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Chapter 4

Chapter 4- Intro to Stakeholder Analysis.docx

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Department
Commerce
Course
COMM 104
Professor
Karen Humphreys Blake
Semester
Winter

Description
Chapter 4: An Introduction to Stakeholder Analysis • Milton Friedman wrote in 1970 that the sole motive for the corporate manager  was to increase the profits of the corporation, so as to maximize the return to the  shareholders o Aka the shareholders capitalism theory/agency theory • Charles Handy (2002): suggested that a corporation should have a purpose  beyond profits, such as an innovation or the improvement of society What Is Stakeholder Analysis? • Edward Freeman is often credited with developing the stakeholder model of  business  • There are two ways of looking at stakeholder management: 1. An approach to the ongoing management of a business  2. As a way to make business decisions when specific issues arise for  managers (this context is known as stakeholder analysis) • Some typical stakeholders in a business include: shareholders, employees,  customers, suppliers, governments, community and interest groups, and the  environment  • Stakeholder analysis: a strategy used on an issue­by­issue (transactional) basis to  arrive at the best possible outcome when making a business decision Why Stakeholder Management and Analysis? • There are 4 broad reasons why stakeholder management is better than focusing  solely on the shareholders: 1. It responds better to the demands of modern society 2. It accords with the emerging legal reality 3. It is morally superior 4. It may be a more effective business strategy in this century • In our modern society, stakeholders learn about corporate actions more quickly  than ever before  • Canadian law now requires corporations to consider stakeholders more broadly  than just shareholders o Ruled by the SCC in 2008  • Stakeholder management could be a better strategy for two reasons: 1. By understanding stakeholders, the company can better take advantage of  opportunities better  2. Stakeholder management can help avert business disaster and, in the case  of crisis, stakeholder management can help the business respond quickly  and effectively How to Engage in Stakeholder Analysis: • Stakeholder: someone (or a group of people) with either something at risk in the  decision, or who legitimately expect a certain outcome • The stakes of stakeholders a
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