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Business Stakeholders

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philip nash

on 8 November 2016

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Transcript of Business Stakeholders

Firms used to aim for maximum profits to keep shareholders happy
This was often against interests of groups outside organisation
Now, interdependence seen as vital
Partnerships with all interest groups
Benefits firms can expect from stakeholder management
Better public relations
More favourable reporting of firm’s activities in media
Quality relationships with suppliers
Lower staff turnover
Higher employee motivation
Reduced impact of pressure groups on firm’s activities

But only if firm genuinely commits to stakeholder model.
The Stakeholder Model of Business
Ethical questions in business relate to:
Behaviour towards customers, suppliers, distributors, and competitors
The way employees are treated
The treatment of other stakeholder groups
The effect on the natural environment
Conduct in international operations
Stakeholder Theory
Corporate Social Responsibility (CSR)
Who are Stakeholders?
Any individual or a collection of individuals with an interest in an organisation

Two main types:

1. Internal: e.g. Employees
2. External: e.g. Government
Stakeholders will:-
have different levels of interests
have varying degrees of power
can be be in conflict with each other
Three key points
Traditional Owners/shareholder Approach

The traditional approach
Business (management) acts in best interest of shareholders / owners only
Principal aim is to maximise shareholder returns
Stakeholder Approach
Increasingly popular
Business takes much more account of wider stakeholder interests
Approach based on consultation, agreement, cooperation
E.g. social and environmental concerns become more important
Ethics and Corporate Social Responsibility (CSR)
CSR are standards of conduct that an organization sets itself in dealing with both the internal and external environment
Ethics can be defined as a conception of right and wrong conduct

Ethics tells us when our actions are ‘moral’ or ‘immoral’

Ethics are supposed to govern actions and behaviour

Business ethics
“is the study of how personal moral norms apply to the activities and goals of a commercial enterprise”.
Laura Nash 1994, Why business ethics now?
'The single, most important objective for a business organisation is profit maximisation. This is the bottom line and the only realistic criterion by which organisational effectiveness can be judged'
Should this view being challenged?
Should we judge business organizations only by profit?
What should be the other important objectives?
BUT: At the heart of Capitalism is the profit motive and this means that stakeholder interests may always be of secondary or minor concern?
Main focus is on growth & profit
Why? What pressures are causing this change
Ethics Defined
Micro or
Near Environment
Local community
The Organisation

Internal Environment
Macro Environment
adapted from Worthington, The External Business Environment 2012
Fundamental Question
What is the role of business in society?
Milton Friedman
Towards a more 'moral' form of capitalism
Defining CSR
"the process by which managers within an organisation think about and discuss their relationship with stakeholders as well as their roles in relation to the
common good
Lynch R.
Strategic management
Full transcript