... “The primary objective of a firm is to maximise its profit and its primary accountability is towards its shareholders/owners” Although I can see how in most instances the main objective of a firm is to maximise it’s profit, I do not believe that it necessarily follows that the primary accountability is to the shareholders and owners. I would like to present the following argument that suggests real success can be achieved by working with and caring for communities and stakeholders. If we were to believe that companies would only succeed by looking after their shareholders we would surely limit the opportunities for any firm to have any community purpose and would remove any of the benefits that can be achieved by working with other key stakeholders. Firms can benefit greatly from interaction with wider stakeholders and can reap benefits when they care about their communities because these communities can be seen to work together with firms to support mutual success. In outlining my views I will refer to three theories, namely stakeholder theory, legitimacy theory and agency theory and make a case for how an interaction of these theories will support my views that business succeeds when it cares about its community. Stakeholder Theory, (Financial Times Lexicon, 2011), ‘Stakeholder theory suggests that the purpose of a business is to create as much value as possible for stakeholders. In order...
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...relationships that Ellenor and Sainsbury’s want to build with their stakeholders. The primary stakeholder associated with Sainsbury’s which will want to build strong and influential relationships are: * Customers * Employees * Government Customers will be the main stakeholder in Sainsbury’s; therefore Sainsbury’s will want to build up a strong relationship with these valued customers because ultimately the customers bring them their business and profit. To achieve there aims and objectives they will need to do this with the support of their customer fan base. One of Sainsbury’s primary aims which I previously found in another report was to make: ‘Customers’ lives easier, offering great quality and service at fair prices, serving our customers whenever and wherever they want.’ Therefore Sainsbury’s will need to ensure that they provide all customers what they specifically want, tailoring each product as best they can for each customer giving them a personal experience. The Primary customers for Sainsbury’s will also be members of the local community. The business is a small local business and therefore only aims to serve this demographic. It is important for Henrys Bakery to gain the trust and consequent support from the local community. The Local Community and customers are linked quite closely as effectively the local community are the customers. Henrys Bakery relies heavily on the Local Community as their primary market. To this end the need to act and operate in a way...
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...Answer: F Page: 4 4. The stakeholder theory of the firm argues that a firm’s sole purpose is to create value for its shareholders. Answer: F Page: 6 5. The instrumental argument for the stakeholder theory of the firm says that companies perform better if they consider the rights and concerns of multiple groups in society. Answer: T Page: 6 6. The normative argument for the stakeholder theory of the firm says that the stakeholder view is simply a more realistic description of how companies really work. Answer: F Page: 7 7. Nonmarket stakeholders are those that engage in economic transactions with the company as it carries out its primary purpose of providing society with goods and services. Answer: F Page: 8 8. Market stakeholders include nongovernmental organizations and the media. Answer: F Page: 8 9. Government can be considered both a market and nonmarket stakeholder. Answer: T Page: 10 10. The interests of different stakeholders often coincide. Answer: T Page: 14 11. Stakeholders involved with one part of a company often may have little or no involvement with another part of the company. Answer: T Page: 15 12. Some scholars have suggested that managers pay the most attention to stakeholders possessing the least salience. Answer: F Page: 16 13. Urgency refers to the extent to which a stakeholder’s actions are seen as proper or appropriate by the broader society. Answer: F Page: 16 14. A stakeholder map is a useful tool, because...
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...True False The stakeholder theory of the firm argues that a firm's sole purpose is to create value for its shareholders. True False The instrumental argument for the stakeholder theory of the firm says that companies perform better if they consider the rights and concerns of multiple groups in society. True False The normative argument for the stakeholder theory of the firm says that the stakeholder view is simply a more realistic description of how companies really work. True False Nonmarket stakeholders are those that engage in economic transactions with the company as it carries out its primary purpose of providing society with goods and services. True False Market stakeholders include nongovernmental organizations and the media. True False Each stakeholder group has only one source of power in relation to a firm. True False 5. 6. 7. 8. 9. 10. The interests of different stakeholders often coincide. True False 11. Stakeholders involved with one part of a company often may have little or no involvement with another part of the company. True False 12. Some scholars have suggested that managers pay the most attention to stakeholders possessing the least salience. True False 13. Urgency refers to the extent to which a stakeholders actions are seen as proper or appropriate by the broader society. True False 14. A stakeholder map is a useful tool, because it enables managers to see quickly how stakeholders feel about an issue and whether salient stakeholder tend to be in...
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...Chapter 8 – Systems oriented theories 1. Introduction Rationale: Why corporate management might elect to voluntarily provide particular information to parties outside the organisation. (Page 250 & 251) Gray, Owen and Adams (1996): Legitimacy Theory and Stakeholder Theory are two theorietical perspectives that have been adopted by a number of researchers in recent years. The theories are sometimes referred to as “systems-oriented theories”. Within a systems-based perspective, the entity is assumed to be influenced by, and in turn to have influence upon, the society in which it operates. Within both legitmacy theory and Stakeholder theory, accounting disclosure polices are considered to constitute a strategy to influence the organisation’s relationships with the other parties with which it interacts. 2. Political Economy Theory According to Gray, Owen and Adams (1996), Legitmacy Theory and Stakeholder Theory are both derived from a broader theory which has been called “Political Economy Theory”. “Political Economy” as defined by Gary and Owen as the “social, political and economic framework within which human life takes places”. The perspective embraced is that society, politics and economies are inseparable, and economic issues cannot meaningly be investigated in the absence of considerations about the political, social and institutional framework in which the economic activity takes place. Gurthrie and Parket (1990) states that corporate reports cannot...
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...Chapter 8 – Systems oriented theories 1. Introduction Rationale: Why corporate management might elect to voluntarily provide particular information to parties outside the organisation. (Page 250 & 251) Gray, Owen and Adams (1996): Legitimacy Theory and Stakeholder Theory are two theorietical perspectives that have been adopted by a number of researchers in recent years. The theories are sometimes referred to as “systems-oriented theories”. Within a systems-based perspective, the entity is assumed to be influenced by, and in turn to have influence upon, the society in which it operates. Within both legitmacy theory and Stakeholder theory, accounting disclosure polices are considered to constitute a strategy to influence the organisation’s relationships with the other parties with which it interacts. 2. Political Economy Theory According to Gray, Owen and Adams (1996), Legitmacy Theory and Stakeholder Theory are both derived from a broader theory which has been called “Political Economy Theory”. “Political Economy” as defined by Gary and Owen as the “social, political and economic framework within which human life takes places”. The perspective embraced is that society, politics and economies are inseparable, and economic issues cannot meaningly be investigated in the absence of considerations about the political, social and institutional framework in which the economic activity takes place. Gurthrie and Parket (1990) states that corporate reports cannot...
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...1) In your own words, define the term stakeholder The term stakeholder can be defined as any person, social group, or organization that has an interest or concern in an organization. Each stakeholder can be affected by the business’ actions. Primary examples of stakeholders include owners and employees (internal stakeholders), as well as the community, customers, suppliers, media, etc (external stakeholders). 2) In the 3rd section of the ATOM Flash module, identified alternatives, provide what you think would be the impact of each alternative for the 3 stakeholders. Stakeholders - ATOM, client, young people For the first alternative, “tell the client you're not interested”, ATOM Communication Agency would, obviously, lose a valuable customer. At the same time, however, they would gain a positive recognition for being against underage drinking, an illegal and unethical behaviour. In the future, this would be advantageous in attracting other clients that are more favourable to ATOM, such as those who hope to create anti-drinking campaigns. Young people would be also impacted, since less exposure to negative campaigns can be translated to better health and a more positive community in the long run....
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... 1. Assessing Shell’s Stakeholder Engagement This section assesses Shell’s stakeholder engagement on the basis of an eclectic approach combining Mitchell et. al.’s (1997) framework of stakeholder attributes and class, Freeman & Wicks’ (2007) conceptualization of ‘managing for stakeholders’, and the ‘stakeholder engagement standard’ provided by AccountAbility. In order to properly assess ‘how Shell engages its stakeholders’, it is necessary first to map their most salient stakeholders (as proposed by Mitchell et. al.), and then to assess how they manage this engagement to create mutual benefits (as conceptualized by Freeman & Wicks) before comparing it to AccountAbility’s engagement standards to see if anything can be improved. Shell has, in fact, outlined in detail who their main stakeholders are, and to...
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...Business Internship report: A business (also known as enterprise or firm) is an organization involved in the trade of goods, services, or both to consumers.[1] Business plan and Business model determine the outcome of an active business operation. Businesses are predominant in capitalist economies, where most of them are privately owned and administered to earn profit to increase the wealth of their owners. Businesses may also be not-for-profit or state-owned. A business owned by multiple individuals may be referred to as a company, although that term also has a more precise meaning. The etymology of "business" refers to the state of being busy, in the context of the individual as well as the community or society. In other words, to be busy is to be doing commercially viable and profitable work. Breakthrough entrepreneurship is about solving problems -- but it's only half the battle. If you've brainstormed a business idea and have a sense of the customer pain your product can solve. The next step in your billion-dollar business generating process is to figure out if you can fill that need profitably.To do this, you need to understand the value proposition you're creating. Estimate the economics as best you can so as to figure out ahead of time if customers will actually agree to purchase your product or service for significantly more than it costs you to produce it. The business I work for focuses on three factor for value proposition: * Production cost * Customer...
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... Make better innovation in order to find the opportunities. vi. Mention and learn from mistakes will make it able to face risk in better way. vii. Make the goals in cooperative way and also built the trust. viii. Share the power and strengthen the others. ix. Making better emphasize on the individual excellence. x. Make the good spirit and ten create the values in better way. 2. Identify three direct and three indirect stakeholder groups of Veja (total of six). Describe how each stakeholder group either has an interest in Veja or is affected by Veja’s performance and/or the way Veja uses its resources. The three direct stakeholders include the shareholders, directors and the employees. The shareholders have the direct interest of increasing their wealth and see the organization in a good and profitable situation. They are actually the owners of the organization and also appoint the management and the directors of the organization. The directors are also the other direct stakeholders. They are actually involved in the management of the organization and are appointed by the shareholders. The shareholders have the rights to appoint or...
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...Change Management in Action Planning and implementing change in healthcare: a practical guide for managers and clinicians Nadia Gittins and Simon Standish HLSP Institute Why What hat If W How September 2010 Who About tHiS bookLet contentS This booklet is aimed at senior clinicians and healthcare managers who would like help in thinking through, planning and then implementing changes to their healthcare services locally. It provides practical assistance in a way that assumes no prior theoretical background to what is often called ‘change management’. Introduction The Why of change The What of change 3 5 8 10 14 16 17 the booklet is based on HLsP’s experience in supporting individuals and organisations in several countries including nigeria and Russia. Most recently, HLsP designed a successful change management programme conducted for over 400 Iraqi clinicians, administrators and policy makers during 2007-2009. the aim of this programme was to assist participants to become Agents of Change in re-establishing their healthcare system1. there is a wealth of tools and techniques to help with planning and achieving change. Based on HLsP’s experience, the team refined the approach and focused on the tools that really help clinicians to formulate, sell and negotiate their vision of change, and then to plan for successful implementation. the tools presented in this booklet are the ones that clinicians and managers participating in change management programmes...
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...Stakeholder Claim and the Product Market Name: Institution: Numerous stakeholders possess the right to inspire the resolutions that a company makes as they unswervingly demand respect from these companies. As a result, of the impact exercised by stakeholders, business guidelines must be framed to apt the prerequisites of most shareholders so as to have prosperous dealings. Examples of shareholders in a business include stakeholders themselves, staffs, associates and stockholders. The focus of this paper will be a review of relations between stakeholder prerogatives and the product market (Bourne, 2009). Additionally, stakeholders refer to the groups of people that influence the routine actions of the business and those that the business shakes. Most importantly, stakeholders encompass the society, dealers, customers, trade unions and other organizations which affect the business integrates. Regardless, of the nature of stakeholders involved in any business or company, there should be close integration of the major shareholders in business activities so as, to avoid imminent wrangles about the management of the company. The conception of stakeholder claims is that every shareholder possesses something that they desire from the Company or posedefinitewants from the organization they have affiliations. For instance, stakeholdersproclaim dividends; personnelassert recompense and indemnification;...
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...Kapitel 1 Normative (prescriptive) accounting theory Inte baserad på empiriska tester (som positive teorier är) utan de är baserade på vad researcher tror ska eller borde inträffa vid särskilda omständigheter. Teorier som föreskriver (prescribe) istället för förklarar (describe) särskilda handlingar kallas för normativa teorier eftersom att dom baseras på normer som researchern som lägger fram teorierna har. T.ex. säger hur vi ska ta till oss och använda redovisningsmetoder. Kapitel 2 Theories of regulation Public interest theory There is the public interest theory of regulation which propose that regulation be introduces to protect the public. It assumes that the regulatory body (usually government) is a neutral arbiter of the public interest and does not let its own self-interest impact on its rule-making processes. “The regulator does its best to regulate so as to maximize social welfare. Consequently, regulation is thought of as a trade-off between the costs of regulation and its social benefits in the form of improved operations of markets”. Regulation put in place to benefit society as a whole rather than vested interests. Regulatory body considered to represent interests of the society in which it operates, rather than private interests of the regulators. Assumes that government is a neutral arbiter. Criticisms of public interest theory Critics question assumptions that economic markets operate inefficiently if unregulated. Question the assumption...
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...Corporate social responsibility (CSR) can be defined as the "economic, legal, ethical, and discretionary expectations that society has of organizations at a given point in time" (Carroll and Buchholtz 2003, p. 36). The concept of corporate social responsibility means that organizations have moral, ethical, and philanthropic responsibilities in addition to their responsibilities to earn a fair return for investors and comply with the law. A traditional view of the corporation suggests that its primary, if not sole, responsibility is to its owners, or stockholders. However, CSR requires organizations to adopt a broader view of its responsibilities that includes not only stockholders, but many other constituencies as well, including employees, suppliers, customers, the local community, local, state, and federal governments, environmental groups, and other special interest groups. Collectively, the various groups affected by the actions of an organization are called "stakeholders." The stakeholder concept is discussed more fully in a later section. Corporate social responsibility is related to, but not identical with, business ethics. While CSR encompasses the economic, legal, ethical, and discretionary responsibilities of organizations, business ethics usually focuses on the moral judgments and behavior of individuals and groups within organizations. Thus, the study of business ethics may be regarded as a component of the larger study of corporate social responsibility. Carroll...
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...Name Course: Tutor: Date: Agency Theory and Shareholder Primacy Question The corporate law structure mandates corporations to act according to shareholders interests. The shareholders control companies by appointing the directors, suing wasteful managers on behalf of the corporation and approving important transactions. On the other hand, the other stakeholders such as the employees and customers have the right to make contractual claim however, the shareholders receives the larger share. Therefore, shareholder primacy is centrally focusing on the shareholders compared to the other stakeholders (Smith, p. 277-278). Even though the shareholder dominates the corporate law structure, the shareholder is mainly expressed under the law that relates to fiduciary duties. The directors are obligated to make decisions which benefit the shareholders. The shareholder primacy norm is thus the fiduciary duty aspect. The shareholder primacy theory is rooted to the early decisions in the Dodge versus Ford Motor Company case in the Michigan Supreme Court in 1919. The court ruled that the managers are required to conduct corporate activities in the best interest of the shareholders. Therefore, according to shareholder primacy theory, the corporate activities are bound by the shareholders obligations (Keay, p. 375). The shareholder primacy theory holds that the non shareholders are granted rights through contracts which in turn fulfills their interests and adequately safeguards their rights. Companies...
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