A stakeholder is defined as "any individual or group who can affect or is affected by the actions, decisions, policies, practices, or goals of the organization" The primary stakeholders include owners, customers, employees, suppliers, and others crucial to the organization's survival. Secondary stakeholders are "all other interested groups, such as the media, consumers, lobbyists, courts, governments, competitors, the public, and society". The stakeholder concept was developed and championed by R. Edward Freeman in the 1980s. The very purpose of a company, according to this view, is to serve and coordinate the interests of its various stakeholders. It is the moral obligation of the firm's managers to strike an appropriate balance among the big five interests in directing the activities of the firm.
Identify the stakeholders in each of the six situations below, and analyze what is at stake. If you use a utilitarian analysis, which stakeholders benefit and which ones are harmed? Which decision will produce the greatest good to the greatest number of stakeholders? Type your answers in a paper, single-spaced, 11 pt. type, standard margins.
Example:
An employee of a car dealership tries to sell a car at the sticker price to any customers who are not aware that the usual negotiated selling price is at least $2,000 less than the sticker price. The employee is paid on commission.
Answer:
1. The employee. He will get a higher commission in the short-run, but he may lose repeat customers in the long-run.
2. The dealership owners. They will make more profit in the short-run, but may lose profits in the long run if the dealership is perceived as high-price and not willing to "deal."
3. The customer paid more money than he needed to, but if that was important, wouldn't he have done research on prices beforehand and prepared himself?
4. The community-at-large. The customer won't be spending that $2,000 at other businesses in the community.
The question is whether you think the customer or the company is responsible for ensuring that the customer gets the best deal. Should the company be more concerned about the customer's well being than the customer himself?
1. A beer company engages in advertising that is targeted to undergraduate college students, many of whom are under the legal drinking age.
2. A rental car company strongly advises customers to purchase insurance when renting a car. Although most personal collision insurance covers the insured motorist when driving a rental car, most rental car customers are unaware of this.
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3. Consumer Reports publishes the results of a study on shampoos that provides strong evidence that all shampoos are basically the same. In fact, the results suggest that a mild dish-washing liquid will do the same job for a lot less money. A popular shampoo uses a famous actress in its advertising purring "I love my shiny and healthy-looking hair!" The shampoo costs three times as much as its competitors.
4. A bribe is paid to a government official in the island country of Kocomo to facilitate the movement of a product in that country. Bribes are a normal and expected practice in Kocomo.
5. The president of a firm uses most of this year's earnings to purchase a private jet for the company. The jet is used for business purposes, but also to fly the company officers and important politicians to the best golf courses around the world. Consequently, smaller dividends were paid out this year.
6. Your biggest client is a company in Saudi Arabia that asks you to respect its Arab culture and Muslim religion by not having any women, Jews or gays work on its projects. The team currently assigned to the project includes women, Jews and gays