Wk03_1301 Stakeholders (Ch.3,4)

Wk03_1301 - ADM1301 Week3 TextReference:Chapters3,4 Abusinessexiststo MAKEMONEY 2 ShareholderView(thetraditionalview maximizethewealth

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ADM 1301 Week 3 Text Reference: Chapters 3,4
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2 One view of business’s relationship with  stakeholders – the “shareholder view” A business exists to  MAKE MONEY
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3 One view of business’s relationship with  stakeholders – “the shareholder view” Shareholder  View (the traditional view) maximize the wealth of shareholders straight-forward: efficiency must be maximized to earn a maximum  return; if not, shareholders will pull their investment and the  company eventually disappears clear accountability: management to owners (the shareholders) as long as shareholder wealth is maximized, governance would be  considered adequate “If businesses use their resources to solve “social” problems  instead of economic problems, they may become less efficient  and less competitive” “Property Rights Theory”  – the corporation is the private  property of its shareholders
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4 Arguments for the “shareholder view” Business is  most socially responsive  when it focuses strictly on  its economic interests The pursuit of social goals  dilutes  the business’s primary  purpose Many socially responsible costs do not pay their own way and  someone has to pay.  If business pays, the  costs will be passed  on to consumers Businesses assuming social responsibility would ultimately have  too much power Most business leaders pursue economic goals in the areas of  their specialty and are  not qualified  to cope with social issues There are no direct lines of  social accountability  for business to  the public
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5 Another view of business’s relationship with  stakeholders – the “stakeholder” view A business has a  responsibility to do  MUCH MORE  THAN make money
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6 Another view of business’s relationship with  stakeholders – the “stakeholder” view Stakeholder  View the responsibilities of business go beyond the shareholders to  include the full set of stakeholders touched by a company --  employees; the community; suppliers; etc. Represents a very complex set of multiple accountabilities Question of WHO are the stakeholders and WHAT LEVEL of social  responsibility exists for the business enterprise is unique for each  organization… “The public expects businesses to get involved -- businesses  exist primarily to satisfy social needs” Social Institution Theory”  – the firm is considered a public  institution sanctioned by the state for some social good
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7 Arguments for the “stakeholder view” Public expectations that  business has a social role  to play long-run  profits are more secure  in socially responsible 
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This note was uploaded on 12/09/2010 for the course TELFER ADM 1301 taught by Professor Timragan during the Fall '10 term at University of Ottawa.

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Wk03_1301 - ADM1301 Week3 TextReference:Chapters3,4 Abusinessexiststo MAKEMONEY 2 ShareholderView(thetraditionalview maximizethewealth

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