Responsibility of Stakeholder HARRIET BENNETT
- Created by: Harriet
- Created on: 09-04-15 11:23
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- Responsibility to stakeholder 3.3.4
- The shareholder model
- shareholders'interest are the most important.
- Profit maximisation is the main priority of the managers
- if shareholders want short-run profit maximisationat the expense of long- term growth, then its the responsibilityof business managers to deliever
- Managers are employed to manage, on behalf of the shareholders.the needs, desires & aspirations of other interest groups should not take precedence over shareholder interest
- The stakeholder model
- the stakeholder approach to business decision making means that managers have a responsibilityto take account of the interests of all stakeholders
- improved image perception by consumers, leading to greater sales & increased competition advantage.
- Improved retention & motivation of staff
- Close relationships with suppliers, leading to a better quality & more reliable sevice
- a reduction in the disruption of commercial activities by pressure groups
- improved public relations, resulting in more favourable media coverage
- Shareholders vs. stakeholders
- The shareholders want to maximise profits
- The employees want better pay & conditions
- Customers want lower prices & better service
- The government want tax revenue
- The local community wants minimum disruption & help with local infrastructure development.
- The environment needs protecting from business activity
- Corporate social responsibilityCSR
- Nearly all businesses have a CSR policy in place but the reasons for implementinga CSR policy vary
- A genuine desire to behave responsibly
- A wish to show a positive public image
- A positive marketing ploy
- A smokescreen to hide behind
- Wanting to fit in with everyone else
- For many businesses there are positive spin-offs from implementinga CSR policy
- it can help foster a good public image & reputation
- It can increase sales
- It improves stakeholder relationship & reduces potential conflicts
- Ethical decision making
- Ethical businesses use clearly defined moral values as a basis for a consistent approach of what is right
- Ethical business involves basing decisions on clearly defined moral principles & striving to do the right thing regardless of commercial consideration
- This does include elements of CSR but it attempts to operate on the basis of declared moral values
- Ethical behaviour & profitability
- Behaving ethically is likely to increase costs which will reduce profitability
- Some of the most profitable companies are not ethical
- High ranked ethical companies all make good profits
- The shareholder model
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