1. Copyright © 2008 McGraw-Hill Ryerson Ltd. 1 Chapter Three Identifying Stakeholders and Issues Canadian Business and Society: Ethics & Responsibilities

2. Chapter 3 Copyright © 2008 McGraw-Hill Ryerson Ltd. 2 Chapter Outline Stakeholder: Definition Identifying Stakeholders Managers’ Responsibilities Opposition to Stakeholder Concept Argument for Stakeholder Concept Issues Management Issues Management Process Go over the exam Handout the exam

3. Chapter 3 Copyright © 2008 McGraw-Hill Ryerson Ltd. 3 Stakeholder: Definition An individual, or group, who can influence and/or is influenced by the achievement of an organization’s purpose. Source: Freeman, 1984

4. Chapter 3 Copyright © 2008 McGraw-Hill Ryerson Ltd. 4 Discussion Questions Why are stakeholders important to a firm? What can happen to the firm if managers do not properly identify and satisfy the interests of their firm’s stakeholders? Do stakeholders have differing goals and power/influence over time?

5. Chapter 3 Copyright © 2008 McGraw-Hill Ryerson Ltd. 5 Identifying Stakeholders Owners Directors Employees Customers or consumers Lenders and creditors Suppliers

6. Chapter 3 Copyright © 2008 McGraw-Hill Ryerson Ltd. 6 Identifying Stakeholders Service professionals Dealers, distributors, and franchisees Business organizations Competitors Joint-venture participants Non-governmental organizations Society at large

7. Chapter 3 Copyright © 2008 McGraw-Hill Ryerson Ltd. 7 Identifying Stakeholders Educational institutions Religious groups Charities Service, fraternal, cultural, and ethnic associations The media Government

8. Chapter 3 Copyright © 2008 McGraw-Hill Ryerson Ltd. 8 Managers’ Responsibilities Identify stakeholders Understand how corporation currently views stakeholders Examine how each stakeholder will or might influence firm Assess opportunities and threats Rank stakeholders by influence Prepare programs or policies detailing how to cope with stakeholders

9. Chapter 3 Copyright © 2008 McGraw-Hill Ryerson Ltd. 9 Opposition to Stakeholder Concept Problems of categorization (e.g., how to identify and prioritize stakeholders) Challenges in meeting expectations (e.g., tradeoffs among the stakeholders) Dilution of top management focus (e.g., away from financial performance) Impracticality of shared governance (e.g., focus still on shareholders)

10. Chapter 3 Copyright © 2008 McGraw-Hill Ryerson Ltd. 10 Argument for Stakeholder Concept Simply good business Ignoring stakeholder interests can have substantial economic consequences (e.g., employees, customers, lenders, etc.) Provides more systematic approach to recognizing stakeholder expectations and deciding how to respond

11. Chapter 3 Copyright © 2008 McGraw-Hill Ryerson Ltd. 11 Issues Management: Definition A systemic process by which the corporation can identify, evaluate, and respond to those economic, social, and environmental issues that may impact significantly upon it.

12. Chapter 3 Copyright © 2008 McGraw-Hill12

13. Advantages to issue management Maintain a competitive advantage Actions are more likely to be consistent with social expectations Less likely to make social/ethical mistakes When response is quicker, vulnerability is reduced and credibility is enhanced. Chapter 3 Copyright © 2008 McGraw-Hill Ryerson Ltd. 13

14. Chapter 3 Copyright © 2008 McGraw-Hill Ryerson Ltd. 14 Issues Management Issues Life Cycle Stages: –Degree of awareness of issue over time (none or little; increasing; prominent; peak; declining)

15. Issue Life Cycle Chapter 3 Copyright © 2008 McGraw-Hill Ryerson Ltd. 15

16. Six Characteristics in T1 1. The terms of the debate cannot yet be clearly defined. 2. One of the actors will define the emerging issue and make it a current issue. 3. It deals with matters of conflicting values and interests. 4. It is not a problem that expert knowledge will automatically be able to resolve. 5. It is stated in value-laden terms. 6. Trade-offs are possible. Chapter 3 Copyright © 2008 McGraw-Hill Ryerson Ltd. 16

17. Chapter 3 Copyright © 2008 McGraw-Hill Ryerson Ltd. 17 Issues Management Process 1. Identification of issues 2. Analysis of issues 3. Ranking or prioritizing of issues 4. Formulating issue response 5. Implementing issue response 6. Monitoring and evaluating issue response Sources: Carroll, 1989; Bryson, 1988