...Chapter 1 The Corporation and Its Stakeholders McGraw-Hill/Irwin Copyright © 2014 by The McGraw-Hill Companies, Inc. All rights reserved. Ch. 1: Key Learning Objectives Understanding the relationship between business and society, and the ways in which they are part of an interactive system Considering the purpose of the modern corporation Knowing what is a stakeholder and who a corporation’s market and nonmarket and internal and external stakeholders are Conducting a stakeholder analysis, and understanding the basis of stakeholder interests and power Recognizing the diverse ways in which modern corporations organize internally to interact with various stakeholders Analyzing the forces of change that continually reshape the business and society relationship 1-2 Introduction – The Business and Society Relationship Business: Any organization that is engaged in making a product or providing a service for a profit Society: Human beings and the social structures they collectively create Business and society are highly interdependent 1-3 Introduction – The Business and Society Relationship We borrow “General Systems Theory (GST)” from biology to explain this relationship; first introduced in 1940s Theory posits that organisms cannot be understood in isolation, even though they have clear boundaries; they can only be understood in relationship to their surroundings Adapted to management theory means that business ...
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...Corporation Community Building Responsibility: The analysis of how Cadbury balance the interests between interior and exterior stakeholders Being one of the global confectionery magnates, Cadbury operates a business incorporating production and promotion of sugary food in a worldwide scale. The flagship brands Cadbury Dairy Milk, Trident, Halls, Dentyne and Clorets underpin the leading position throughout the world for the corporation, with a significant market share of 10.1%. The renowned name ‘Cadbury’ and symbolic purple are manifestation of high-quality sweetmeat according to mindset of the consumers. However, a high profile in taking on the social responsibilities is gradually a necessity for this globalization era, as the emergence and lucidity of the social contract between the businesses and the society. Despite the provision of prevailing goods and services for consumption under a legitimate circumstance, the corporations are supposed to practice in a scope where the beneficial organizations can be achieved in a broader width. The trend for interests of stakeholders to be on the company’s agenda becomes one aspect of this invisible contractual relationship, rather than narrow down its mission for profits maximizaion for present and potential shareholders. This article aims at analysing and evaluating the balancing extent of the fulfillment between interests of shareholders and stakeholders outside the corporation by Cadbury Schweppes PLC. Enterprises, with an entitlement...
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...shareholders and workers in a traditional, capitalist corporation; The Ford Motor Company and compare and contrast the findings with the treatment of these stakeholders in the Mondragon Cooperative Corporation. The structure of this essay will be as follows; firstly the fundamental differences between the two contrasting organisations will be examined and how these differences impact the ethical treatment of the relevant stakeholders; secondly, the ethical treatment of shareholders in regards to corporate governance and the executive’s accountability and control will be investigated, and lastly, the ethical treatment of workers within the two contrasting organisations will be scrutinized in relation to the employees right to participation and association, as well as the right to fair wages. To frame the purpose of this essay; to investigate the ethical treatment of shareholders and workers in a traditional, capitalist corporation compared to the treatment of these stakeholders in the Mondragon Cooperative Corporation, it is imperative to firstly examine the contrasting ideologies and points of difference between the two ways of organising. In understanding the fundamental differences between the two contrasting organisations, it is then possible to recognise the ethical dilemmas that arise for both shareholders and workers. The fundamental differences between a traditional capitalist corporation and the Mondragon Cooperative Corporation are the capital-ownership structures, the difference...
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...3. Corporations practicing stakeholder management will be more sustainable. Discuss. Over the years, social and ethical concerns have brought attention to the community that caused much bitter conflict to the relationship between business and society. As people become better educated and more affluent, rising expectations naturally follow for major institutions and these developed a backdrop against which criticisms towards businesses have grown. Therefore, these created the need for them to assume greater societal responsibilities rather than mere ruthless pursuit of own profits. Many businesses today share the same viewpoint that making profit for profit’s sake no longer leads to sustainable performance, stakeholder management has become an increasingly important aspect of a business’ operation integrating traditional economic considerations with environmental and social concerns (Jones 2012). While doing well and doing good are no longer seen to be mutually exclusive, corporations practicing stakeholder management is highly debated to be sustainable to a large extent. With all the benefits that it brings, this approach however also has its fair share of limitations to be discussed later in this essay. Outlining the term ‘sustainability’ Sustainability is the capacity to endure. One of the best known general definitions about sustainable development was expressed as “meeting the needs of the present without compromising the ability of future generations to meet their...
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...Essay Corporate social reporting: a tool to discharge corporate accountability or to enhance managerial capture? Introduction In the last two decades there has been an increased awareness by society in general on the societal and environmental consequences of human behavior, especially towards corporations and its effect on its surroundings. Investors these days are becoming ethically and socially aware, and are more drawn towards investing in companies that contribute positively to society and who are actively reducing any negative impacts it might have. Because of this emerging awareness by public in general and investors, companies need to actively show compliance with this trend. Also due to the damaged reputation corporations have these days due to several scandals that took place around 2001, investors want reassurance when investing in companies. A way to show compliance to these aspects is by producing sustainability reports, which are made available to the public. Sustainability reports, which can also be referred to as Corporate Social Reporting, is a report that shows how a corporation is complying to economic, environmental and societal issues in which it is active. World Business Council for Sustainability Development (WBCSD) established the current and mainly adopted definition for CSR, which states ‘CSR is the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce...
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...Aulton C. Mitchell | | 7019-8 | Jennifer Scott | | | MGT | Michael Novak: Capitalism and the Corporation | | | The topic of ethics just seems to be hard to define when using other peoples’ writings but I never have an issue of explaining my stand on ethics. ------------------------------------------------- ------------------------------------------------- ------------------------------------------------- Faculty Use Only ------------------------------------------------- <Faculty comments here> ------------------------------------------------- ------------------------------------------------- ------------------------------------------------- <Faculty Name> <Grade Earned> <Writing Score> <Date Graded> Introduction The problem to be investigated in this paper is the relationship between capitalism and the corporation and how socialism will affect this relationship. In the ever expanding economy, the government is trying to cash in more and more by taking over the capital owned by firms. The firms have to try to survive by doing whatever it takes to keep the government from overtaking their capital. In the big picture, firms what to make a profit but also provide a benefit to the society as a whole. We have to look deeper to explain what socialism and capitalism really are and what the corporations are really trying to do. Social Responsibility of Business Friedman said that the social responsibility...
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...PRIVATE PRISON CORPORATION OF AMERICA Nowadays, we are facing a major experiment in privatization. For example, private companies have entered the business of managing public schools, or religious schools. Also, they even run in prison industry. Among them is Private Prison Corporation of America, which is growing fast in prison industry in the United States. Especially, immigration detention business has brought up massive profit for Private Prison of America. Therefore, corporation is planning to join other private prison corporations by making campaign donation and retaining lobbyist to draft and seek the passage of two laws about anti-illegal immigrant and the Intensive Probation Act that will increase opportunities to do business with the federal government. As a manager at Private Prison Corporation of America, I will conduct a stakeholder analysis to determine whether PPA should do it, and my analysis bases on the frameworks Managing for Stakeholders by Freeman, The social Responsibility of Business by Milton Friedman, Ethical Reasoning by Sucher, Five Traditionnal Theories of Moral Reasoning by Werhane, and How to make value count by Joel E. Urbany. The stakeholders of Private Prison Corporation are board of director, corrections officers, offenders, probation and parole officers. Those are employees in corporation. Another, government agency would contract with a provider to supply a service such as health care or programming for inmates. In general, the decision...
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...organization. This crisis involves a recent explosion at one of the plants at the XYZ Corporation and will require the development of an external relations strategy in order to rebuild the corporate image of the organization. The goal of the XYZ Corporation will be to develop a communications and external relations strategy to explain the events that led up to the explosion at the plant and explains the steps that will be taken to fix the problem. The external relations strategy will coordinate the dissemination of information and effectively manage the crisis. An effective communication channel is needed to establish positive feedback throughout the organization. So then, a team is created specifically to implement these channels. This communications team will be responsible for assessing the situation, developing and implementing the communication plan and following up on the success of the plan. The communication team will develop a plan of action that will result in a more positive corporate image. This team will consist of: top executives from the XYZ Corporation, a PR person will be identified and the communication nodes will be determined. The PR will be used to establish the credibility of the corporation and to persuade the public to take a more positive view of the corporation. The team will also come up with the steps that it will take to repair the image of the corporation. Successful crisis management depends largely on developing a planned, integrated solution...
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...The evolution of the culture of our corporations has evolved in many ways and for many reasons. There were many different factors that played an important role in developing the change in the evolution of corporations. Societal and cultural influences played a major role in the early development of the objectives and reason for existence of corporations. Political forces have and will continue to play an influential role in the structure of corporations and the responsibilities corporations have in the communities in which they exist. Economic forces were one of the early influences, but will also continually be a leading factor in how corporations are governed and operated. The changes to how corporations are operated in turn affect the role of corporations and how they will be operated in the future. All of these factors for different reasons play an important role in the evolution of corporations. The decision making power transitioned from the individual to the corporation. The laws that govern the corporations, the individuals that work for the corporations, the boards that guide the corporations all evolved in the amount and type of authority they hold as well as the role they play. Individual behavior was one of the early influences on business and corporations. Businesses were owned by individuals and families. As businesses grew and the need for large scale operations grew, the scope of the operations of these businesses also expanded. The change was in...
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...Corporate Social Responsibility by Your Name name of the module module number word count =1,519 Tutor/Professor Name University Name Department 16th December 2010 Corporate Social Responsibility Corporate social responsibility (CSR) reports provide stakeholders with valuable information about the relationship between a given corporation and society; additionally these reports may serve as a public relations vehicle. CSR reports improve communication between a corporation and its local constituents as well as the greater society. CSR reports and accounting data combine to offer investors and other stakeholders a larger picture of a corporation’s strategy and financial condition. By merging the two, stakeholders have a better understanding of how a corporation’s social initiatives improve its overall health. For example, when energy conservation programs allow a corporation to cut spending costs and cause the development of a new product while at the same time increasing jobs the CSR report acts as a financial statement and a public image enhancer. CSR reports provide information that is valuable for different reasons to different people. Employees and prospective employees can decide which companies they want to work for based on safety information about the workplace contained in these reports. Corporate managers can use the reports to monitor how successful they are in attaining their stated goals. They can also examine the progress...
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...paper is about the role of ethics and social responsibility in developing a strategic plan while considering stakeholder needs and agendas. Included in this paper will be one example of a corporation overstepping the ethical boundaries for stakeholder programs, and what types of preventative measures could be taken to avoid this type of situation. ETHICS AND SOCIAL RESPONSIBILITY There are couple important issues of ethics and general responsibility in the strategic outlining process. According to webster dictionary, the definition of ethics is an area of study that deals with ideas about good and bad behavior and dealing with what is morally right and wrong ("Merriam-Webster", nd). The stakeholders of any corporation are not just investors, they have the power to influence the financial impact of a corporation. Ethical responsibilities are responsibilities that are governed by a moral code of conduct and are composed of beliefs that are generally held by the owners and the stakeholders of the corporation. The stakeholders also have a social responsibility to act in the best of the entire corporation and not just for their own self-interests. STAKEHOLDERS AND STRATEGIC PLANNING When establishing a strategic plan a corporation must consider all of the risk signals as well as their performances and their strategies in order to develop the corporations strategic plan. The corporate strategic adjustment should be reviewed and changed...
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...Research Paper DOES CORPORATE RESPONSIBILITY TO STAKEHOLDERS MAXIMIZE FIRM’S VALUE? DOES CORPORATE RESPONSIBILITY TO STAKEHOLDERS MAXIMIZE FIRM’S VALUE? Topic: This paper seeks to explore the economic mechanisms behind corporate responsibility based on a microeconomic perspective of the firm. The ultimate objective is to ruminate on the effects of corporate responsibility of firms to stakeholders. That is how corporate responsibility to stakeholders can help maximize or minimize the firm’s value. In this research paper, I am going to explain the principle of stakeholder and the corporate social Responsibility that corporation owes to its stakeholders. The fact that corporations are entitled to its stakeholders and the environment within its scope of business has been a controversial issue. At the beginning, I will give a clear understanding of what Corporate Responsibility by firms to its stakeholders is. Later, I will make an argument in favor and against Corporate Responsibility by the firm to its stakeholders. Lastly, I will come to a conclusion on how firm’s value is maximized. That is what corporation should do for its stakeholder. According to rigorous research, each person has his or her personal responsibility that needs to be performed in order to maintain a good image in the society. Just as humans are faced with responsibilities, so as Corporations, since they are seen as a group of individuals working together to accomplish a goal, that goal being making...
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...BUSINESS ETHICS AND STAKEHOLDER ANALYSIS Kenneth E. Goodpaster Abstract: Much has been written about stakeholder analysis as a process by which to introduce ethical values into management decision-making. This paper takes a critical look at the assumptions behind this idea, in an effort to understand better the meaning of ethica] management decisions. A distinction is made between stakeholder analysis and stakeholder synthesis. The two most natural kinds of stakeholder synthesis are then defined and discussed: strategic and multi-fiduciary. Paradoxically, the former appears to yield business without ethics and the latter appears to yield ethics without business. The paper concludes by suggesting that a third approach to stakeholder thinking needs to be developed, one that avoids the paradox just men* tioned and that clarifies for managers (and directors) the legitimate role of ethical considerations in decision-making. So we must think through what management should be accountable for; and how and through whom its accountability can be discharged. The stockholders' interest, both short- and long-term, is one of the areas. But it is only one. Peter Dnicker, 1988 Harvard Business Review W HAT is ethically responsible management? How can a corporation, given its economic mission, be managed with appropriate attention to ethical concerns? These are central questions in the field of business ethics. One approach to answering such questions that has become popular during...
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...pseudo-stakeholder theory of operation representing social responsibility although it has no moral responsibility to be socially responsible. To facilitate this argument, I will use the definitions of those terms as presented by the authors in the book. The stockholders invested their money for the purpose of earning a return on that investment in the form of more money, not in the form of social and moral gratitude from every stakeholder involved with the corporation. Management must take that intention and do their best to see that it is realized. To do so they have to be concerned with the opinions and feelings of all of the stakeholders associated with their companies. If a management team operates a corporation in a way that they show the stakeholders that they are only concerned with the bottom line, then those same stakeholders, and more specifically the consumers, will react to that in negative ways. Theyll look for substitutes to the corporations products or determine that they can live without the products and thereby lower the corporations revenues. If the corporation is not run environmentally efficiently then the towns and cities that are home to the corporations factories and offices will no longer welcome them and may take measures to force the corporation out of their towns. If the corporation habitually takes advantage of its suppliers, theyll look for new customers and stop doing business with the corporation in question. This would force the corporation to expend...
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... School of Commerce The Flinders University of South Australia GPO Box 2100 Adelaide South Australia 5001 Telephone: +61 8 82013896 Facsimile: +61 8 82012644 Email: Maz.Demosthenous@flinders.edu.au SCHOOL OF COMMERCE RESEARCH PAPER SERIES: 00-8 ISSN: 1441-3906 For many, the view that the main goal or purpose of business is to make as much money as possible is accepted as a matter of fact and is beyond debate. To go further and say that the social responsibility of a business is also just to make a profit is open to debate. The aim of this paper is to discuss the various views of the responsibility of business, and to consider where accounting fits in. In addition, to explore the ethical responsibilities that a corporation may have beyond making profits for its stockholders. The Friedman view Milton Friedman’s view is that in a capitalist economy, there is one and only one responsibility of business- to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud (Friedman, 1983). When one is looking at the responsibilities of an individual or an organisation they must first examine their roles. The directors of companies have a fiduciary responsibility to act in the best interest of the shareholders. The managers are agents of the shareholders and therefore have a moral obligation to manage the firm in...
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