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Department
Management
Course
MGMT 1040
Professor
William(bill) Woof
Semester
Winter

Description
Chapter 3: The Stakeholder Approach to Business, Society, and Ethics By Melody Cheng Stake in stakeholder • Interest/share in an undertaking or legal claim of ownership Stakeholder • Any individual or group who can affect or is affected by the actions, decisions, policies, practices or goals of the organization 3 views of the Firm 1) Production Main stakeholder: individuals or groups that supply resources or bought products/services 2) Managerial Main stakeholder: business firms who have responsibilities toward other major constituent groups 3) Stakeholder Main stakeholder: the firm itself and its multilateral relationships with constituent or stakeholder groups Primary & secondary stakeholders Primary social stakeholders • Direct stake in the organization and its success • Most influential Ex. –Shareholders & investors -Employees & managers -Customers -Local communities -Suppliers & other business partners Secondary social stakeholders • Extremely influential in affecting reputation and public standing • Stake in organization more indirect • Can become a primary stakeholder when a claim’s urgency (boycott or demonstration) takes precedence over its legitimacy Ex. –Gov’t & regulators -Civic institutions -Social pressure groups -Media & academic commentators -Trade bodies -Competitors Typology of stakeholder attributes Legitimacy • Perceived validity or appropriateness of a stakeholder’s claim to a stake Ex. Owners, employees and customers have a high degree of legitimacy due to their explicit, formal and direct relationships with a company Power • Ability or capacity to produce an effect (to get something done that otherwise may not be done) Ex. With the help of the media, a large, social, vocal activist group could wield power over a business firm Urgency • Degree to which stakeholder claim on the business calls for the business’s immediate attention or response Ex. A union strike, boycott or picketing outside headquarters is considered urgent Proximity • Spatial distance between the organization and its stakeholders is a relevant consideration in evaluating stakeholders’ importance and priority Ex. Greater the proximity, greater the likelihood of relevant and important stakeholder relationships Stakeholder approaches Strategic • Sees stakeholders as instruments that may facilitate or impede the firm’s pursuit of its strategic, business objectives Multi-fiduciary • Broadens the idea of fiduciary responsibility to include stockholders and other important stakeholders Stakeholder synthesis • Holds that business does have moral responsibilities to stakeholders 3 values of the stakeholder model Descriptive • Provides language and concepts to describe effectively the corporation or organization in inclusive terms Instrumental • Useful in portraying the relationship between the practice of stakeholder management and resulting achievement of corporate performance goals such as profitability, stability and growth Normative • Stakeholders seen as possessing value irrespective of their instrumental use to management • Considered moral or ethical view because it emphasizes how stakeholders should be treated Key questions in stakeholder management 1) Who are our stakeholders? • A.k.a stakeholder identification • Management must identify: a) Generic stakeholder groups - general or broad grouping such as employees, shareholders, environmental groups or consumers b) Specific subgroups 2) What are our stakeholders’ stakes? • Management’s challenge: a) Identify nature or legitimacy of a group’s stakes b) Identify the power of a group’s stakes c) Identify specific groups within a generic group 3) What opportunities and challenges do our stakeholders present? • Opportunities are to build decent, productive working relationships with stakeholders • Challenges firms to handle stakeholders acceptably or be hurt in some (financially or in terms of its public image or reputation) 4) What responsibilities does a firm have toward its stakeholders? • In terms of corporate social responsibilities (economic, legal, ethical and philanthropic responsibilities) 5) What strategies or actions should management take? • Managers prioritize stakeholder demands based on cooperation and threat before deciding the appropriate strategy to employ Type 1: Supportive stakeholder • Ideal stakeholder • Hig
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