7401 assigment
A: Explain stakeholder theory and give four examples of stakeholders.
(1): Stakeholder theory is about identifying the groups who are stakeholders in a corporation and need to be managed. It emphasizes that the company should not only pursue the interest of the shareholders (not only act for the financial benefits), but also run for the benefit of both their owners and stakeholders. It suggests the purpose of the firm is to serve broader societal interests beyond economic value creation for shareholders (Margolis & Walsh, 2001). The essential idea of stakeholder theory is that organizations that manage the relationships of the stakeholders effectively will survive longer and improve performance (Freeman, 2003). Stakeholder theory is recognizing that organizations hold responsibilities towards other stakeholders beyond their stockholders (shareholders).
(2): According to Freeman (1984), stakeholders refers to “any group or individual who can affect or is affected by the achievement of the organization’s objective”. There are two types of the stakeholders include the internal stakeholders and external stakeholders. For example, the internal stakeholder include shareholders, employee, supplier and customers.
In terms of shareholders, shareholders as one of the significant stakeholders because they are owners and financiers of firms. They contribute capital to the business and expect to share in the company 's profits. In addition, they have power to sell shares which will influencing share price. The company therefore maintains close relations with its major shareholders.
Customers are also essential stakeholders which source of sales revenue and profits. In addition, customers are source of feedback information (via surveys and complaints), that improve the company’s performance. Businesses that ignore the concerns of customers find themselves losing sales to rivals.
Employees are an important internal stakeholder group that provide services for the company. It
(1): Stakeholder theory is about identifying the groups who are stakeholders in a corporation and need to be managed. It emphasizes that the company should not only pursue the interest of the shareholders (not only act for the financial benefits), but also run for the benefit of both their owners and stakeholders. It suggests the purpose of the firm is to serve broader societal interests beyond economic value creation for shareholders (Margolis & Walsh, 2001). The essential idea of stakeholder theory is that organizations that manage the relationships of the stakeholders effectively will survive longer and improve performance (Freeman, 2003). Stakeholder theory is recognizing that organizations hold responsibilities towards other stakeholders beyond their stockholders (shareholders).
(2): According to Freeman (1984), stakeholders refers to “any group or individual who can affect or is affected by the achievement of the organization’s objective”. There are two types of the stakeholders include the internal stakeholders and external stakeholders. For example, the internal stakeholder include shareholders, employee, supplier and customers.
In terms of shareholders, shareholders as one of the significant stakeholders because they are owners and financiers of firms. They contribute capital to the business and expect to share in the company 's profits. In addition, they have power to sell shares which will influencing share price. The company therefore maintains close relations with its major shareholders.
Customers are also essential stakeholders which source of sales revenue and profits. In addition, customers are source of feedback information (via surveys and complaints), that improve the company’s performance. Businesses that ignore the concerns of customers find themselves losing sales to rivals.
Employees are an important internal stakeholder group that provide services for the company. It
References: Freeman, R. E. (1984). Strategic management: A stakeholder approach. Boston: Pitman. Freeman, R. E. (2003). Foreword. In Stakeholder theory and organizational ethics. Author R. Phillips. San Francisco: Berrett-Koehler Publishers. Friedman, M. (1970, Sept. 13, 1970). The social responsibility of business is to increase its profits. N.Y. Times, Section 6, pp. 30, 126-127. Hillman, A. J., & Keim, G. D. (2001). Shareholder value, stakeholder management, and social issues: what 's the bottom line? Strategic Management Journal, 22(2), 125-139 Margolis, J. D., & Walsh, J. P. (2001). People and profits? The search for a link between a company 's social and financial performance. Mahwah, NJ: Lawrence Erlbaum Associates