Chapter 1

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who are relevant stakeholders?

Answer this question by drawing market and nonmarket stakeholder maps Recognize that not all of groups are relevant to every situation

Business

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

Stakeholder Theory of the Firm

Argues the corporation serves a broader purpose, to create value for society Must make profit for owners to survive, however, creates other kinds of value too Corporations have multiple obligations, all "stakeholder" groups must be taken into account

Core Arguments for Stakeholder Theory of the Firm

Descriptive More realistic description of how companies really work Instrumental More effective corporate strategy Normative Stakeholder management is the right thing to do

Ownership Theory of the Firm

Firm is the property of its owners Purpose is to maximize returns to shareholders Shareholders' interests are paramount and take precedence over all others

Society

Human beings and the social structures they collectively create

stakeholder analysis

Process whereby identify relevant stakeholders and analyze their interest and power Who are the relevant stakeholders? What are the interests of each stakeholder? What is the power of each stakeholder? How are coalitions likely to form?

how are stakeholder coalitions likely to form?

Stakeholder groups often have common interests and will form temporary alliances to pursue these common interests Coalitions are very dynamic (can change at any time) Coalitions are increasing international Internet has enabled coalitions to form quickly, across political boundaries International alliances, coupled with media interest, can be a very powerful strategic force for companies

what are the interests of each stakeholder?

What are the groups' concerns? What does the group want/expect from their relationship with the firm?

stake

an interest in-or claim on-a business enterprise

management theory

business firms are embedded in a broader social environment with which they constantly interact ● Business and society together form an interactive social system

Boundary-spanning department

departments or offices within an organization that reach across the dividing line that separates the company from groups and people in society Building positive and mutually beneficial relationships across organizational boundaries is a growing part of management's role

Dynamic Environment of Business

ever changing Six dynamic forces powerfully shape the business and society relationship: Changing societal expectations Growing emphasis on ethical reasoning and actions Globalization Evolving government regulations and business response Dynamic natural environment Explosion of new technology and innovation

General Systems Theory (GST)

organisms cannot be understood in isolation, even though they have clear boundaries; they can only be understood in relationship to their surroundings

Nonmarket (secondary) stakeholders

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

stakeholder

refers to persons or groups that affect, or are affected by, an organization's decisions, policies, and operations is NOT the same as stockholder stockholder is a type of

salient

stands out from a background, is seen as important, or draws attention Stakeholders to managers when they have power, legitimacy, and urgency Managers can use the concept to develop a stakeholder map - a graphical representation of the relationship of stakeholder salience to a particular issue A stakeholder map is a useful tool, because it enables managers to see quickly how stakeholders feel about an issue

what is the power of each stakeholder?

the ability of a group to use resources to make an event happen or to secure a desired outcome Voting power Economic power Political power Legal power

Market (primary) stakeholders

those that engage in economic transactions with the company as it carries out its primary purpose of providing society with goods and services


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