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Canada (158,173)
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ADM1301 (73)
Chapter 3

ADM1301 Chapter 3 Textbook Notes

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University of Ottawa
John Palmer

Chapter 3 Identifying Stakeholders and Issues 3.1 The Stakeholder Concept and Business  In Canada, business operates in a pluralistic social system where a variety of groups and institutions use power or influence to represent the interests of particular groups of citizens.  Business is subject to the influence of other institutions in society and must respond to the various participants in society. 3.2 Defining and Identifying Stakeholders  A stakeholder is an individual, or group, who can influence and/or is influenced by the achievement of an organization’s purpose.  All stakeholders have expectations (reasonably priced goods, good quality etc.) Identifying Stakeholders Owners  Individuals or groups who have invested in the form of equity, or shares.  Depending on the size of the organizations, the number of shareholders will vary.  A shareholder in a large corporation will not have the same importance as in a smaller corporation. Directors  Directors are elected by shareholders to represent their interests.  The purpose of a board of directors is to determine the corporation’s strategic direction, monitor and review the corporation’s performance, and hire and fire top executives.  Small, unincorporated business enterprises do not have directors. Employees  Those who work for the company  Employees are considered among the most obvious, and perhaps the most important stakeholders. Customers or Consumers  Can be members of the public, or other corporations.  Consumers are influencing the ethics of corporations. Lenders and Creditors  Some lend for long term by purchasing bonds or debentures.  Some advance funds for short periods, as with trade creditors.  Lenders can be individuals or other corporations.  Stakeholders have an influence if the lender is not paid as agreed upon in the contract, the corporations assets can often be seized. Suppliers  Suppliers are usually other corporations that provide raw materials, component parts, or finished materials.  Depending on how many sources of this supply you can get, the supplier’s importance will vary.  Sometimes, a corporation may own its supplier. Service Professionals  Individuals who are not employees of the corporation but provide services on a fee-for-service basis.  Lawyers, accountants, engineers, and management consultants.  Their influence is in the form of advice they provide. Dealers, Distributors, and Franchisees  Corporations use distributors to bring their products to customers; therefore the corporation should see them as an important stakeholder. Business Organizations  Corporations join together to form hundreds of organizations to represent their interests.  The impact of these types of organizations varies, but by uniting to speak as one they are bound to have more influence than by acting individually. Competitors  Competitors are those firms that sell the same products.  Competitors need to be watched and monitored closely.  Not only from domestic environment, but from foreign countries as well. Joint-Venture Participants  Joint-venture participants are partners cooperating in a particular enterprise or project.  Typically have written agreements. Non-Governmental Organizations  Such organizations operate on a non-profit basis with volunteers.  They are numerous, but their impact on the corporation varies. Society at Large  This stakeholder represents the general public; that is, the views of society.  The views of this stakeholder can be difficult to determine, making it difficult to ascertain the stakeholder’s influence. Educational Institutions  Educational institutions educate not only the students, but also the general public.  Business relies on these institutions to provide it with educated and skilled employees. Religious Groups  Religious leaders occasionally speak out on issues related to business.  Businesspersons are individually influenced by the values and beliefs upheld by religious groups. Charities  Charitable organizations receive some of their funding from corporations, and in return the business donors expect careful stewardship of the funding. The Media  The media publicizes information about the corporation and can have a substantial positive or negative impact
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