Copyright © 2008 McGraw-Hill Ryerson Ltd. 1 Chapter Three Identifying Stakeholders and Issues Canadian Business and Society: Ethics & Responsibilities
Chapter 3 Copyright © 2008 McGraw-Hill Ryerson Ltd.2 Chapter Outline Stakeholder: Definition Identifying Stakeholders Managers’ Responsibilities Opposition to Stakeholder Concept Argument for Stakeholder Concept Issues Management Issues Management Process
Chapter 3 Copyright © 2008 McGraw-Hill Ryerson Ltd.3 Stakeholder: Definition An individual, or group, who can influence and/or is influenced by the achievement of an organization’s purpose. Source: Freeman, 1984
Chapter 3 Copyright © 2008 McGraw-Hill Ryerson Ltd.4 Discussion Questions Why are stakeholders important to a firm? What can happen to the firm if managers do not properly identify and satisfy the interests of their firm’s stakeholders? Do stakeholders have differing goals and power/influence over time?
Chapter 3 Copyright © 2008 McGraw-Hill Ryerson Ltd.5 Identifying Stakeholders Owners Directors Employees Customers or consumers Lenders and creditors Suppliers
Chapter 3 Copyright © 2008 McGraw-Hill Ryerson Ltd.6 Identifying Stakeholders Service professionals Dealers, distributors, and franchisees Business organizations Competitors Joint-venture participants Non-governmental organizations Society at large
Chapter 3 Copyright © 2008 McGraw-Hill Ryerson Ltd.7 Identifying Stakeholders Educational institutions Religious groups Charities Service, fraternal, cultural, and ethnic associations The media Government
Chapter 3 Copyright © 2008 McGraw-Hill Ryerson Ltd.8 Managers’ Responsibilities Identify stakeholders Understand how corporation currently views stakeholders Examine how each stakeholder will or might influence firm Assess opportunities and threats Rank stakeholders by influence Prepare programs or policies detailing how to cope with stakeholders
Chapter 3 Copyright © 2008 McGraw-Hill Ryerson Ltd.9 Opposition to Stakeholder Concept Problems of categorization (e.g., how to identify and prioritize stakeholders) Challenges in meeting expectations (e.g., tradeoffs among the stakeholders) Dilution of top management focus (e.g., away from financial performance) Impracticality of shared governance (e.g., focus still on shareholders)
Chapter 3 Copyright © 2008 McGraw-Hill Ryerson Ltd.10 Argument for Stakeholder Concept Simply good business Ignoring stakeholder interests can have substantial economic consequences (e.g., employees, customers, lenders, etc.) Provides more systematic approach to recognizing stakeholder expectations and deciding how to respond
Chapter 3 Copyright © 2008 McGraw-Hill Ryerson Ltd.11 Issues Management: Definition A systemic process by which the corporation can identify, evaluate, and respond to those economic, social, and environmental issues that may impact significantly upon it.
Chapter 3 Copyright © 2008 McGraw-Hill Ryerson Ltd.12 Issues Management Issues Life Cycle Stages: Degree of awareness of issue over time (none or little; increasing; prominent; peak; declining)
Chapter 3 Copyright © 2008 McGraw-Hill Ryerson Ltd.13 Issues Management Process 1. Identification of issues 2. Analysis of issues 3. Ranking or prioritizing of issues 4. Formulating issue response 5. Implementing issue response 6. Monitoring and evaluating issue response Sources: Carroll, 1989; Bryson, 1988
Chapter 3 Copyright © 2008 McGraw-Hill Ryerson Ltd.14 Group Exercise In a group – identify one organisation you all know well (an organisation that you all belong to – like a university - or that you use – like a beer company, an airline) – discuss the stakeholders of the company. Questions:\ 1. How does the organisation manage its stakeholders? 2. How many stakeholders does it have? 3. What do you think would make the organisation better at managing its stakeholders? 4. Can you rank stakeholders by influence? 5. What are the opportunities or threats posed by the most influential stakeholders?