Textbook- CH 3

• Stakeholders in business can influence and/or be influenced by the achievement of an organization's purpose
• Stakeholders may also be referred to as claimants, influencers, publics, or constituencies
• Managers must identify the complete array of stakeholders to obtain resources and maintain the legitimacy of business as an institution in society
• Freeman argues that the term "stakeholder" is important as it connotes legitimacy and implies that it is legitimate to spend time and resources on stakeholders, regardless of the appropriateness of their demand
• All stakeholders have expectations such as reasonably priced and good-quality products, adequate wage levels, good working conditions, and a clean, safe environment
• Corporations must understand how their activities influence stakeholders and how stakeholders can influence their activities
• Relationships between a corporation and its stakeholders are two-way, with both parties having responsibilities towards each other depending on the situation and issue
• The first step for a business is to identify the stakeholders that influence the corporation and/or that are influenced by the corporation
• A generic listing of a corporation's stakeholders includes owners (shareholders), directors, employees, customers, suppliers, and the community
• Owners of the corporation, usually referred to as shareholders, are those individuals or groups who have invested in the form of equity or shares
• Directors are elected by shareholders to represent their interests and determine the corporation's strategic direction, monitor and review performance, and hire and fire top executives
• Small, unincorporated business enterprises do not have directors; owners are also the operators and/or managers, and no board of directors exists
• Even small enterprises can be incorporated, with the owner/manager often being the principal shareholder and serving on the small board of directors, which operates informally
• Employees are categorized as managers, blue-collar workers (involved in manufacturing, production, or servicing tasks), and white-collar workers (office employees)
• A corporation employs professional groups like engineers, lawyers, and accountants; employees may be hired on a part-time or full-time basis, with part-time employment becoming more prevalent recently
• Labour unions often represent some employees, especially blue-collar workers; one issue is dealing with the corporate trend to seek wage and benefit concessions from employees during economic downturns
• Retired employees, either managers or workers, have a stake in the corporation where company pension plans exist
• More attention has been focused on the employment of disadvantaged groups, including women, minority ethnic groups, and persons with disabilities
• Customers of a corporation may be members of the public (consumers), other corporations (industrial customers), or governments/government agencies
• Customers are the source of revenue for the corporation and should be treated carefully; ethical consumer influences are becoming more prevalent
• Consumers are influencing corporations to offer goods and services considered "ethical" or "socially responsible"
• Examples of ethical consumer influences include natural and organic food supermarkets, fair trade products, Product Red brand, boycotts, and local sourcing
• Lenders and creditors include individuals or groups lending corporations money; mortgagees, lenders, and creditors have a prior claim on the assets of a corporation if it ceases operations or goes bankrupt
• Suppliers provide raw materials, component parts, or finished materials used in the manufacture or provision of the corporation’s goods and services
• Service professionals provide services on a fee-for-service basis and include lawyers, accountants, engineers, and management consultants
• Accountants play a key role in presenting financial and non-financial information according to certain standards for stakeholders to have confidence in the data
• Chartered Professional Accountants Canada represents accounting professionals and ensures the highest standards of accounting, ethics, and best business practices
• CPA Canada follows the Chartered Professional Accountants of British Columbia (CPABC) Code of Professional Conduct, based on five fundamental principles of ethics
• Dealers, distributors, and franchisees are stakeholders involved in distributing a firm’s product to customers along a distribution or supply chain
• Business organizations represent the interests of corporations, such as the Business Council of Canada, Chambers of Commerce, and trade associations
• Competitors are firms that sell the same products, including those producing substitute products; potential future competitors should also be identified and monitored
• Competitors should be viewed broadly, including corporations producing substitute products and potential future competitors
• Rapid technological advances lead to the constant research and development of new products and services
• Competitors should not only be from the domestic environment but also from foreign countries
• Joint-venture participants are partners cooperating in a particular enterprise or project, often outlined in written agreements
• Terms used to describe cooperation between corporations and partners include alliances, consortia, networks, and partnerships
• Non-Governmental Organizations (NGOs) are groups outside of the public and private sectors that hold shared values or attitudes about societal issues
• NGOs operate on a non-profit basis with volunteer members or networks, impacting corporations differently
• Society at Large represents the general public and their views, including Canada's Indigenous Peoples
• Educational Institutions like schools, colleges, and universities educate employees and the public about economic systems and the role of business in society