CHAPTER_2 - CHAPTER 2 Strategic Management of Stakeholder...

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CHAPTER 2 Strategic Management of Stakeholder Relationships 0PURPOSE AND PERSPECTIVE The purpose of this chapter is to fully examine the concept of stakeholders and explore why these groups are important for today’s businesses. First, we define stakeholders, examine primary and secondary stakeholders, and discuss the characteristics of stakeholders. In the stakeholder interaction model, there are two-way relationships between the firm and a host of stakeholders. Next, we consider the impact of corporate reputation and crisis situations on stakeholder relationships, including the importance of understanding ethical misconduct disasters. Finally, we examine the development of stakeholder relationships and the link between stakeholder relationships and social responsibility. 0LECTURE OUTLINE I0. Stakeholders Defined0 A0. Stakeholders are those people and groups to whom an organization is responsible.0 10. The historical view of business defined a relatively small group of stakeholders known as market constituencies.0 a0. Stockholders and other investors provide the financial foundation for business and expect something in return; therefore, managers and executives strive to maintain positive relationships with them. b0. Customers, who provide a revenue stream, are also viewed as primary constituents by all types of organizations. c0. Employees are fundamental to the operations of any firm. d0. Suppliers and other business partners have a clear role in any business enterprise because they provide goods and services that are necessary for an organization to function effectively and efficiently. 20. In the latter half of the twentieth century, perceptions of business accountability evolved toward an expanded model of the role and responsibilities of business in society, resulting in a more broadly defined group of stakeholders that includes nonmarket constituencies.0 a0. When a business also cares about the well-being of nonmarket groups, it earns trust and cooperation that ultimately reduce costs and increase productivity. b0. Nonmarket groups include the general community, the media, government, special-interest groups, and others that are not always directly tied to issues of profitability and performance. II0. Stakeholder Issues and Interaction0 A0. Identifying Stakeholders0 10. Without primary stakeholder groups, a company would not be able to continue its fundamental operations.0 a0. Groups that are primary stakeholders include shareholders and investors, employees, customers, and suppliers, as well as public stakeholders, such as government and the community. b0. There is a high degree of interdependence among these groups, so serious dissatisfaction, withdrawal from the relationship, or other disruption may threaten the existence of the firm.
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20. Secondary stakeholders , while they influence and/or are affected by the company, are neither engaged in economic exchanges with the firm nor
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This note was uploaded on 04/17/2008 for the course BUS 260 taught by Professor Schultz during the Spring '08 term at Carroll WI.

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CHAPTER_2 - CHAPTER 2 Strategic Management of Stakeholder...

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