BGIS CIA _ the Stakeholder Model
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Transcript of BGIS CIA _ the Stakeholder Model
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Copyright Wondershare Software
The Stakeholder Model
Darshan Thaker (1021213)Rahul Sinha (1021226)Rohit Dhannawat (1021229)Arpita Srivastava (1021239)
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A shareholder mission statement
From Coca-Cola:
We exist to create value for our shareowners on a long term basis by building abusiness that enhances the Coca-Colacompanys trademark. This is also ourultimate commitment.
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A stakeholder mission statement
Cadbury Schweppes
Our task is to build upon our tradition
of quality and value and to providebrands, products, financial results andmanagement performance that meet the
interest of our shareholders.
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HISTORY
In the feudal age and continuing for centuries, kings ownedmost property in the kingdom.
The first corporations, such as the British East India Company,were broadly chartered by powerful nobility to achieve wealthby trading, taking slaves and war booty, and stripping theresource wealth of colonies and weak countries.
In the industrial and modern age, laws were passed to curbthe feudal excesses of companies and their benefactors. Thelegal form of corporations evolved to the present shareholdermodel .
The stakeholder model requires that all of the partiesaffected by management decisions, in addition tothe shareholders themselves, management, employees,customers, suppliers, communities in which the companyoperates and the environment from local to global, all must beconsidered as fairly and justly as possible.
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Who are stakeholders?
A person, group ororganization that has
direct or indirect stake inan organization because
it can affect or beaffected by the
organization's actions,objectives, and
policies.
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What is the common ground betweenshareholder and stakeholder model?
Transparency: Full disclosure of financial and non-financial information
Accountability: Ensuring that management iseffectively overseen (and, where necessary, replaced)by appointing an independent and competent governingbody.
Fairness: Equitable treatment of investor
Responsibility: Ensuring the corporation fulfils itsproper role in society.
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Owners / Shareholders
Their stake: stocks, bonds, equity, etc.
Their expectation: some ROI
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Stakes and expectations:Employees
Their stake: jobs, livelihood, career, human capitalinvestments
Their expectation:decent wages, security, benefits and
meaningful work
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Stakes and expectations:Customers
Their stake:need for / purchases of products andservices
Their expectations:honesty, quality goods, fair pricing
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Stakes and expectations:the community
Their stake:the environment, taxes, payroll,
infrastructure improvements
Their expectations:
good citizenship, open partnership
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Stakes and expectations:Trade Associations
Their stake:Time, Energy, Risk at work, job.
Their expectations:Safety, Better relation with topmanagement, Improved working
conditions, Fair wages
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Pressures on Business
Competitive pressures Modern business faces greatercompetitive pressure:
More open marketsGlobalisationShareholders seeking ever higher profits
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Pressures on Business
Pressure of responsibility Growing importance toconsumers of ethical business:
Total UK sales of Fair Trade products grew in 2004 by more than50% to 140 million.
Environmental legislation
In the last few years it has been proven that it is possible totreat employees, customers, suppliers, communities, and naturalenvironment well better than most companies are now doing,and at the same time both make a good profit and produceproducts which themselves help assure sustainabledevelopment
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How Should Firms Respond?
Inclusivity:
Take a wide view
of why the firm existsRecognise range of interest groupsForm partnerships with wide range of groups
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Whats Different About This?
Firms used to aim for maximumprofits to keep shareholders happy
This was often against interests
of groups outside organisation
Now, interdependence seenas vital
Partnerships with all interestgroups
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What Does This Mean?
Difficult to balance the differentshort term demands of shareholdersand stakeholders
Firms can benefit considerably fromcooperating with stakeholdergroups
Their needs can be built into thefirms decision making processes
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Benefits Firms Can Expect
Better public relations
More favourable reportingof firms activities in media
Quality relationships with suppliers
Lower staff turnover
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CRITIQUE
Criticism of the stakeholder model:It is not a realistic assessment of the powerrelationships between the corporation and otherentities.There is no single, clear, and objective measure toevaluate the combined ethical/economicperformance of a firm.
Advocacy for the stakeholder model:A corporation that embraces stakeholders
performs better .It is the ethical way to manage becausestakeholders have moral rights that grow from theway powerful corporations affect them.
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The web of stakeholder relationships
Can you serve the long term interests of theshareholders without paying attention to theothers?
The interconnectedness of wealth creation
Long term relationships are source of wealthnot individual transactions
The key to organizational long term viability is
manage the entire web of interconnectedstakeholder relationships for everyonesmutual benefit as much as possible.
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Sources!
instructional1.calstatela.edu - /prosent/MGMT 308/ http://www.oecd.org/dataoecd/5/41/1930657.pdf http://www.alanfkay.com/successes/stakeholder_model.shtml
http://www.bized.co.uk/educators/16-19/business/external/presentation/stakeholdermodel.ppt
Business, Government and Society Steiner and Steiner McGraw-Hill Irwin, 12 th Edition, Page: 15-17