CHAP 1 Business organisations and their stakeholders

What is an organisation?

Social arrangement + collective goals + controls own performance + boundary.

What is a social arrangement?

People organised to work towards shared objectives.

What are collective goals?

Goals shared by members of the organisation.

What is an organisation's boundary?

What separates the organisation from its environment.

What are inputs, processes and outputs?

Inputs → transformation/process → outputs.

What are the 3 main sectors?

Private + public + not-for-profit.

What is the private sector?

Privately owned; usually profit-focused.

What is the public sector?

Government owned/controlled; provides public services.

What is the not-for-profit sector?

Exists mainly to achieve social/community objectives, not distribute profit.

What is a sole trader?

One owner; unlimited liability.

What is a partnership?

2+ owners sharing the business.

What is a limited company?

Separate legal entity; limited liability.

What is limited liability?

Owners' liability is generally limited to their investment.

What is a private company?

Shares not offered to the general public.

What is a public company?

Shares can be offered to the public.

What is a cooperative?

Owned and controlled by its members.

What is a mutual?

Owned/run for the benefit of members.

What is a trade union?

Represents employees' interests.

Who are stakeholders?

Those who affect or are affected by the organisation.

Who are internal stakeholders?

Employees + managers.

Who are external stakeholders?

the community, government and pressure groups

What is a shareholder?

Owner of shares in a company.

What do shareholders want?

Return on investment + long-term value.

What do employees want?

Pay + job security + good conditions.

What do customers want?

Quality + fair price + reliable service.

What do suppliers want?

Orders + prompt payment + ongoing business.

What does government want?

Tax + employment + legal compliance.

What does the community want?

Local benefits + limited negative impacts.

What is Mendelow's matrix?

Stakeholders classified by power and interest.

High power + high interest?

Manage closely.

High power + low interest?

Keep satisfied.

Low power + high interest?

Keep informed.

Low power + low interest?

Monitor.

What is stakeholder conflict?

Different stakeholder interests compete.

What is loyalty?

Continue supporting the organisation.

What is exit?

Leave the organisation/relationship.

What is voice?

Try to influence the organisation.

Main objective of private-sector organisations?

Usually profit / owner value.

Main objective of public-sector organisations?

Provide services / achieve public objectives.

What is corporate governance?

System for directing and controlling an organisation.

Why are stakeholders important?

They can influence organisational performance.

What is the business environment?

Internal + external factors affecting the organisation.

What is a commercial organisation?

Sells goods/services for commercial returns.

What is a statutory organisation?

Created or given powers by legislation.

What is a pressure group?

Group trying to influence decisions/policy.

What is CSR?

Responsibility for social + environmental impacts.

Why consider CSR?

Stakeholder expectations + risk + reputation + sustainability.

What is an objective?

A result the organisation wants to achieve.

What is a mission statement?

States the organisation's purpose.

What is a vision statement?

States what the organisation aspires to become.

What is a strategic objective?

Long-term objective supporting strategy.

What is value creation?

Increasing value/usefulness.

What is value destruction?

Reducing value.

Why do organisations need resources?

To achieve their objectives.

What are financial resources?

Money + finance.

What are human resources?

People + skills + knowledge.

What are physical resources?

Buildings + equipment + machinery.

What are intangible resources?

Brands + patents + reputation + knowledge.

How can stakeholders influence organisations?

Investing, buying, working, regulating, campaigning or complaining.

Why identify key stakeholders?

To assess their power, interest and influence.

Who are connected stakeholders

shareholders, customers, suppliers, financiers