CFS stakeholder capitalism and responsible business

Q1: What is a stakeholder?

A: Anyone affected by or affecting a company.

Q2: Give examples of market stakeholders.

A: Shareholders, customers, suppliers.

Q3: Give examples of nonmarket stakeholders.

A: Government, community, regulators.

Q4: What are internal stakeholders?

A: People who work inside the firm (employees, managers).

Q5: What are external stakeholders?

A: People or groups outside the firm (suppliers, community, regulators).

Q6: What is Friedman's main principle?

A: Maximize shareholder value within the law.

Q7: Name one justification Friedman gives for shareholder capitalism.

A: Companies can invest in stakeholders only if it benefits shareholders.

Q8: Name another justification.

A: Government policy ensures social responsibility.

Q9: Name the third justification.

A: Shareholder freedom maximizes social welfare.

Q10: What is Enlightened Shareholder Value?

A: Investing in stakeholders to increase long-term shareholder value.

Q11: Why might stakeholder capitalism be necessary?

A: Friedman's assumptions can fail: government oversight, firm advantage, difficult decision-making.

Q12: What are challenges of stakeholder capitalism?

A: No clear rule like NPV, trade-offs, subjective decisions, accountability issues.

Q13: What defines a responsible business?

A: Considers social, environmental, and governance impacts in decisions.

Q14: What is the Principle of Multiplication?

A: Positive impact benefits multiple stakeholders.

Q15: What is the Principle of Comparative Advantage?

A: Use core strengths to create impact.

Q16: What is the Principle of Materiality?

A: Focus on issues that matter most to stakeholders and business.

Q17: How is responsible business practiced in the real world?

A: Public purpose statements, ESG reporting, ESG-linked pay, ESG ratings.