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Corporate Governance Whom Does the Corporation ServeOECD suggests a stakeholder approach to governanceWho are stakeholdersAny group or individual who is affected by or can affect the achievement of an organizations objectives Freeman 1984A stakeholder approach means operating in a socially responsible wayin other words business has a responsibility beyond profit maximization PluralismA condition in which there is diffusion of power among societys many groups and organizationsa wide decentralization and diversity of power concentration Strengths Prevents concentration of powerMaximizes freedom Disperses individual allegiancesCreates diversified loyaltiesProvides safeguardsWeaknessesPursuit of selfinterestProliferates organizations with similar goalsForces conflicts Promotes inefficiencyStakeholdersIndividuals and groups with a multitude of interests expectations and demands as to what business should provide to societyShareholder Viewpoint vs Stakeholder ViewpointShareholder ViewpointA business exists to make moneygreatest efficiency is achieved through profit maximization profitstaxes paid to government for use in dealing with social issuesProperty rights theory corporation owned by shareholders Stakeholder ViewpointBusiness has a responsibility to do more than maximize profitsBusiness has caused several problems so it has a responsibility to fix themSocial institution theory society provides the very existence of business through legal frameworks StakeholdersA Complex LandscapeWho are our stakeholdersManagement must identify generic stakeholder groups and specific subgroupsWhat are our stakeholders stakesThe naturelegitimacy of a groups stakesThe power of a groups stakesThe specific groups within generic groupsWhat opportunities and challenges do stakeholders present Productive working relationships with stakeholdersChallenges and action onhow the firm handles stakeholders What strategies or actions to takeDeal directly or indirectly with stakeholdersTake the offence or the defence in dealing with stakeholdersAccommodate negotiate manipulate or resist stakeholder overturesEmploy a combination of the above or singular strategiesIdentifying key stakeholdersOne who can exert and sustain a positive or negative affect on the organizationThose stakeholders having high interest and high power to influence would be perceived as keyWho Are Business StakeholdersPrimary and Secondary StakeholdersPrimary stakeholders are those that have a direct interest in the organization and its successSecondary stakeholders are those that have a public or special interest in the organizationCore Strategic and Environmental StakeholdersCore stakeholders are essential to the firms survivalStrategic stakeholders are directly affected by threats and opportunities the organization facesEnvironmental stakeholders are all others in the organizations environmentThe Business StakeholdersLegitimacy is the perceived validity of the stakeholders claim to a stakePower is the ability of a stakeholder to produce an effectUrgency is the degree a stakeholders claim demands immediate attentionIdentifying StakeholdersPower legitimacy and urgencyany party possessing at least one of these attributes is a stakeholderLatent stakeholder possesses only one attributeExpectant stakeholder possesses two attributesDefinitive stakeholder would possess all three attributes How Canadians Govern ThemselvesCanada is a democracy a constitutional monarchy and a federal state with 10 largely selfgoverning provinces and three territoriesNova Scotia was the first part of Canada to secure a representative government in 1758
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