Bus Govt Society Exam #1

Boundary-spanning department

Departments/offices within an organization that reach across dividing line seperating company groups and people in socety

Boundary spanning departments help

Build positive and mutually beneficial relationships alongside corporate departments that typically work with engaging partners (public)

Business

Aany organization that is engaged in makign a product or providing a service for profit

Society

human beings and to social structures they collectively create (segments of human kind, e.g. members of a particular community, nation, or interst group)

Internal stakeholders

Employees and managers employed by the firm

External stakeholders

although may have important transactions WITH the firm, are not EMPLOYED by firm

Classification of government as a non market stakeholder

Because they don’t normally conudct any direct market exchanges with businesses (buy/sell)

Nonmarket stakeholders

People and groups that don’t engage in direct economic exchange with firm, but are AFFECTED or CAN AFFECT its actions

Nonmarket stakeholders examples

community, various levels of government, nongovernmental organizations, business support groups, competitors, general public

Market stakeholders

Engage in economic transactions with the company (goods and services)

Stakeholder analysis

identify relevant stakeholders and to understand their interests and power they may have to assert these interests

Focal organization

Organization from whose perspective the analysis is conducted from

Stakeholder interests

Nature of each group’s stakes

Interactive social system

business and society are intertwined

shareholder theory of the firm

(ownership theory) — firm is seen as property of its owner.

shareholder theory of the firm — POV of purpose

firm must maximize its long term market value to make the MOST amount of money for shareholders who own stock

shareholder theory of the firm — managers & board of directors

agents of shareholders; NO obligations to others

stakeholder theory of the firm

corporations service a broad public purpose: CREATE value for society

stakeholder theory of the firm — POV of firm

corporations must make profit for owners and other value types (professional development for employees, innovative new products for customers)

stakeholder theory THREE core arguments

Descriptive

Instrumental

Normative

Descriptive argument

stakeholder view is more realistic description of how companies work

• Must be mindful of producing high quality/innovative products

• services for customers

• attractive/retaining talent

Instrumental argument

stakeholder management is more effective as a corporate strategy (behave responsibly towards multiple stakeholder groups perform better financially)

Normative argument

simply the right thing to do with their great power & resourcesst

stakeholders

person or groups that affect or are affected by an organization’s decisions, policies, oprations

Stakeholder coalitions

groups that are highly inovlved with a country

stakeholder salience

Degree of stakeholders impact (power, legitimacy, urgency)

stakeholder interests

nature of each group’s stake (what are their concerns, what do they want)

stakeholder power

ability to use resources to make an event happen or to secure a desired outcome

5 types of stakeholder power

Voting Power

Economic Power

Political Power

Legal Power

Informational Power

Voting power

stakeholder has a legitimate right to cast a vote V

Voting power example

shareholder typically have voting power proportionate to stock ownership

will vote on major decisions (mergers, acquisitions, board of directors)

Economic power

suppliers, customers, and employees

Economic power of suppliers

withhold or refuse to fill orders

Economic power of customers

refuse to buy a company’s products or services (boycott)

Economic power of employees

refuse to work under certain conditions (strike/slowdonw)

Political power

Governments , citizens, stakeholder groups

Political power of governments

done through legislation, regulations, or lawsuits

Political power of governments

Political power of citizens

urge government to pass new laws/regulations

vote for candidates that support their views

Political power of stakeholder groups

may act directly, as when social, environmental, or community activists organization protest against specific corporate action

Legal power

sue a company for damages

Legal power example CUSTOMERS

damages from defective products

Legal power example EMPLOYEES

workplae injury

Legal power example ENVIRONMENTALISTS

damages caused by pollution or harm to species/habitat

informational pwoer

access to valuable data, facts, or details and can bring their own information to attention of the public or key decision makers

Issue management process steps

1) Identify issue

2) analyze issue

3) generate options

4) take action

5) evaluate results

Identify issue

1) Anticipating emerging concerns (horizon issues)

2) Be aware by tracking media, views, legislative developments

3) stakeholder materiality matrix

stakeholder materiality matrix

relevance of stakeholder and their issues to the company

stakeholder materiality matrix visualized

issues (node dots) to be plotted on matrix/graph

Y axis importance to stakeholders

X axis importance to company

examples of stakeholder materiality matrix nodes

data security and privacy, animal testing, responsible marketing, inclusion, nutrition and diets, employee health and wellbeing, packaging and waste, human rights, sustainability

Analyze issues

2) Its implications must be analyzed to understand how likely it is to evolve and affect them

Generate Options

3) Generate, evaluate and select possible options based on ethical considerations, reputation, and non quantifiable factors. Choose an option

Take action

4) After choosing an option, org designs and implements plan of action

Evaluate Results

5) Assess results and make adjustments if necessary

Issue management process IS

a continuous process

Performance expectations gap

Gap between what the firms want/are doing, and what stakehodlers expect

Public issue

Any issue of mutual concern to an organization and 1+ stakeholders

Stakeholder dialogue

Business and its stakeholders come together for a direct conversation about common concerns D

During stakeholder dialogue:

Describe their core interests and concerns

define a common definition of problem

invent innovative solutions for mutual gain

Establish procedures for implementing solutions

Stakeholder engagement

Process of ongoing relationship building between business and stakeholders

Stakeholder materiality

Identify important factors that should be measured and discussed in details in the company's sustainability reporting

Stakeholder network

Working collaboratively with other businesses and concerned persons and organizations

B corporations

Businesses that focus on social responsibility and corporate citizenship by blending their social and environmental objectives with financial goals

B corporations ALIGN

Power of business to solve social and sustainability challenge

To qualify as a B corporation

Rigorous independent social and performance standards, assessed by B Lab (non profit)

Social enterpreneurship

Driven by a core mission to create and sustain social rather than economic value

Social entrepreneurs CREATE

social ventures

Corporate citizenship

Actions businesses take to put their commitments to CSR into practice

Stages of corporate citizenship

1) Elementary

2) Engaged

3) Innovative

4) Integrated

5) Transforming

Elementary

stage 1) DEFENSIVE jobs, profits, taxes, lip service

engaged

stage 2) REACTIVE philanthropy, environmental protection - reactive and public engaged

innovative

stage 3) RESPONSIVE stakeholder management; business steward, cross-functional with mutual influence, public reporting

integrated

stage 4) PROACTIVE sustainability or triple bottom line; value proposition, alignment, proactive 

transforming

stage 5) DEFINING game changer visionaries; full disclosure transparency 

corporate power

the capability of corporations to influence government, economy, and society based on organizational resources

corporate social reporting

company publicizes information collected in a social audit (transparency)

Corporate social responsibility

corporation should act in a way that enhances society and its inhabitants

Corporate social responsibility means companies should be

held accountable for any of its actions that affect people, their communities, and their environment

Iron law of responsibility

in the long run, those who don't use powers in ways that society considers responsible will tend to lose it

Iron law of responsibility other name

law of long run self interest

Iron law of responsibility manifests in

stakeholder whistleblowing efforts for corporate wrongdoing

integrated reporting

Integration of legally required financial information with social and environemntal information

reputation

[corporate] to the desirable or undesirable qualities associated with an organization that may influence the relationships with stakeholders

Social audit

Systematic evaluation of an organization's social, ethical, and environmental performance

Social audits serve

as a guide for improving an organization's social and environmental behaviors

social audits evaluated based on

externally imposed standards & audit standards (3 types)

types of audit standards

1) Company imposed

2) common-wide industry standards

3) Governmental or standard-setting organizations

transparency

Quality of complete clarity - conveyed by openly and clearly reporting performance to stakeholders

bottom of the pyramid

conceptualization of inequality

individuals organized based on income /day or /year

Bottom population represented at the bottom of the pryamid....

represents a great business opportunity (poverty premiums and vast market)

Poverty premiums

companies deliver quality products at lower prices to vast market

democracy

1) fair elections

2) independent media

3) separation of powers

4) open society with the right to form independent organizations

Free enterprise systems

Voluntary association and exchange (market)

civil society

nonprofit, educational, religious, community, family, and interest group organizations

global action networks

gemerging trend of development into collaborative, multisector partnerships focused on social issues/problems in the global economy

nongovernmental organizations (NGOs)

civil sector organizations

concerned with environemtanl risk, labor, worker rights, community development, human rights

race to the bottom

companies move their production to countries with low stnadards, costs, or regulations

foreign direct investment 

a company, individual, or fund invests money in another country (buy stocks, loan money to foreign form)

globalization

[PROCESS] increasing movement of goods, services, capital, and labor across national borders

international monetary fund

international financial and trade institutions (IFTIs) composed of

international monetary fund, world trade organization, and the world bank