Responsibility of Stakeholder HARRIET BENNETT

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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


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