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Stakeholder Theory

Stakeholder Theory. A very brief overview Dr. Randy Richards, Ph.D. St. Ambrose University. Development. Descriptive As a strategy As an ethical approach. Who are the stakeholders?. Shareholders/owners Employees Suppliers Customers “Community”.

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Stakeholder Theory

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  1. Stakeholder Theory A very brief overview Dr. Randy Richards, Ph.D. St. Ambrose University

  2. Development • Descriptive • As a strategy • As an ethical approach

  3. Who are the stakeholders? • Shareholders/owners • Employees • Suppliers • Customers • “Community”

  4. In whose interest should a corporation be managed? • Traditional answer • The stake holder alternative answer • Who are the stakeholders? • What are the stakes and expectations of each?

  5. In whose interest:The Traditional Answer • The shareholders/owners • Managers have a fiduciary relationship to the owners to look after their interests • Legal constraints on this duty • Problems with this understanding of single view of responsibility

  6. A shareholder mission statement • From Coca-Cola: • We exist to create value for our share owners on a long term basis by building a business that enhances the Coca-Cola company’s trademark. This is also our ultimate commitment. • Discussion

  7. In whose interest: the stake holder alternative • Stockholders are one group among many. • Stakeholders are those groups that have a “stake in” or claim on the resources / activities of the company. • Each has a right to be treated as a end itself not just means for enrichment of the stockholders.

  8. A stakeholder mission statement • Cadbury Schweppes • Our task is to build upon our tradition of quality and value and to provide brands, products, financial results and management performance that meet the interest of our shareholders. • Discussion

  9. Resource Base Stakeholders • Investors • Employees • Customers

  10. Owners / Shareholders • Their stake: • stocks, bonds, equity, etc. • Their expectation: • some ROI

  11. Stakes and expectations:Employees • Their stake: • jobs, livelihood, career, human capital investments • Their expectation: • decent wages, security, benefits and meaningful work

  12. Stakes and expectations:Customers • Their stake: • need for / purchases of products and services • Their expectations: • honesty, quality goods, fair pricing

  13. Stakes and expectations:Suppliers • Their stake: • income from goods and services • Their expectation: • fairness, mutual prosperity, honesty

  14. Stakes and expectations:the community • Their stake: • the environment, taxes, payroll, infrastructure improvements • Their expectations: • good citizenship, open partnership

  15. How to decide in cases of conflicting interests? • The traditional answer • simple • The stakeholder model • much more difficult

  16. The web of stakeholder relationships • Can you serve the long term interests of the shareholders without paying attention to the others? • The interconnectedness of wealth creation • Long term relationships are source of wealth not individual transactions • The key to organizational long term viability is manage the entire web of interconnected stakeholder relationships for everyone’s mutual benefit as much as possible.

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