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Slide 1

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Topic 5 Responsibility to
Ethical Decisions
Potential Conflicts…read more

Slide 2

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What is a stakeholder?
Stakeholders are an individual or group that has had an
effect on and is affected by the activities of an
organisation. Businesses can also be held to account for
their impacts upon society at large…read more

Slide 3

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Firms come into contact with suppliers, customers, the local
communities and employees on a daily basis
Each of these groups affects the degree of a firms success and is
also affected by a change in a firms activities
E.G. If a manager wants to expand a business it means:
More overtime for employees
More orders for suppliers
Wider product range for customers
More traffic for the local community
Groups such as suppliers, employees and the community are
known as the firms, stakeholder groups because they both have
an affect on the business and are affected by the firms decisions…read more

Slide 4

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Stakeholder groups
Each stakeholder group will have its own objectives
The managers of a firm must consider to what extent
they'll change the business in order to meet these
Some managers believe its important to focus on the
needs of their stakeholders whilst other managers
believe that an organisations sole duty is to its investors
i.e. shareholders…read more

Slide 5

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The shareholder concept
The logic is clear: the shareholders employ managers to run
the company on their behalf and so everything the
managers do should be in the direct interest of shareholders
The managers shouldn't take the needs or objectives of any
other group into consideration
If the owners want short run profit, the managers should
provide it. If the owners want expansion, the managers
should provide it
The only consideration managers should have when making
any decision is to meet their owners objectives e.g. Generally
this means maximising shareholder value…read more

Slide 6

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The stakeholder concept
Places emphasis on the need to meet the `objectives of
a wider group'
Suggests that managers should take into account their
responsibility to other groups, not just to the owners
when making business decisions
A firm can benefit significantly from cooperating with its
stakeholder groups an incorporating their needs into the
decision making process…read more

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