Business, Government and Society Chapter 1

Stakeholder analysis

An important part of the modern manager's job is to identify relevant stakeholders and to understand both their interests and the power they may have to assert these interests

Four models of the BGS Relationship:

1. Market Capitalism 2. Dominance 3. Countervailing forces 4. Stakeholder model

Corporate responses to stakeholders-

1. descriptive 2. instrumental 3. normative

4 questions of stakeholder analysis

1. who are the relevant stakeholders 2. What are the interests of each stakeholder 3. What is the power of each stakeholder 4. How are coalitions likely to form

in the stakeholder theory of the firm

All companies must make a profit for their owners, however, corporations create many other kinds of value as well, such as professional development for employees and innovative new products for their customers.

Government

agencies institutions hat have authority to apply rules on society, city, state federal. All within society

Business

any organization that is engaged in making a product or providing a service for a profit

stakeholders (market)

are those that engage in economic transactions with the company as it carries out its purpose of providing society with goods and services. Each relationship between a business and one of its market stakeholders is based on a two way exchange or a unique transaction.

Stakeholder Theory of the Firm

argues that corporations serve a broad public purpose; to create value for society.

in the stakeholder theory view

corporations have multiple obligations, and all stakeholders' interest must be taken into account. Success in business ventures depends upon maintaining the trust of these essential stakeholders.

countervailing forces

each different power at all different times, it's the issue that choose who has power

The horizontal axis represents

each stakeholder's position on this issue- from "against" to "for"

internal stakeholders (market)

employee, managers

The organization from whose perspective the analysis is conducted is called the

focal organization.

market capitalism

good for everyone, business, and partners work well together and work problems together

external stakeholders (non market)

governments, communities, nongovernmental organizations, business support groups, media, competitors

Stakeholder map

graphical representation of the relationship of stakeholder salience to a particular issue. The figure shows the position of various stakeholders on a hypothetical issue-whether or not a company should shut down an underperforming factory in a community.

Society

human beings and the social structures they collectively create Business and society are highly interdependent

stake

interest in or claim on a business enterprise

in the ownership of the firm theory

managers and boards of directors are agents of share holders and have no obligations to others, other than those directly specified by law. In this view, owners' interests are paramount and take precedence over the interests of others.

a stakeholder map is a useful tool because it enables

managers to see quickly how stakeholders feel about an issue and whether salient stakeholders tend to be in favor or opposed. It also help managers see how stakeholder collations are likely to form and what outcomes are likely

stakeholder model

market, non market, transaction that occur

instrumental

more effective corporate strategy

descriptive

more realistic description of how companies really work

stakeholders (nonmarket)

people and groups who- although they do not engage in direct economic exchange with the firm- are nonetheless affected by or can affect its actions

normative

stakeholder management is the right think to do

external stakeholders (market)

stockholders, customers, creditos, wholesalers, retailers, suppliers

dominance

support politician, creating gap between wealthy and poor

ownership of the firm

the firm is seen as the property of its owners, the purpose of the firm is to maximize its long-term market value, to make the most money it can for shareholders who own stock in the company.

The vertical axis represents

the salience of the stakeholder, an overall measure of that stakeholder's power, legitimacy and urgency. Bank pressure firm to close plant, high salience because they control the company's credit line and are urgently demanding action.