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    The Corporation and Its Stakeholders

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    Irfan Ul Haq
    1) The document discusses stakeholders, who are individuals and groups affected by or able to affect a company's actions. Stakeholders include both market stakeholders like suppliers and retailers, as well as nonmarket stakeholders like governments, communities, and the media. 2) Stakeholders have different interests and abilities to influence companies. For example, employees want fair pay and safe working conditions, while governments aim to promote economic development through regulations and taxes. 3) Business and society are interdependent, and general systems theory holds that companies interact with their external environment. Managing stakeholder relationships is important for companies to address social challenges and enhance their reputation.

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    The Corporation and Its Stakeholders

    Uploaded by

    Irfan Ul Haq
    27 views23 pages
    1) The document discusses stakeholders, who are individuals and groups affected by or able to affect a company's actions. Stakeholders include both market stakeholders like suppliers and retailers, as well as nonmarket stakeholders like governments, communities, and the media. 2) Stakeholders have different interests and abilities to influence companies. For example, employees want fair pay and safe working conditions, while governments aim to promote economic development through regulations and taxes. 3) Business and society are interdependent, and general systems theory holds that companies interact with their external environment. Managing stakeholder relationships is important for companies to address social challenges and enhance their reputation.

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    1) The document discusses stakeholders, who are individuals and groups affected by or able to affect a company's actions. Stakeholders include both market stakeholders like suppliers and retailers, as well as nonmarket stakeholders like governments, communities, and the media. 2) Stakeholders have different interests and abilities to influence companies. For example, employees want fair pay and safe working conditions, while governments aim to promote economic development through regulations and taxes. 3) Business and society are interdependent, and general systems theory holds that companies interact with their external environment. Managing stakeholder relationships is important for companies to address social challenges and enhance their reputation.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    27 views23 pages

    The Corporation and Its Stakeholders

    Uploaded by

    Irfan Ul Haq
    1) The document discusses stakeholders, who are individuals and groups affected by or able to affect a company's actions. Stakeholders include both market stakeholders like suppliers and retailers, as well as nonmarket stakeholders like governments, communities, and the media. 2) Stakeholders have different interests and abilities to influence companies. For example, employees want fair pay and safe working conditions, while governments aim to promote economic development through regulations and taxes. 3) Business and society are interdependent, and general systems theory holds that companies interact with their external environment. Managing stakeholder relationships is important for companies to address social challenges and enhance their reputation.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 23

    Chapter 1

    THE CORPORATION AND ITS STAKEHOLDERS


    Welcome Everyone

    Takrima Jannat
    Assistant Professor
    Department of Marketing
    Bangladesh University of Professionals
    takrima.jannat@bup.edu.bd
    Introduction
    ► business corporations have complex relationships with many individuals and
    organizations in society.
    ► The term stakeholder refers to all those that affect, or are affected by, the actions
    of the firm.
    ► An important part of management’s role is to identify a firm’s relevant
    stakeholders and understand the nature of their interests, power, and alliances
    with one another.
    ► Building positive and mutually beneficial relationships across organizational
    boundaries can help enhance a company’s reputation and address critical social
    and ethical challenges.
    Business & Society
    ► Business today is arguably the most dominant institution in the world. The term
    business refers to any organization engaged in making a product or providing a
    service for a profit.
    ► Society, in its broadest sense, refers to human beings and to the social structures
    they collectively create.
    ► In a more specific sense, the term is used to refer to segments of humankind, such
    as members of a particular community, nation, or interest group.
    Business & Society
    ► As a set of organizations created by humans, business is clearly a part
    of society.
    ► At the same time, it is also a distinct entity, separated from the rest of
    society by clear boundaries.
    ► Business is engaged in ongoing exchanges with its external
    environment across these dividing lines.
    ► For example, businesses recruit workers, buy supplies, and borrow
    money; they also sell products, donate time, and pay taxes.
    business and society are highly interdependent.
    Business activities impact other activities in
    society, and actions by various social actors and
    governments continuously affect business.
    To manage these interdependencies, managers
    need an understanding of their company’s key
    relationships and how the social and economic
    system of which they are a part affects and
    affects their decisions.
    General systems theory

    ► General systems theory, first introduced in the 1940s, argues that all organisms
    are open to, and interact with, their external environments. Although most
    organisms have clear boundaries, they cannot be understood in isolation, but only
    in relation to their surroundings.
    ► the systems concept implies that business firms (social organisms) are embedded
    in a broader social structure (external environment) with which they constantly
    interact. Corporations have ongoing boundary exchanges with customers,
    governments, competitors, the media, communities, and many other individuals
    and groups. Just as good soil, water, and light help a plant grow, positive
    interactions with society benefit a business firm.
    General systems theory
    The Stakeholder Theory of the Firm
    ► In the firm’s own theory (sometimes called property or finance theory), the
    firm is seen as the property of its owners. The purpose of the firm is to
    maximize its long-term market value, that is, to make the most money it can
    for shareholders
    ► In the stakeholder theory of the firm, argues that corporations serve a broad
    public purpose: to create value for society. In this view, corporations have
    multiple obligations, and all stakeholders’ interests must be taken into account.
    The Stakeholder Concept

    ► The term stakeholder refers to persons and groups that affect, or are affected by,
    an organization’s decisions, policies, and operations.
    ► The term stakeholder is not the same as a stockholder, although the words sound
    similar. Stockholders—individuals or organizations that own shares of a
    company’s stock—are one of several kinds of stakeholders.
    Different Kinds of Stakeholders
    ► Market stakeholders are those that engage in economic transactions with the
    company as it carries out its purpose of providing society with goods and
    services. Examples: wholesalers, distributors, retailers, suppliers
    ► Nonmarket stakeholders, by contrast, are people and groups who—although
    they do not engage in direct economic exchange with the firm—are nonetheless
    affected by or can affect its actions. Nonmarket stakeholders include the
    community, various levels of government, non-governmental organizations, the
    media, business support groups, competitors, and the general public.
    Think About it:
    is there any relationship between a student
    and a business? Are you a stakeholder in
    any business?
    Stakeholders: Nature of Interest and Power

    Stakeholder Nature of Interest— Stakeholder Nature of Power—Stakeholder


    Wishes To: Influences company by-

    Suppliers ■ Receive regular orders for goods ■ Refusing to meet orders if


    ■ Be paid promptly for supplies conditions of contract are breached
    deliveredd ■ Supplying to competitors

    Retailers Wholesalers Receive quality goods in a timely ■ Buying from other suppliers if
    fashion at reasonable Cost terms of contract are unsatisfactory
    ■ Offer reliable products that ■ Boycotting companies whose
    consumers trust and value goods or policies are unsatisfactory
    The Stakeholders of Business

    Market Stakeholders Nonmarket Stakeholders


    Internal Stakeholders Employees
    Managers

    External Stakeholders Stockholders Governments


    Customers Communities
    Creditors Nongovernmental Organizations
    Suppliers Business Support Groups
    Wholesalers and Media
    Retailers Competitors
    Stakeholders: Nature of Interest and
    Power
    Stakeholder Nature of Interest— Nature of
    Stakeholder Wishes To: Power—Stakeholder
    Influences company by-
    Employees ■ Maintain stable ■ Union bargaining power
    employment in firm ■ ■ Work actions or strikes
    Receive fair pay for work ■ Publicity
    ■ Work in safe,
    comfortable environmen
    Stockholders ■ Receive a satisfactory Exercising voting rights
    return on investments based on share ownership
    (dividends) ■ Realize ■ Exercising rights to
    appreciation in stock value inspect company books and
    over time records
    Stakeholders: Nature of Interest and Power
    Stakeholder Nature of Interest— Stakeholder Nature of Power—Stakeholder
    Wishes To: Influences company by-

    Creditors ■ Receive repayment of loans ■ ■ Calling in loans if payments are


    Collect debts and interest not made ■ Utilizing legal
    authorities to repossess or take over
    property if loan payments are
    severely delinquent
    Communities ■ Employ local residents in the ■ Refusing to extend additional
    company ■ Ensure that the local credit ■ Issuing or restricting
    environment is protected ■ Ensure operating licenses and permits ■
    that the local area is developed Lobbying government for
    regulation of the company’s
    policies or methods of land use and
    waste disposal
    Stakeholders: Nature of Interest and Power

    Stakeholder Nature of Interest— Nature of Power—Stakeholder


    Stakeholder Wishes To: Influences company by-

    Governments ■ Promote economic ■ Adopting regulations and laws


    development ■ Encourage social ■ Issuing licenses and permits ■
    improvements ■ Raise revenues Allowing or disallowing
    through taxes commercial activity
    Competitors ■ Compete fairly ■ Cooperate ■ Pressing government for fair
    on industry-wide or community competition policies ■ Suing
    issues ■ Seek new customers companies that compete unfairly
    The Dynamic Environment of Business

    ► Changing societal expectations. Everywhere around the world, society’s


    expectations of business are changing. People increasingly expect businesses to be
    more responsible.
    ► Growing emphasis on ethical reasoning and actions. The public also expects
    businesses to be ethical and wants corporate managers to apply ethical principles
    or values—in other words, guidelines about what is right and wrong, fair and
    unfair, and morally correct—when they make business decisions.
    The Dynamic Environment of Business

    ► Globalization. We live in an increasingly integrated world economy,


    characterized by the unceasing movement of goods, services, and capital across
    national borders.
    ► Evolving government regulations and business response. The role of government
    has changed dramatically in many nations in recent decades. Governments around
    the world have enacted a myriad of new policies that have profoundly constrained
    how business is allowed to operate.
    The Dynamic Environment of Business

    ► Dynamic natural environment. All interactions between business and society


    occur within a finite natural ecosystem. Humans share a single planet, and many
    of our resources—oil, coal, and gas, for example—are nonrenewable.
    ► Explosion of new technology and innovation. Technology is one of the most
    dramatic and powerful forces affecting business and society. New technological
    innovations harness the human imagination to create new machines, processes,
    and software that address the needs, problems, and concerns of modern society.
    Thank You

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