01c MGT 353 Chap 1

01c MGT 353 Chap 1

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: ial environment with which they constantly interact Business and society together form an interactive social system (shown graphically in the following slide) 1-6 Figure 1.1 Business and Society: An Interactive System 1-7 Two critical questions: What is the purpose of the modern corporation? To whom, or what, should the firm be responsible? 1-8 Two contrasting views: “Ownership Theory of the Firm” (also called property or finance theory) The firm is seen as the property of its owners (shareholders) Argues the owners’ interests are paramount and take precedence over the interests of others The purpose of the firm is to maximize its long-term market value, that is, to make the most money it can for shareholders 1-9 “Stakeholder Theory of the Firm” Argues the corporation serves a broader purpose, to create value for society Must make profit for owners to survive, however, creates other kinds of value too Corporations have multiple obligations, all “stakeholder” groups must be taken into account 1-10 Core Arguments for Stakeholder Theory of the Firm Descriptive More realistic description of how companies really work Instrumental More effective corporate strategy Normative Stakeholder management is the right thing to do 1-11 The Stakeholder Concept A stakeholder refers to persons or groups that affect, or are affected by, an organization’s decisions, policies, and operations A stake is an interest in–or claim on–a business enterprise Businesses are embedde...
View Full Document

This document was uploaded on 03/05/2014.

Ask a homework question - tutors are online