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Stakeholder Theory by Mind Map: Stakeholder Theory
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Stakeholder Theory

Community

Interests

Employment for Residents

Local Development

Protected Local Environment

Tax revenue

Classification

The geographical area and groups affected by an organization's decisions

Benefits of engagement

Benefits to Company, Enhanced reputation, Ability to respond quickly to stakeholder wants, Loyalty from customers, employees, neighbors, Avoidance of government intervention and regulation, Earned right to do business, the "right to operate", Build social capital (goodwill and trust) that enhance the quality of life in the community of operation, Increased profits/decreased costs

Benefits to Community, Economic Development, Crime Abatement, Makes communities more attractive to other businesses, employees, and consumers, Housing, Organizations partnered with Corporations, Neighborhood housing services of America, Locally controlled, locally funded, non profit, and tax exempt, offers housing rehabilition and financial services to neighborhood residents, New York City's Coalition for the Homeless, Efforts to house the homeless includes corporate, nonprofit, and community members, Habitat for Humanity, Corporations often work with nongovernmental organizations, Welfare-to-Work Job Training, Examples, Bank of America has partnered with Women in Community Service, a nonprofit organization that provides job and life skills training to women who are in public assistance, in prison, or homeless, or living in public housing, Aid to minority businesses, Example, Microsoft works closely with its minority suppliers to refine their business processes to make them more competive, Disaster relief, When floods, fires, earthquakes, ice storms, hurricanes or terrorist attacks devastate communities, funds pour into affected communities from companies

Relationship between community and businesses

Business participation desired by community, Pays taxes, Provides jobs and training, Follows laws, Supports schools, Supports the arts and cultural activities, Supports local health care programs, Supports parks and recretation, Assists less-advantaged people, Contributes to public safety, Participates in economic development

Community services desired by business, Schools-a quality educational system, Recreational opportunties, Libraries, museums, theaters, and other cultural services, Adequate infrastructure, e.g., sewer, water. and electric services, Adequate transportation systems, e.g., roads, rail, airport, harbor, Effective public safety services, e.g., police and fire protection, Fair and equitable taxation, Streamlined permitting services, Quality health care services, Cooperative problem-solving approach

Corporate Philanthropy

Examples

Background, In the United States, tax rules have encouraged corporate giving for educational, charitable, scientific, and religious purposes since 1936

Methods, Corporate Foundation, Permits corporations to administer contributions programs more uniformly and provides a central group of professionals that handles all grant responses

Forms of Corporate Giving, Charitable donations, In-kind contributions (gifts of products or services, Volunteer employee service

Strategic philanthropy, Refers to corporate giving that is linked directly or indirectly to business goals and objectives, Strategic contributions focus on:, Factor conditions, such as the supply of trained workers, physical infrastructure, and natural resources., Demand conditions, those that affect demand for a product or service., Context for strategy and rivalry, company donations sometimes can be designed to support policies that create a more productive environment for competition., Related and supporting industries, Drawing on unique assets and competencies of the business., Aligning priorities with employee interests, Aligning priorities with core values of the firm, Using hard-nosed business methods to asses the impact of gifts

Employees

Interests

Stable Employment

Fair Pay

Safe Work Environment

Rights

Guaranteed By Law, Safe and Healthy Workplace, Occupational Safety and Health Act, Required employers to provide workers with workplaces free of recognized hazards that could cause serious injury or death and required employees to abide by all safety and health standards that apply to their jobs, Problems of employers providing-and of employees accepting-safe working environments stem from:, Lack of knowledge and of available, reliable information about levels of health risks., Lack of appropriate compensation proportional to the level of health risks., Employees accepting known risks when the employer does not offer any safer alternatives, Constitutional rights, Individual freedom, Liberty, Control over private lives, Right to due process, To ensure the employees fourth and fifth amendment rights the following corporate procedural mechanisms are needed, Right to a public hearing, Right to have peer evaluations, Right to obtain external arbitration, Right to an open, mutually approved grievance procedure, Right to organize and strike, Obliged to pay employees fair wages for work performed, Factors of determination, What the public and society support and expect, Conditions of the labor market, Competitive industry wages in the specific location, Firm's profitablity, Nature of the job and work, Laws governing minimum wages, Comparable salaries, Fairness of the salary or wage negotiations., Family and Medical Leave Act, Entitles eligible employees to a maximum of 12 weeks of unpaid leave per year for the birth or adoption of a child, to care for a spouse or immediate family member with a serious health condition, or when an employee is unable to work because of personal illness., Companies that employee at least 50 people within a 75 mile radius are mandated to offer such leave., Once the leave is concluded, the employee must be reinstated to the same position or an equivalent job., Employers may deny reinstatement to "key employees." Such employees must be among the 10% highest paid company employees, and their absence must have a serious economic impact on their organization.

Implied, Social contract that has historically defined the employee/employer relationship, Employment-at-will doctrine, "the right of an employer to fire an employee without giving a reason and the right of an employee to quit when he or she chooses."

Morally Guaranteed, The right not to be terminated without just cause., Employees have a right not to be terminated arbitrarily or without just cause, even in a free market economy., Rights regarding plant closings., Since August 1988, companies with more than 100 employees must by law give 60-day notice to workers before closing., Right to Privacy, An employee's privacy in the workplace remains an unsettled area of controversy, Court upheld privacy violations include:, Intrusion (Locker room and bathroom surveillance), Publication of private matters, Disclosure of medical records, Appropriation of an employee's name for commercial use, Eavesdropping on employee conversations and retrieving or accessing employee e-mail (if unauthorized), Permissible employee privacy inquires include:, Criminal history inquiries, Credit history inquiries, Access to medical records, Polygraph and Psychological Testing, These tests are not reliable or valid, they are only indicators., The tests, to some extent, can be manipulated and influenced by the operators., The tests may include irrelevant questions that invade a person's privacy., Employees do not have control over the test results or how the information is used., The Electronic Communications Privacy Act renders electronic eavesdropping through computer-to-computer transmissions, private video conferences, and cellular phones illegal.

Forms of Legal Protection

Employee and Employer relationship goals

Employers, Try to maximize productivity and profits., Sustain financial growth and stability., Minimize costs, Improve quality, Increase market share, Stabilize wages

Employees, Increase their wages and benefits, Improve working conditions, Enhance mobility, Ensure job security

Relationship grounded on mutual trust and reciprocal responsibility

Employee Responsibilities to Employers, Fulfilling their contracted obligations to the corporation, Following the goals, procedural rules, and work plans of the organization., Offering competence commensurate with the work and job assignments., Performing productively according to the required tasks., Timliness, Avoiding absenteeism, Acting legally and morally in the workplace and while on job assignments., Respecting the intellectual and private property rights of the employer.

Discrimination, Defined, Discriminatory practices in employer-employee relationships include unequal or disparate treatment of individuals and groups, Based on irrelevant criteria such as gender, race, color, religion, national origin, or disability., Examples of contemporary and systematic discrimination, Found in practices such as recruitment, screening, promotion, termination, conditions of employment, and discharge., Government regulations, Title VII of the Civil Rights Act of 1964 makes discrimination on the basis of gender, race, color, religion, or national origin in any term, condition, or privilege of employment illegal., Equal Employment Opportunity Commission, Serves as the implementation agency to investigate complaints that individuals submit. They cannot enforce the law except through grievances., The Age Discrimination in Employment Act (1967), Prohibits employers from discriminating against individuals based on their age (between ages 40 and 70) in hiring, promotions, terminations, and other employment practices., Equal Pay Act of 1963, Prohibits discriminatory payment of wages and overtime pay based on gender.

Customers/Consumers

Interests

Products that work

Products that are safe, Consumerism, Ralph Nader, Unsafe at Any Speed, Nader's book not only gave rise to auto safety regulations and devices but it also created a new era-that of the consumer, Criticized the auto industry, generally, and General Motors, specifically, Social movement created to encourage accountability among businesses in their development, production, and sales processes.

Fair pricing

Rights

Right to Safety

Right to be Informed

Right to Choose

Right to be Heard

Right to Privacy

Protection Agencies

Federal Trade Commission, Protects competition, Protects against monopolies/regulates utility monopolies, Protects against unfair or deceptive practices, Deceptive Advertising, Truth in lending, Truth in Lending Act, Requires all suppliers of consumer credit to fully disclose all credit terms and to permit a 3-day right of rescission in any transaction involving a security interest in the consumer's residence, Fair packaging and labeling, Federal Packaging and Labeling Act of 1967, Prohibit deceptive labeling of certain consumer products and to require disclosure of certain important information., Fair credit reporting, Fair Credit Opportunity Act, Ensures that consumer-reporting agencies provide information in a manner that is fair and equitable to the consumer, Equal credit opportunity, Equal Credit Opportunity Act, Prohibits discrimination in the extension of consumer credit, Allows complaints to be filed, Major divisions, Advertising practices, Credit practices, Enforcement, Marketing practices, Service industry practices

Food and Drug Administration, Regulatory responsibilities, Nutrition and nutritional labeling, Prescription drug marketing, Dietary supplements, Food quality, Infant Formula, Food safety

Consumer Product Safety Commission, Reduce risk of injury or death from consumer products, Develop and enforce industry standards, Ban products, Obtain recalls and arrange for repairs, Inform and educate consumers, Media, State and local govenments, Private organizations, Responding to consumer inquiries, Conducting research on potential product hazards., State laws, not federal, apply

Better Business Bureau, Funded by member businesses, the purpose is to promote and foster the highest ethical relationship between businesses and the public

Current Issues

Product dumping, Distribution of products in one country that are banned in another

Product Liability, Distance between manufacturer and consumer have eroded manufacturer concerns about product quality by providing anonymity, Tort legislation upholds full accountability by manufacturer and all suppliers for defects, Metamorphosis from caveat emptor to caveat venditor*, UCC (Uniform Commercial Code) deals with warranties and guarantees of product performance, Express Warranties, Explicitly offered at the time of the sale,, Implied Warranties, An unspoken promise that there is nothing significantly wrong with the product and that the product can be used for the purpose intended., It is estimated that litigation's cost to society is over $200 billion per year, more than half of which goes to legal fees and costs, some of which could be spent to hire more teachers, police officers, and fire fighters., Reform, Tort reform

Advertising, Critics argue that advertising raises the prices of products and services because it is an unnecessary business cost whose main effect is to circulate superfluous information that could better and more cheaply be provided on product information labels or by salespeople in stores, Supporters have claimed that advertising is a beneficail component of the market system and that the increase in the standard of living and consumer satisfaction may be attributed to it., Provides social and economic benefits to the American people, Advertising Abuses, Ambiguous advertising, Something about the product or service is not made clear because it is stated in a way that may mean several different things, Weasel words, Words that are inherently vague and for which the company could always claim it was not misleading the consumer., Examples, "Help", "Like", Concealed facts, Refers to the practice of not telling the whole truth or deliberately not communicating information the consumer ought to have access to in making an informed choice, Forms of concealed advertising, Product placement, Spokesperson placement, Exaggerated Claims, Claims that simply cannot be substantiated by any kind of evidence, Examples, Saying that a pain reliever is "50 percent stronger than aspirin", Puffery, Normally, a claim of general superiority fits sqarely into puffery and is allowable, Effects on consumers, Induce people to buy things that do them no good., Result in loss of advertising efficiency as companies are forced to match puffery with puffery, Drive out good advertising, Generally result in consumers losing faith in the system because they get so used to companies making claims that exceed their product capabilities., Psychological Appeals, Designed to persuade on the basis of human emotions and emotional needs rather than reason., Examples, Appeals to power, prestige, sex, masculinity, femininity, approval, acceptance, etc..., Specific Controversial Advertising Issues, Comparative advertising, Use of sex in advertising, Advertising to children, Advertising of alcoholic beverages, Cigarette advertising, Health and Environmental claims, Ad Creep, Refers to the way advertising can increasingly be found everywhere one looks., Self Regulation, Forms, Self-discipline, Firm itself controls its own advertising, Pure self-regulation, The industry controls advertising, Co-opted self regulation, Where the industry, of its own violation, involves non industry people in the development, application, and enforcement of norms., Negotiated self-regulation, Where the industry voluntarily negotiates the development, use, and enforcement of norms with some outside body., Mandated self-regulation, Where the industry is ordered or designated by the government to develop, use, and enforce norms, whether alone or in concert with other bodies.

Forms of Legal Protection

The sales contract governs the actual transition with the customer

Tort law area of "product liability" identifies the risk exposure of the seller of a defective product

Rules from government agencies such as the FTC, CPSC, and from the court systems in tort cases

Owners

Interests

Satisfactory Return on Investment

Appreciation of Stock Value Over Time

Forms of Ownership

Sole Propietorship, Disadvantages, Unlimited financial liability, Financing limitations, Lack of continuity, Advantages, Owners retain all profits, Easy to form and dissolve, Owner has flexibility

Partnership, Advantages, Easy to form, Can benefit from complementary management skills, Expanded financial capacity, Disadvantages, Unlimited financial liability, Interpersonal conflicts, Lack continuity, Difficult to dissolve

Corporation, Types, S-Corporation, Limited Liability Corporation, General, Advantages, Limited financial liability, Specialized management skills, Expanded financial capacity, Economies of large-scale operations, Disadvantages, Difficult and costly to form and dissolve, Tax disadvantages, Legal restrictions, Stockholders, Forms of stock, Preferred Stock, Benefit, More likely to paid great dividends, Detriment, No voting power, Common Stock, Benefit, Influence corporation through votes, Detriment, No fixed dividend payed out, Factors of reliance, Company earnings, Company reinvestment, Efficiency of market to value and sell stock, Rights, Right to a share of the profit, Right to Receive Annual Reports of earnings and activites, Right to elect board, vote on mergers, acquistions, changes in by-laws, vote by proxy (absentee ballot), Right to sell stock, Right to bring suit against company and officers, Types, Individual stockholders, Institutions, Such as pensions, mutual funds, insurance companies, and university endowments., Reasons for ownership, To make money, Capital appreciation, When the price of the stock increases., Dividends, Share of company's earnings, To achieve social or ethical objectives, Through selecting stocks according to various social criteria., Using the corporate governance to raise issues of concern., Role of Government, Regulation Actions, Securities and Exchange Commision, Make sure stock markets are fair and that investment information is well disclosed, Target fraudulent accounting and insider trading, Insider trading occurs when a person gains access to confidential information about a company's financial condition and then uses that information, before it becomes public knowledge, to buy or sell the company's stock., Ensures that investors have full confidence in the fundamental fairness of the stock markets., Federal Trade Commission, Acts Enforced, Clayton Act (1914), Put restrictions on proce discrimination, exclusive dealing, tying contracts, and interlocking boards of directors that lessened competition., Sherman Act (1890), Set a competitive business system as a national policy goal. The act specifically banned monopolies and restrains of trade, Rights Enforced, Sarbannes-Oxley Act, Required top corporate executives to attest to the validity of the company's financial statements, Increased documentation and monitoring of internal controls, Prohibited CPA firms from providing some types of consulting services for their clients, Established a five-member accounting oversight board, To compel businesses to provide accurate, detailed information to protect the owners., Corporate Governance, Refers to the process by which a company is controlled or governed., Board of Directors, Play a central role in corporate governance, Elected group of individuals who have legal duty to establish corporate objectives, develop broad policies, and select top-level personnel to carry out these objectives and policies., Reviews management's performance to be sure the company is well run and stockholders' interests are protected., Key features of effective boards, Select outside directors to fill most positions, Hold open elections for members of the board, Appoint an independent lead director and hold regular meetings without the CEO present., Align director compensation with corporate performance., Evaluate the board's own performance on a regular basis., Role of Corporate Governance

Suppliers - Supply Chain Management

Interests

Regular Orders

Prompt Payment

Classification

All of the strategic suppliers, intermediaries, and customers of a firm to move product or service to the final consumer., Upstream, All of the materials/resources that need to be procured prior to making a firm's final product., Purchasing Management, Ensure that the right suppliers are selected, Ensure that suppliers are meeting performance expectations, Ensuring that appropriate contractual mechanisms are employed., Ensuring that a good relationship is maintained with suppliers., Materials Management, Responsible for planning, forecasting, and scheduling material flows between suppliers in the chain., Downstream, Following said activities of the central firm, all of the distribution channels, processes, and functions that the product passes through on its way to the final consumer., Distribution Management, Involves the management of packaging, storing, and hanfling of materials at receiving docks, warehouses, and retail outlets.

Raw materials procurement, transportation, warehousing, inventory management, wholesaling, retailing

Internal vs. External Supply Chain Management, Internal, The different processes used in transforming the inputs provided by the supplier network., External, All of the processes that are not under the firm's control - stuff that is not done "under the company's roof."

Increased Importance Today of Supply Chain Management

The information revolution, the "Logistics Renaissance"

Customer demands in areas of product and services cost, quality, delivery, technology, and cycle time brought about by increased global competition

The emergence of new forms of inter-organizational relationships

Goal of supply chain management - to gain strategic competitive advantage through relationships with suppliers, intermediaries, and customers

Forms of Legal Protection

Contract Law, The relationship between firms and suppliers is purely contractual. A minimal amount of governmental regulations apply (mostly the controls on credit arrangements).

Defined

The supply chain encompasses all activities associated with the flow and trasnformation of goods from the raw materials stage, through to the end user, as well as the associated information flows. Material and information flow both up and down the supply chain., Trends in Supply Chain Management, Electronic Commerce, Changes in information technology will allow firms to track product data in real-time, allowing them to accurately make adjustments in production scheduling and materials procurement., Response Times, With these changes in information technology, firms are demanding quicker response times from suppliers in regards to adjusting to changes in demand, external events, etc., Relationship Management, More than ever, firms are placing emphasis on creating healthy relationships with their suppliers in order to create value for all groups in the long run., Examples, Chrysler's suppliers allowed the company to make late payments on orders during a time of financial crisis for the company as a result of the relationships they developed., Proctor & Gamble keeps employees at Wal-Mart's headquarters in Arkansas to more effectively manage Wal-Mart's supply of P&G products.

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