CS\CSACIOASCMASOC AAOWKCSPDKC,C AC Understanding the Implications of Businesses Operating Ethically

All businesses have a number of stakeholder groups, each with different interests in what the business does. Business owners - perhaps the key stakeholders - want good financial performance from their investments. Business managers know that it is their first responsibility to deliver good financial results.

However, while it was always acknowledged that businesses exist in a diverse social, economic and political environment, today it is also accepted that a business should be managed with the interests of all stakeholders in mind.

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Look at the following stakeholders:

•Shareholders
•Employees
•Customers, Suppliers and Competitors
•Citizens
•Bankers, Stock Markets and Financial Commentators

How are each of these sets of stakeholders linked to ethical business practice?

How do they benefit and how do they suffer from ethical business practice?

Give examples of companies and stakeholders to support your answers.

Businesses today have to balance the aims of a number of stakeholders. This is sometimes difficult because the interests of stakeholder groups can conflict with each other.

E.g. shareholders have a financial interest in the business and want their shares to increase in value, whereas environmentalists look to protect the natural environment. If a business successfully launches a new product and all is going well, the shareholders will be very pleased that their cash investment looks like returning a healthy profit.

If, however, an environmental group mounts a big campaign to prevent this business operating in the way it does, these two stakeholders are in conflict. Success for environmentalists may mean a loss for shareholders.

Consider the following stakeholder groups. Which ones might be