The Concept of Stakeholders

1
The Concept of Stakeholders

• Stakeholder
• A person or group that has some claim or
  expectation of how a business should be run.
• Primary stakeholders
• Those stakeholders whom a business affects and
  interacts with most directly.
• Secondary stakeholders
• Those stakeholders whom a business affects in an
  indirect or limited way.

2
Stakeholders as Part of the Business System

• Command economy
• One stakeholder group -the government- dictates
  how a business operates
• The government even decides production amounts
  and prices.
• Free market society
• Owners provide capital.
• Customers influence the volume, models, colors,
  and options that are produced.
• Government is involved in product, employee, and
  environmental safety.
• Unions affect wages and working conditions.
• Suppliers affect costs and, in turn, prices.

3
Primary Stakeholders(continued)

• Primary Stakeholders
• Owners.
• Customers.
• Employees (and their unions if the firm is
  unionized).

• Secondary Stakeholders
• Suppliers.
• Former employees.
• Community.
• Unions.
• The natural environment.
• The industry in which the firm operates.
• Other businesses.
• Government.
• Special interest groups.
• The media.
• Society.

4
Creating an Ethical Culture

• Why a Business Focus on Ethics
• Customers demand ethical behavior.
• Customers demand ethical action and increasingly
  support businesses efforts to be good corporate
  citizens.
• Good ethics improves the work climate.
• Clear ethical standards and direction foster a
  more favorable and promising work climate.
• Newly empowered workers need clear guidelines.
• Companies must trust employees to behave
  ethically on their own.

5
Forces That Shape Ethical Behavior
6
How Do You Know If Its Ethical?

• Is it legal?
• Is it fair?
• How does it make me feel?

7
Decision Making

• The Process
• Problem Identification
• Information Analysis
• Issue
• Employees
• Generating Alternatives
• Evaluating Alternatives
• Implementing Evaluating the Solution

• The Application
• Consider the following scenario
• You are interviewing a capable woman applicant
  for a job as salesperson. She is better qualified
  than the men you just interviewed. Nevertheless,
  you know that some of your top customers prefer
  dealing with men, and you will lose some sales if
  you hire her. What do you do?

8
What would you do?

• You are the purchasing agent for a retailer
  seeking to purchase a large quantity of big
  screen TVs. One of the suppliers hints that
  you could have one of their TVs to use
  personally in order to sample the quality of
  their product.

9
What would you do?

• You learn that a competitor has a new product
  feature that will make a big difference in sales.
  The competitor will demonstrate the feature at a
  private dealer meeting at the annual trade show.
  You can easily send a snooper to this meeting to
  learn about the feature.

10
Social Responsibility

• Social Responsibility involves being accountable
  to the
• Investor Financial Community
• General Public
• Consumer
• Employee
• Other Stakeholders

11
Levels ofSocial Responsibility

• Social Obligation- minimum economic legal
  obligation.
• Hiring minorities, highly visible social programs
  which are actually marketing campaigns
• Social Responsiveness - adapt to changing
  societal demands.
• Firms carefully follow changing mores, attitudes
  and taste and modify their practices accordingly.
  Starkist, Tide
• Social Activism- make society better / avoid
  making worse
• Ben Jerrys commitment to peace, charitable
  giving