benefiting profits.

Question 36

Social Contract

Answer 36

The social contract position suggests that businesses have a “license to operate” granted by society. They must align with societal norms and adapt to ethical expectations, or risk losing their societal approval.

Question 37

Social Ecologists

Answer 37

Social ecologists believe that businesses have a responsibility to minimize their social and environmental impact. They adopt socially and environmentally responsible policies because they feel it is their duty, regardless of societal norms.

Question 38

Socialists

Answer 38

Socialists see business as a tool of the capitalist class, concentrating wealth and oppressing others. They advocate for a significant restructuring of business to address societal imbalances and benefit a wider range of stakeholders.

Question 39

Radical Feminists

Answer 39

Radical feminists challenge traditional masculine values such as aggression, power, assertiveness in business and society.
They propose a shift towards values like connectedness, equality, and compassion, requiring a major cultural change in business practices.

Question 40

Deep Ecologists

Answer 40

Deep ecologists argue that humans should not exploit and harm ecosystems for economic growth. They believe current economic systems are fundamentally flawed and incompatible with the preservation of the environment.