Stakeholder Theory

Comprehensive concept map created for a project in Business Ethics

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Stakeholder Theory by Mind Map: Stakeholder Theory

1. Community

1.1. Interests

1.1.1. Employment for Residents

1.1.2. Local Development

1.1.3. Protected Local Environment

1.1.4. Tax revenue

1.2. Classification

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

1.3. Benefits of engagement

1.3.1. 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

1.3.2. Benefits to Community Economic Development Crime Abatement Makes communities more attractive to other businesses, employees, and consumers Housing Organizations partnered with Corporations Welfare-to-Work Job Training Examples Aid to minority businesses Example Disaster relief When floods, fires, earthquakes, ice storms, hurricanes or terrorist attacks devastate communities, funds pour into affected communities from companies

1.4. Relationship between community and businesses

1.4.1. 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

1.4.2. 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

1.5. Corporate Philanthropy

1.5.1. Examples

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

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

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

1.5.5. Strategic philanthropy Refers to corporate giving that is linked directly or indirectly to business goals and objectives Strategic contributions focus on: Factor conditions Demand conditions Context for strategy and rivalry 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

2. Employees

2.1. Interests

2.1.1. Stable Employment

2.1.2. Fair Pay

2.1.3. Safe Work Environment

2.2. Rights

2.2.1. Guaranteed By Law Safe and Healthy Workplace Occupational Safety and Health Act Problems of employers providing-and of employees accepting-safe working environments stem from: Constitutional rights Individual freedom Liberty Control over private lives Right to due process Right to organize and strike Obliged to pay employees fair wages for work performed Factors of determination 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.

2.2.2. Implied Social contract that has historically defined the employee/employer relationship Employment-at-will doctrine

2.2.3. 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: Permissible employee privacy inquires include: Polygraph and Psychological Testing The Electronic Communications Privacy Act renders electronic eavesdropping through computer-to-computer transmissions, private video conferences, and cellular phones illegal.

2.3. Forms of Legal Protection

2.4. Employee and Employer relationship goals

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

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

2.4.3. Relationship grounded on mutual trust and reciprocal responsibility

2.4.4. 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.

2.4.5. Discrimination Defined Discriminatory practices in employer-employee relationships include unequal or disparate treatment of individuals and groups 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. The Age Discrimination in Employment Act (1967) Equal Pay Act of 1963

3. Customers/Consumers

3.1. Interests

3.1.1. Products that work

3.1.2. Products that are safe Consumerism Ralph Nader, Unsafe at Any Speed Social movement created to encourage accountability among businesses in their development, production, and sales processes.

3.1.3. Fair pricing

3.2. Rights

3.2.1. Right to Safety

3.2.2. Right to be Informed

3.2.3. Right to Choose

3.2.4. Right to be Heard

3.2.5. Right to Privacy

3.3. Protection Agencies

3.3.1. Federal Trade Commission Protects competition Protects against monopolies/regulates utility monopolies Protects against unfair or deceptive practices Deceptive Advertising Truth in lending Fair packaging and labeling Fair credit reporting Equal credit opportunity Allows complaints to be filed Major divisions Advertising practices Credit practices Enforcement Marketing practices Service industry practices

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

3.3.3. 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 Conducting research on potential product hazards. State laws, not federal, apply

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

3.4. Current Issues

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

3.4.2. 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 Implied Warranties 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

3.4.3. 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 Concealed facts Exaggerated Claims Psychological Appeals Specific Controversial Advertising Issues Self Regulation Forms

3.5. Forms of Legal Protection

3.5.1. The sales contract governs the actual transition with the customer

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

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

4. Owners

4.1. Interests

4.1.1. Satisfactory Return on Investment

4.1.2. Appreciation of Stock Value Over Time

4.2. Forms of Ownership

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

4.2.2. 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

4.2.3. Corporation Types S-Corporation Limited Liability Corporation General Stockholders Forms of stock Rights Types Reasons for ownership Role of Government Regulation Actions 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 Role of Corporate Governance

5. Suppliers - Supply Chain Management

5.1. Interests

5.1.1. Regular Orders

5.1.2. Prompt Payment

5.2. Classification

5.2.1. 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. 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.

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

5.2.3. 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."

5.3. Increased Importance Today of Supply Chain Management

5.3.1. The information revolution, the "Logistics Renaissance"

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

5.3.3. The emergence of new forms of inter-organizational relationships

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

5.4. Forms of Legal Protection

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

5.5. Defined

5.5.1. 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 Response Times Relationship Management

6. New node