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Lecture 4

ADM1301 Lecture 4: Chapter 4

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Department
Administration
Course
ADM1301
Professor
Rumaisa Shaukat
Semester
Fall

Description
Stakeholders Who exactly are stakeholders?  Any group or individual who is affected by or can affect the achievement of an organization’s objectives (Freeman: 1984)  Individuals and groups with a multitude of interests, expectations, and demands as to what business should provide to society.  Anyone or any organization w/ a perceived stake the organization activities and operation  We live in a pluralistic society therefore ether is diffusion of power  In a nutshell everyone is a stakeholder Defining Stakeholders/Publics • Geographics • Demographics: look into ecosystem to see how many demographic differences are there; ethnic political, religious • Psychographics: shows quality of life and more educated people = more aware of how bsuieness decision may affect the society • Covert power: this is something that you cannot see by legitimate authority but by networking and connections • Position • Reputation: shows who is influential • Membership: • Role in decision process: look into how people participate in public policy Pluralistic Society Diffusion of Power Strengths  Prevents concentration of power: power is more decentralized; people have a more equal distribution of power  Maximizes freedom: everyone has freed of expression, belief etc.  Disperses individual allegiances  Creates diversified loyalties; more complexities; v. important in a multicultural Society like Canada that there will many differences  Provides safeguards Weaknesses  Pursuit of self-interest individual and organization may pursue their self-interest; may not necessarily be bad  Proliferates organizations with similar goals  Forces conflicts : different groups and individuals leads to a lot of completion and a lot of conflict  Promotes inefficiency Stakeholders vs. Stakeholder Viewpoints  Shareholder Viewpoint: o A business exists to make money – greatest efficiency is achieved through profit maximization  Work w/ a profit generating perspective- main goal is to make money and profits: o profits, > taxes paid to government for use in dealing with social issues o Property rights theory (corporation owned by shareholders)  Stakeholder Viewpoint: o Business has a responsibility to do more than maximize profits o Business has caused several problems so it has a responsibility to fix them o Social institution theory (society provides the very existence of business through legal frameworks) o Believe it’s your ethical and social responsibility to do something good in your society Shareholder View vs. Stakeholder View  Why view is correct? o The correct view is in the grey area o The stakeholder map is complex o First must identify who your stakeholders are and prioritize them o Cannot have one definite strategy to handle to stakeholder o Different stakeholder have different stake in the business Stakeholders: Some Realities 1. Stakeholders’ interests will not always be clear 2. Some stakeholders will win, others will lose: it is almost impossible to please every stakeholder; it is not to 3. Stakeholders watch how the organization treats other stakeholders: stakeholders are gatekeepers; they watch how you treat your other stakeholders to make sure you’re Socially Responsible 4. Stakeholder management will cost money, but might be cheaper than not managing stakeholders: Costly but may actually less costly in the long run 5. Stakeholders and stakeholder groups are not static 6. Stakeholder contributions are essential: if your stakeholder is dissatisfied w/ you it could negatively affect your operation Who are Typical Stakeholders? Key Questions in Stakeholder Management 1. Who are stakeholders? 2. What are stakeholders’ stakes? 3. What opportunities and challenges do stakeholders represent? 4. What economic, legal, ethical, and philanthropic responsibilities does a firm have? 5. What strategies or actions should firms take to manage stakeholders’ opportunities and challenges? Key Question In Stakeholder Management Who are our stakeholders? Management must identify generic stakeholder groups and specific subgroups Generic subgroups ex, Employees sub-subgroup unionized and
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