Stakeholders – Someone who has an interest or concern or is affected by the operations m and objectives of a business
Possible stakeholders include:
- Employees – want high wages and good working condition
- Shareholders – want high profits so they get high dividends
- Consumers – want high quality goods with low prices
- Managers – want high salaries and bonuses and other personal benefits
- The Government – want to earn corporation tax from the business’s profits
- Suppliers – want businesses to stay successful so they still have customers
- Different stakeholders have different objectives depending on how the business will affect them, this leads to conflicting objectives.
- For example, managers may want a big bonus, but this would decrease the money that goes into shareholder dividends.
- This can become a problem as when a firm sells shares they relinquish some of their control in order to gain this investment.
- This can lead to shareholder activism – when shareholders exercise their power as part owners to manipulate the company into fulfilling their motives.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
CSR – refers to the companies taking responsibility for their impact on the local m area and beyond society, even including the environment
- CSR can be shown by making decisions that benefits all stakeholders or takes them all into account (rather than just shareholders).
- Treating customers, employees, local community and suppliers well.
- Examples of this would be avoiding polluting activities and contributing positively to lives in the local community.
- Companies may only do the bare minimum that the law entails and still claim CSR as it is not regulated in any way.
- Goes beyond CSR
- A moral code of ethics that a business follows e.eg. not investing in countries which have human rights issues.
- Being moral despite the finance (cost) e.g. The Body Shop does not use ingredients tested on animals.
ETHICAL DECISION MAKING
- Following a code of practice which reflects moral values.
- Considers all the groups affected by the business’ practices.
- This is the most ethical way to practice business and again goes beyond CSR