7. STAKEHOLDERS AND ETHICS Flashcards
(13 cards)
StakeHolders
• Individuals and groups with a stake in corporate performance and activities are found in both the internal and external environments of organisations.
- There is a great degree of interdependence between these stakeholders in large businesses: they rely on one another in many ways.
- However, there is also potential for tension and conflict arising from their different interests and perspectives.
Owners/shareholders-?
A business is the property of its owner or owners.
-Owners receive profit generated by their business (or suffer the loss) and clearly have a large stake in its performance.
-The owners of large organisations in the private sector are usually shareholders.
The shareholders in publicly listed (private) companies can be: ■ individuals ■ directors of the company ■ managers of the company ■ employees
!! Have an obvious interest in the business as they receive dividends upon its success
Managers-?
Managers are employed to direct the company on behalf of its owners.
- As managers, they do not normally receive a share of the profits and the business.
- Instead, they are paid a salary (remuneration, compensation) in return for their managerial work.
!! Interested in salary, promotion, achieve organisational objectives. Failure to meet objectives reflects poorly on them.
Investors/lenders ?
In addition to obtaining funds from shareholders, companies also raise funds from outside investors.
- These can be individuals, financial institutions or other companies.
- Outside investors have a stake in an organisation’s business performance.
Employees ?
The staff of an organization have a stake in organizational performance, including profitability.
-The work environment, opportunities for employees and job security all depend on business viability.
!! Interested in representation, job security and good working conditions. The success of the business will grant them job satisfaction and career advancement.
Suppliers?
The suppliers of these have a financial stake in an ongoing flow of orders and reliable payment from the buyer.
-Suppliers have a strong interest in the continuing viability of an organisation to which they make sales.
-Business organisations buy inputs from other businesses. Inputs can include:
■ raw materials
■ components
■ machinery and equipment
!! Interested in continuing validity of business to which it makes sales.
Customers ?
Customers (clients) use the goods and services produced by business
organisations.
-they have a stake in performance that delivers products of acceptable price and quality for their purposes.
!! Interested in price and quality of business products and continuing suppliers.
government?
Local Community?
International Community?
Interest Groups?
Government
All three levels of government in Australia are important players in promoting and supporting business performance.
-Successful businesses provide jobs and generate wealth and they add to government’s taxation revenue.
!! Interested in standard of living, economic conditions, compliance with laws. Successful businesses provide jobs, generate wealth hence more tax revenue for government.
Local community
Many communities have a substantial stake in large business organisations in their local area.
-Large organisations provide employment and training;
-they supply goods and services that, without their presence, may be difficult.
!! Interested in safety, environment. Can be interest groups.
International community
The international community is increasingly seen as a stakeholder in the business activities and the social responsibility of large organisations.
-Numerous concerns are expressed about the activities of some transnational corporations.
-Issues include product pricing, climate change.
!! Numerous concerns regarding pricing, climate change, sustainabality, and employment practices
Interest Groups
!!Interested in health and safety, environment, child welfare, deforestation. Can be Trade Unions.
Ethics?
Ethics are the moral standards and principles that guide people’s decisions and actions.
- The term integrity is often used in business to describe this personal quality.
- Modern business ethics are expected to include a sense of social responsibility—that is, a concern for the condition of society at large.
- The standing and significance of business ethics varies from organisation to organisation, and depends on an organisation’s culture.
• Conflict between stakeholders usually involves ethical considerations.
A business code of ethics typically includes?
■ responsibilities to the organization stakeholders
■ commitment to ethical business practices (for example, advertising standards)
■ policies on employment and human resource issues (for example, occupational health and safety)
■ statements about the organization active social responsibility.
Social Responsibility?
• Social responsibility continues to take on greater importance in the corporate world.
-Modern organisations are expected to implement triple bottom line policies that take account of profit but also include the social and environmental costs of business activity.
• The CSR index measures the performance of Australian companies against social responsibility indicators.
• Corporate social responsibility may be highlighted in relation to either:
■ outcomes of the organisation’s own activities, or
■ a more general concern for society.
Social Responsibilty
General concern for society ?
An organisation can also express a sense of social responsibility beyond the direct outcomes of its own activities.
- The strength of an organisation’s social responsibility will affect its public image and its business opportunities.
- Today there can clearly be profit in social responsibility.
Social Responsibilty
Outcomes of the organisation’s own activities:?
Typical outcomes of business activity—positive and negative—that may involve management in social responsibility issues include:
■ the organization product or products (for example, product safety)
■ creation of employment
■ creation of export revenue
■ development and transfer of new technology
■ outcomes in the natural environment
