Professional Documents
Culture Documents
Chapter 2
Stakeholders, Managers, and Ethics
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Organizational Stakeholders
Stakeholders: people who have an interest, claim, or stake in an organization Inducements: rewards such as money, power, and organizational status Contributions: the skills, knowledge, and expertise that organizations require of their members during task performance
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Inside Stakeholders
People who are closest to an organization and have the strongest and most direct claim on organizational resources
Shareholders: the owners of the organization Managers: the employees who are responsible for coordinating organizational resources and ensuring that an organizations goals are successfully met The workforce: all non-managerial employees
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Outside Stakeholders
People who do not own the organization, are not employed by it, but do have some interest in it
Customers: an organizations largest outside stakeholder group Suppliers: provide reliable raw materials and component parts to organizations The government
Wants companies to obey the rules of fair competition Wants companies to obey rules and laws concerning the treatment of employees and other social and economic issues
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Trade unions: relationships with companies can be one of conflict or cooperation Local communities: their general economic well-being is strongly affected by the success or failure of local businesses The general public
Wants local businesses to do well against overseas competition Wants corporations to act in socially responsible way
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Stakeholder Goals
Shareholders: return on their investment Customers: product reliability and product value Employees: compensation, working conditions, career prospects
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Competing Goals
Organizations exist to satisfy stakeholders goals But which stakeholder groups goal is most important? In the U.S., the shareholders have first claim in the value created by the organization However, managers control organizations and may further their own interests instead of those of shareholders Goals of managers and shareholders may be incompatible
Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall
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Allocating Rewards
Managers must decide how to allocate inducements to provide at least minimal satisfaction of the various stakeholder groups Managers must also determine how to distribute extra rewards Inducements offered to shareholders affect their motivation to contribute to the organization The allocation of reward is an important component of organizational effectiveness
Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall
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They own the company They exercise control over it through their representatives
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To be included, a CEO had to have assumed the job no earlier than January 1995 and no later than December 2007 On average, the top 50 CEOs increased the wealth of their shareholders by $48 million.
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Other Managers
Divisional managers: managers who set policy only for the division they head Functional managers: managers who are responsible for developing the functional skills and capabilities that collectively provide the core competences that give the organization its competitive advantage
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Agency Problem
There is a problem in determining managerial accountability that arises when delegating authority to managers Shareholders are at information disadvantage compared to top managers It takes considerable time to see the effectiveness of decisions managers may make
Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall
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Very difficult to evaluate how well the agent has performed because the agent possesses an information advantage over the principal Self-dealing describes the conduct of corporate managers who take advantage of their position in an organization to act in their own interests
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