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BU midterm chapter4-part.docx

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Wilfrid Laurier University
Laura Allan

Chapter 4 Social Environment – Ethics – Stakeholders & Corporate Social Responsibility – Demographics – Ethics – “individual standards/beliefs regarding what is right and wrong or good and bad” – Business or Managerial Ethics – “standards of behaviour that guide individual managers in their work Planning Organizing Critical Success Factors Stakeholders Economic Marketing E Top Management L X TE NA PoliticalN Social Vision OperationsE Finance AL INT Mission Human Technological Resources Strategy Middle Management First-Line Management Controlling Directing How Does This Link Back To The Diamond V- the organization function is up to managers, therefore they decide the ethical standards in a company. Categories Of Ethical Behaviour • Behaviour Toward Employees – hiring & firing, wages, working conditions, privacy and respect • Behaviour Toward the Organization – conflict of interest, confidentiality and honesty- objective decision making • Behaviour Toward other Economic Agents – relationship with customers (take care of customers, regardless of the type), competitors, stockholders, suppliers, dealers and unions Assessing Ethical Behaviour 1.Gather Facts (facts are objective) 2. Analyze situation – Utilitarian Approach – involves trying to find ways to do the most good for the most people – Rights Approach – involves not violating legal or basic rights, what benefits the majority of individuals – Fairness/Justice Approach – equitable distribution of burdens and rewards – Caring Approach – consistent with peoples responsibilities 3.Make judgement * you can combine the approaches, ie rights approach always included. Fairness/Justice approach and utilitarian cannot be used together Managing Ethics managerial mission statement/ hiring criteria core value role modeling statement code of ethitrainingets & evaluation criteria conduct/ethics employee rewards systems protection mechanisms Inspiring Lives of Leadership and Purpose Hiring- want to hire people that make good ethical decisions Managerial Role Modeling- managers lead by example Mission Statement/ Core Value- This sends a message to employees about how company operates Code of Conduct- for everyone involved in business/organizations Ethics Booklets & Training- how to handle situations where ethics may be questioned Goals and Evaluation Criteria- performance evaluation, measure on ethics of decisions and behaviour Rewards Systems- we act positively when we are rewarded positively Employee Protection Mechanisms- ensures protection over those who act when ethics are broken Stakeholders • “Individuals, groups and other organizations who have an interest in the actions of an organization and who have the ability to influence it” (Savage et al., 1991) • “Groups or individuals who can significantly affect or are significantly affected by an organization‟s activities” (Harrison & St. John, 1996) • Stakeholders‟ importance depends on the situation and the issue- affect willingness and opportunity to act • Challenge: stakeholders may have varying and conflicting expectations of an organization Examples of Stakeholders • owners/creditors Decisions must be made with • customers these in mind • employees (and their unions) • the natural environment • suppliers • community, society • board of directors • special interest groups • government Stakeholders provide business with the capacity to operate… • owners & creditors: capital • customers: purchases • employees: human resources • BOD: leadership • natural environment: natural resources Stakeholders have expectations of the business… – owners & creditors: ROI – customers: quality, choice, communication, safety, respect – employees: fair pay, meaningful work, safety, fair treatment, training – BOD: responsible management. – natural environment: responsible stewardship Why Manage Stakeholders? to cope with to keep pace with environmental societal change in to avoid adverse to improve ability to turbulence and which stakeholders actions by predict/control the uncertainty want a voice stakeholders external environment to improve the to promote higher to promote higher percentage of levels of operating to promote more entry barriers leading successful new efficiency and favourable to more favourable product/service organizational legislation/regulation competitive introductions flexibility environment to align company to promote higher to potentially improve values with societal to increase media levels of trust profitability values (moral and power philosophical basis) Inspiring Lives of Leadership and Purpose  Take an active position in regards to the stakeholders and include stakeholders in your decisions, especially major ones. Strategically some may have pull in your company and therefore need to be managed, are they supportive or can they hurt you? How are stakeholders best managed? Potential for Threat n i High Low a e High MIXED BLESSING SUPPORTIVE o Strategy: Strategy: Involve o Collaborate l i Low n NONSUPPORTIVE MARGINAL t Strategy: Defend Strategy: Monitor o P Inspiring Lives of Leadership and Purpose Salvage et Al’s Approach • Savage et al‟s approach: – Identify key organizational stakeholders – Diagnose them along two critical dimensions of potential for threat and potential for cooperation – Formulate appropriate strategies both to enhance or change current relationships with those key stakeholders and to improve the organization‟s overall situation – Effectively implement these strategies How are stakeholders best managed? When/Which Should You Manage? • Importance of stakeholder varies by Potential for Threat n issue *INCENTIVES benefit t High Low • Stakeholders affect uncertainty faced by e firm o High Strategy:SSING SStrategy: Involve o Collaborate – Threatening= increase it l o Determined by relative power, t Low t NONSUPPORTIVE MARGINAL and capacity and willingness to o Strategy: DefendStrategy: Monitor act ex. Competitor, other groups P – Cooperative Inspiring Lives of Leadership and Purpose o Determined by dependence on organization, and capacity to expand interdependence ex. Employee/ supplier Mixed Blessing- can easily turn into a threat; Unions can be very threatening but if included the unions can be very helpful and influential on the people in the union Non Supportive- competing organization, especially controversial industries; unions may slip into this category. Strategic Importance and management Strategic importance of stakeholder LOW •
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