bgis cia _ the stakeholder model

8/2/2019 BGIS CIA _ the Stakeholder Model

1/20

Copyright Wondershare Software

The Stakeholder Model

Darshan Thaker (1021213)Rahul Sinha (1021226)Rohit Dhannawat (1021229)Arpita Srivastava (1021239)


2/20

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.


3/20


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.


4/20


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.


5/20


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.


6/20


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.


7/20Copyright Wondershare Software

Owners / Shareholders

Their stake: stocks, bonds, equity, etc.

Their expectation: some ROI



Stakes and expectations:Employees

Their stake: jobs, livelihood, career, human capitalinvestments

Their expectation:decent wages, security, benefits and

meaningful work



Stakes and expectations:Customers

Their stake:need for / purchases of products andservices

Their expectations:honesty, quality goods, fair pricing



Stakes and expectations:the community

Their stake:the environment, taxes, payroll,

infrastructure improvements

Their expectations:

good citizenship, open partnership



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



Pressures on Business

Competitive pressures Modern business faces greatercompetitive pressure:

More open marketsGlobalisationShareholders seeking ever higher profits



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



How Should Firms Respond?

Inclusivity:

Take a wide view

of why the firm existsRecognise range of interest groupsForm partnerships with wide range of groups



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



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



Benefits Firms Can Expect

Better public relations

More favourable reportingof firms activities in media

Quality relationships with suppliers

Lower staff turnover



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.



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.


20/20C i h W d h S f

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

bgis cia _ the stakeholder model

Documents