2. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 1-1 BA 385 - Business Environment Chapter 3 The Stakeholder Approach to Business, Society, and Ethics BA 385 - Business Environment Week 2 ~ Part 2 Fall 2003

3. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 1-2 BA 385 - Business Environment Chapter 3 The Stakeholder Approach to Business, Society, and Ethics Agenda Chapter 3 intro Current Events Presetations Other stakeholder issues Preview for next class

4. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 1-3 BA 385 - Business Environment Chapter 3 The Stakeholder Approach to Business, Society, and Ethics 1 The Stakeholder Approach to Business, Society and Ethics Search the Web Information on stakeholder theory can be found at the Clarkson Centre for Business Ethics at the University of Toronto: www.mgmt.utoronto.ca/~stake www.mgmt.utoronto.ca/~stake

5. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 1-4 BA 385 - Business Environment Chapter 3 The Stakeholder Approach to Business, Society, and Ethics What is a stake? An interest or a share in an undertaking and can be categorized as: InterestRightOwnership Legal Moral

6. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 1-5 BA 385 - Business Environment Chapter 3 The Stakeholder Approach to Business, Society, and Ethics Stakeholders Individuals and groups with a multitude of interests, expectations, and demands as to what business should provide to society

7. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 1-6 BA 385 - Business Environment Chapter 3 The Stakeholder Approach to Business, Society, and Ethics Who Are Business Stakeholders? GovernmentEmployees Business Community Consumers Owners

8. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 1-7 BA 385 - Business Environment Chapter 3 The Stakeholder Approach to Business, Society, and Ethics Production and Managerial Views

9. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 1-8 BA 385 - Business Environment Chapter 3 The Stakeholder Approach to Business, Society, and Ethics Who Are Business Stakeholders?

10. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 1-9 BA 385 - Business Environment Chapter 3 The Stakeholder Approach to Business, Society, and Ethics Primary and Secondary Stakeholders Primary stakeholders are those stakeholders that have a direct stake in the organization and its success Secondary stakeholders are those that have a public or special interest stake in the organization

11. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 1-10 BA 385 - Business Environment Chapter 3 The Stakeholder Approach to Business, Society, and Ethics Core, Strategic, and Environmental Stakeholders Core stakeholders are essential to the survival of the firm Strategic stakeholders are vital to the organization and the threats and opportunities the organization faces Environmental stakeholders are all others in the organization's environment

12. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 1-11 BA 385 - Business Environment Chapter 3 The Stakeholder Approach to Business, Society, and Ethics Legitimacy, Power, Urgency: A Typology of Stakeholder Attributes Legitimacy refers to the perceived validity of the stakeholder’s claim to a stake Power refers to the ability or capacity of a stakeholder to produce an effect Urgency refers to the degree to which the stakeholder’s claim demands immediate attention

13. Who Are Business Stakeholders? 3-14

14. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 1-13 BA 385 - Business Environment Chapter 3 The Stakeholder Approach to Business, Society, and Ethics Strategic, Multifiduciary, and Synthesis Views of Stakeholders Strategic approach considers stakeholders primarily as factors managers should manage in pursuit of shareholder profits Multifiduciary approach considers stakeholders as a group to which management has a fiduciary responsibility Synthesis approach considers stakeholders as a group to whom management owes an ethical, but not a fiduciary responsibility

15. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 1-14 BA 385 - Business Environment Chapter 3 The Stakeholder Approach to Business, Society, and Ethics Three Values of the Stakeholder Model Descriptive Instrumental Normative

16. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 1-15 BA 385 - Business Environment Chapter 3 The Stakeholder Approach to Business, Society, and Ethics Key Questions In Stakeholder Management 1.Who are our stakeholders? 2.What are our stakeholders’ stakes? 3.What opportunities and challenges do the stakes and stakeholders present? 4.What economic, legal, ethical, and philanthropic responsibilities does our firm have? 5.What strategies or actions should our firm take to best manage stakeholder challenges and opportunities?

17. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 1-16 BA 385 - Business Environment Chapter 3 The Stakeholder Approach to Business, Society, and Ethics Key Questions In Stakeholder Management Who are our stakeholders? Management must identify generic stakeholder groups and specific subgroups

18. Key Questions In Stakeholder Management 3-19

19. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 1-18 BA 385 - Business Environment Chapter 3 The Stakeholder Approach to Business, Society, and Ethics Key Questions In Stakeholder Management What are our stakeholders’ stakes? –Determine the nature/legitimacy of a group’s stakes –Determine the power of a group’s stakes –Determine specific groups within generic groups

20. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 1-19 BA 385 - Business Environment Chapter 3 The Stakeholder Approach to Business, Society, and Ethics Key Questions In Stakeholder Management What opportunities and challenges do stakeholders present? –Opportunities are to build good productive working relationships with the stakeholders –Challenges are representative of how the firm handles the stakeholders

21. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 1-20 BA 385 - Business Environment Chapter 3 The Stakeholder Approach to Business, Society, and Ethics Key Questions In Stakeholder Management What strategies or actions should our firm take to best manage stakeholder challenges and opportunities? –Should we deal directly or indirectly with stakeholders? –Should we take the offense or the defense in dealing with stakeholders? –Should we accommodate, negotiate, manipulate or resist stakeholder overtures? –Should we employ a combination of the above strategies or pursue a singular course of action?

22. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 1-21 BA 385 - Business Environment Chapter 3 The Stakeholder Approach to Business, Society, and Ethics Types of Stakeholders Stakeholder Type 4 Mixed Blessing Strategy: Collaborate Stakeholder Type 3 Nonsupportive Strategy: Defend Stakeholder Type 1 Supportive Strategy: Involve Stakeholder Type 2 Marginal Strategy: Monitor High Low Stakeholder’s Potential for Cooperation With Organization HighLow Stakeholder’s Potential for Threat to Organization ?

23. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 1-22 BA 385 - Business Environment Chapter 3 The Stakeholder Approach to Business, Society, and Ethics Careful assessment of the five core questions: Who are our stakeholders? What are our stakeholders’ stakes? What opportunities and challenges do stakeholders present? What economic, legal, ethical, and philanthropic responsibilities does our firm have? What strategies or actions should our firm take to best manage stakeholder challenges and opportunities?

24. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 1-23 BA 385 - Business Environment Chapter 3 The Stakeholder Approach to Business, Society, and Ethics Stakeholder Management Capability Rational level Process level Transaction level

25. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 1-24 BA 385 - Business Environment Chapter 3 The Stakeholder Approach to Business, Society, and Ethics Effective Stakeholder Management Stakeholder Corporation Stakeholder inclusiveness Stakeholder symbiosis

26. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 1-25 BA 385 - Business Environment Chapter 3 The Stakeholder Approach to Business, Society, and Ethics Stakeholder Power: Four Gates of Engagement Awareness Knowledge Admiration Action

27. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 1-26 BA 385 - Business Environment Chapter 3 The Stakeholder Approach to Business, Society, and Ethics Principles of Stakeholder Management Acknowledge Monitor Listen Communicate Adopt Recognize Work Avoid Acknowledge conflict

28. Principles of Stakeholder Management 3-32