Notesale: Turn your study into money

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Business Ethics- Chapter 3
A
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B
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) Internal Stakeholders
i
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Elected by shareholders,
they are responsible for defining and evaluating the ongoing mission of the company
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ii
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He implements the policies set by
them and hires executives to lead in the various business departments
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) External Stakeholders
iii
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Therefore they determine the success of the company
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iv
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They want to see the company thrive
because an increase in the demand for the company’s products or services will also increase the
demand for their own
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) Communities: They provide a market and labor to the businesses
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It affects their employment, incomes and
spending rates
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) The government: It collects taxes from businesses and protects employees, customers
and the environment through regulatory bodies
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) Creditors: They lend finances to the businesses in the form of loans or mortgages to be
fully paid with interest
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viii
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They help to shape the consumers’
attitudes towards the business
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) Ethical Responsibilities Often Extend Beyond Legal Requirements
Every transaction between a stakeholder and a business may appear finite
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g You may purchase
something from a store and leave
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This is known as ethical maximum
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On the other hand, an ethical minimum is the

least that a company might do that complies with the law
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Ethical minimum are not necessarily illegal or
unethical but it fails to recognize the value of its customers
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g gyms or employee discounts
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D
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According to
Donaldson and Preston, there are three theoretical approaches to considering stakeholder claims: a
-Descriptive approach: It sees the company as composed of various stakeholder groups, each with its
own interests
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-An instrumental approach: It connects stakeholder management and financial outcomes, proposing
that appropriate management of stakeholder interests is important and useful because it contributes to
a positive bottom line
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According to Donaldson and Preston, in the normative approach “the
interests of all stakeholders are of intrinsic value
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Although Donaldson and Preston stress that the descriptive and instrumental approaches are
integral to stakeholder theory, they contend that the fundamental basis of stakeholder theory is
normative
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) Defining Stakeholder Categories
To better understand stakeholder theory and, ultimately, manage stakeholder claims and
expectations, it may be helpful to take a closer look at categories of stakeholders
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- Regulatory stakeholders including stockholders, legislatures, government regulators, and boards of
directors are enabling stakeholders because they permit the firm to function
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- Diffused stakeholders: They include other organizations such as nongovernmental organizations
(NGOs), voters, and mass media organizations with less direct relationships but potential for meaningful
impacts on

James E
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These publics are
distinguished by their degree of awareness of a problem and ability to do something about it
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For the latent public, a problem is there but the
public does not recognize it
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The active public is
aware of the problem and organizes to respond to it
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F
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Then, it must consider their claims
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After establishing that a key stakeholder group is being represented, the manager should identify what
the company needs from the stakeholder
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If the firm cannot survive without this particular stakeholder or replace him or her relatively easily, then
such a person should have priority over other stakeholders who do not meet this criterion
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For example, a
large retailer facing aggressive new competitors must prioritize customer service and value
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A stakeholder with a high level of both power and interest is a key stakeholder
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Not all stakeholders have equal influence with a firm
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G
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Some tools are available to help
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The MITRE Guide to Stakeholder Assessment and
Management lays out a five-step system for stakeholder management
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To accomplish this, however, stakeholders must first be clearly identified and
then periodically reidentified, because stakeholder cohorts change in size and significance over time
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Sometimes a
firm will conduct surveys or focus groups with customers, suppliers, or other stakeholders
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For software in
web and mobile applications, for example, user data may be readily available to show how stakeholders
are using the company’s digital services or why they appear to be purchasing its products
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What matters is gathering relevant and accurate data and ensuring that key stakeholders
are providing it
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19 Finally, stakeholders should be informed that their
concerns were taken into consideration and that the company will continue to heed them
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Because every firm, no matter its mission, ultimately depends on the marketplace, its clients or
customers are often high-priority stakeholders
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We should note, too, that nonprofit organizations are beholden, for the most part, to the same rules
that apply to for-profits for their sustainability
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A significant difference, of course, is
that the client or customer for a nonprofit’s service often is unable to pay for it
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Hence,
those who give to philanthropies constitute essential stakeholders for these nonprofits and must be
acknowledged as such
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Lindahl, who studies and advises nonprofits, notes that philanthropies have an ethical
obligation to safeguard the donations that come their way
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So those who manage
nonprofits have a special obligation to ensure that these donations are well spent and distributed
appropriately
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H
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Many
corporations
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) CSR and the Environment
Sustainability is the practice of preserving resources and operating in a way that is
ecologically responsible in the long term
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In addition to safeguarding the environment, other ethical
contributions that stakeholders could lobby corporate management to make include establishing
schools and health clinics in impoverished neighborhoods and endowing worthwhile philanthropies in
the communities where companies have a presence
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For example, the state of California in 2015 enacted a set of laws, referred to
as the California Transparency in Supply Chains Act, which requires firms to report on the working
conditions of the employees of their suppliers
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) People, Planet, Profit: The Triple Bottom Line
The triple bottom line is a measure described in 1994 by John Elkington, a British
business consultant which gives us a way the effects of CSR programs
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” Most businesses, and most
consumers for that matter, think of the bottom line as a shorthand expression of their financial wellbeing
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On the other hand, for some, CSR is nothing more than an opportunity for publicity as a
firm tries to look good through various environmentally or socially friendly initiatives without making
systemic changes that will have long-term positive effects
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K
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By positioning themselves as stakeholders in a broader global
community, conscientious corporations can be exemplary organizations
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They can return to communities as much as they extract and
foster automatic financial reinvestment so that people willing and able to work for them can afford not
only the necessities but a chance to pursue happiness

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