Stakeholders and the Organization

Stakeholders

• People and entities whose interests are affected by an organization

  • Internal and External

Internal Stakeholders

Owners

• Holds claims against the corporation (legal property)

Board of Directors

• Elected by shareholders to make sure the firm is run according to their interests

Employees

• Including top managers

External Stakeholders: Task Environment

Customers

• Those who pay for an organization’s goods or services

Competitors

• Organizations that compete in the same marketplace for customers or services

Supplier

• A person or organization that provides raw materials, services, equipment, labor, or energy to other organizations

Distributor

• An organization that helps another organization sell its goods and services to customers

Strategic Allies

• Relationship between two or more organizations joining forces to achieve advantages neither can achieve alone

Government Regulators

• regulatory agencies that establish ground rules under which organizations operate

Interest Groups

• Groups seeking influence

  • Unions, Local Communities, Greenpeace, NRA, Sierra Club, Amnesty Intl.

General Environment

Economic Segment

• Market growth rates depend on demand from airlines

  • GDP growth

  • Business confidence

  • Employment and wage gains

  • Inflation and interest rates

Political and Legal

• Regulations

  • Consumer privacy laws

  • Antitrust, deregulation laws

  • Barriers to trade

  • Taxation

Sociocultural

• Changing attitudes and cultural values

  • Concerns about environment

  • Shifts in work and career preferences

    • Attitudes about quality of work-life balance

  • Shifts in product and service preferences

    • Towards experiences

  • Diverse and aging workforce

  • Women in the workplace

Technological Segment

• Rapid technological change and the risk of disruption

  • Product innovations, shorter product cycles

Ethics

What is ethics?

• Science of how we should behave

  • Norms and values– “the way we do things around here”

  • Up and above the law

Ethics in Business

• Reasonable salaries and working conditions

  • Environmentally-friendly operations

  • Good corporate governance

    • Transparency

4 Approaches to Ethics

Utilitarian

• Guided by what will result in the greatest good for the greatest number of people

Moral-Rights

• Guided by respect for the fundamental rights of human beings

Individual

• Guided by the individual’s best long-term interest, which ultimately is in everyone’s self-interest

Justice

• Guided by respect for impartial standards of fairness and equity

Kohlberg’s Theories

Level 1, Preconventional

• Follows rules

Level 2, Conventional

• Follows rules and expectations of others

Level 3, Postconventional

• Guided by internal values

Creating Ethical Organizations

Create a strong ethical climate (from top)

• Ethics training

  • Screen prospective employees

  • Protect whistle-blowers

    • An employee who reports organizational misconduct to the public, such as health and safety matters, waste, corruption, or overcharging customers

SEB Case

Great year for NY branch (1993): 100M profit

• High US taxes and earnings volatility

Solution: swap to temporarily move profit to Sweden right before end of year then reverse transaction next year

The Sarbanes-Oxley Reform Act (2002)

Established requirements for proper financial record keeping for public companies and penalties of as much as 25 years in prison for noncompliance

CEO and CFO personally sign off on financial statements

Social Responsibility Required of You as a Manager

Corporate social responsibility

• The notion that corporations are expected to go above and beyond following the law and making a profit

4 Levels of Social Responsibility

Economic Responsibility

• Responsibility of an organization to produce goods & services desired by society and earn a profit; to do what is required for the benefit of shareholders

Legal Responsibility

• Responsibility of an organization to obey the law; to do what is required by global stakeholders

Ethical

• Responsibility of an organization to make decisions with fairness and to respect the rights of others; to do what is expected by global stakeholders

Philanthropy

• Making charitable donations to benefit humankind