Responsibility to stakeholders

Responsibility to stakeholders

1. Shareholder model

   • Profit maximisation is the main priority of managers
   • Everything that managers do should be directed towards the best interest of shareholders
   • If shareholders want short run profit maximisation of business managers to deliver
   • Managers are employed to manage on behalf of shareholders
   • The interest of shareholders seen as most important
   • Survival and market share

2. Stakeholder model

   • managers have repsobilisty to take account of all stake holder groups
   • Improved image perception by consumers leading to greater sales and increased competitive advantages
   • Improved retention and motivation of staff
   • Closer relationship with suppliers leading to better quality and more reliable services
   • A reduction in the disruption of commercial actives by pressure groups
   • Improved public relations resulting in more favourable media coverage

3. Corporate social responsibility

   • Means taking decision that take account of all stakeholder interest
   • Desire to behave responsibility
   • Positive public image
   • Smokescreen to hind behind
   • Spins offs
   • Good public relations exercise
   • Can increase sales
   • Reduce potential stakeholder conflict

4. Ethical decisions making conflict

   • Following codes of practise that embody moral values
   • What to manufacture eg arms and cigarettes make profits but both are destructive
   • Where to manufacture eg movement of production overseas to reduce cost causing unemployment
   • Capital and labour ie machinery and more jobs
   • Pay and working conditions eg trade off between better standards or lower costs
   • The environment trade of between controlling pollution and lower costs
   • Ethical behaviour and profitability
   • Trade off between ethical and profitability
   • Drawbacks to ethical
     • Labour cost increase
     • supplies and matierals higher costs
     • Controlling environment damage increase costs
     • Change in organisation culture expensive
     • If competitors less ethical so lower cost/prices
   • Benefits of behaving ethically
     • favourable media attention
     • improved public image can lead to increased sales and brand loyalty
     • Ethically produced products can carry a premium prices without damaging sales
     • More motivated workforce and increase in producitiviy
     • Be profitable

5. Ethics- A trade off?

   • YES
     • More expensive resources like recycled paper
     • Workers will cost more when paying a higher wage and training them to behave in an ethical maner
     • Giving to charity is not cheap
     • Saftey systems and changing production processes to reduce pollution
   • NO
     • Marketing advantage
     • Gives the firm a USP and competitive advantages
     • Positive company image
     • Workers will be proud to work for the organisation

6. Internal and external costs

   • Internal costs
     • these are visible production costs to the business such as wages, transports and raw material
     • costs will be tangible and are paid by the business directly
   • External costs
     • Costs of production are not are not always invisible and does not costs to the environment
     • air pollution

7. Legislation

   • The environmental protection act 1991
     • Requires businesses to minimize all sources of pollution that they cause
   • The environmental protection act 1995
     • Covers aspect of conversation and restoration of polluted and contained land and abandoned mines
   • Environment agency monitors and controls of pollution
   • The carbon trust created by the Uk government in 2001 offers finical incentives to business to be energy saving technology

8. Social and cultural differences

   • Different promotional messages for different countires
   • International branding
   • Distribution channels
   • Joint venture
   • Pricing strategies for different countires
   • language barriers
   • problems of misunderstanding