What is the Stakeholder Theory - 1083 Words

Stakeholder can be defined as â€Å"any group or individual who can affect or is affected by the achievement of the organization’s objectives†. This theory focuses on wider aspect rather than only focusing on just the shareholder. Stakeholder theory is a fundamental theory about how business works at its best and how it could work. It is concerning on the value creation and trade on how to manage a business effectively. A consequences of focusing on organization or company’s stakeholder is that the shareholder value itself can be enhanced and improved when a wider stakeholder group-such as employees, provider or credit, customers, suppliers government and the local community is taken into account (Mallin, 2011). This theory also related to†¦show more content†¦Simply moving operations from one part of the globe to another in the interest of shareholder value will not eventually solve the problems of increasing global-stakeholders problems. A board that pays less attention to the interests of its stakeholders cannot maximize its shareholder value. However in relation to company performance, this theory has made a number of key contributions. For example, by emphasizing on maintaining goodwill with stakeholders, the organization will have a much better business ethics. Stakeholder ideas will develop the corporate value statements as well as the boards role in creating corporate ethics codes, social and environmental reporting which reflect an acknowledgement of a wider set of corporate obligations beyond only on shareholder value. Another contribution related to the company performance can be found in Kaplan and Nortons (1992) ideas about the Balanced Scorecard and the revolution in performance measurement. This Balance Scorecard embodies key stakeholder interests in a firm specific set of measures which link important operational drivers to financial performance. It therefore provides managers with a way to explore the organization’s inter-dependencies between customers needs, and what the company must do in order to meet these needs and sustain competitive success. It has both an immediate performance focus as well as pointing to key areas for continuous improvement and innovation. From thisShow MoreRelatedStakeholder Theory Vs. Stakeholder Thinking1160 Words   |  5 PagesStakeholder theory and definition Stakeholder is defined as â€Å"any group or individual who can affect or is affected by the achievement of the organization’s objectives† (Freeman 1984). Stakeholder theory, when introduced in the 1980s, signify a major change in how relationships within a business might coexist and benefit one another. The concept of â€Å"Stakeholder theory† or â€Å"stakeholder thinking† is about identifying groups who are stakeholder in a corporation and manage them. It states that organizationsRead MoreCorporate Management Theories1721 Words   |  7 PagesGroup 1 Corporate Governance Theories of corporate management and Process Definition:- According to the business directory, management theory is a collection of ideas which set forth general rules on how to manage a business or organization. Management theory addresses how managers and supervisors relate to their organizations in the knowledge of its goals, the implementation of effective means to get the goals accomplished and how to motivate employees to perform to the highest standardRead MoreCorporate Social Responsibility : Csr979 Words   |  4 PagesThe notion of Corporate Social Responsibility is a phenomenon globally known for many years. In spite of the fact that CSR has been neglected for quite a long time, nowadays several authors deal with this issue, as revealed by the development of theories in recent years concerning the topic. In spite of the fact that there has been a huge growth of literature it is still impossible to simply define CSR. Many definitions trying to capture the concept of CSR exist, but their content varies (MattenRead MoreKey Tips For A Generous Financial Donations1495 Words   |  6 PagesTIPS (1)Community Stakeholders a. Generous financial donations b. Innovative giving c. Support for education and job training programmes d. Direct involvement in community projects and affairs e. Community volunteer programmes f. Support for the local community g. Campaigning for environmental and social change h. An employee-led approach to philanthropy i. Efficient and effective community activity j. Disclosure of environmental and social performance (2)Environment Stakeholders a. EnvironmentalRead MoreShareholder Theory Vs. The Competing Ideas Of Stakeholders Theories946 Words   |  4 Pagesrelevance to shareholder theories versus the competing ideas of stakeholders theories. I will not only develop a basis of each, I will take a deeper look into what the sole responsibility and how these action may affect business as a whole. Finally I will take time to examine each and conclude with a personal justification to each. To make a profit, that s what most would say is the end goal in every business for the most part. Shareholder theory also related with stockholder theory providing a main emphasisRead MoreStakeholder Theory Of The Firm1423 Words   |  6 PagesEven though the stakeholder theory of the firm served as a comprehensive fundamentally solid concept for corporate social responsibility to branch out of; without the stakeholder theory of the firm there is no corporate social responsibility and vice versa, because business cannot exist without society and society is not sustainable without business, due to advancements in the modern world, business and society have evolved, and traditional business theories have a narrow business scope, while contemporaryRead MoreEssay on Friedman vs Freeman827 Words   |  4 PagesWhat is ethically responsible management? How can a corporation, given its economic mission, be managed with appropriate attention to ethical concerns? These are central questions in the field of business ethics. There are two approaches to answering such questions. The first one is Milton Friedman’s shareholder theory of management and the second one is Edwards Freeman’s â€Å"Stakeholder† theory of management, two different views about the purpose and aims of a business. Milton Friedman’s shareholderRead MoreCorporate Ethics Theory And Stakeholder Theory1309 Words   |  6 Pagesact let know that directors must act in good faith and in what the director believes is the best interest of the company. Traditionally, the word company foretold under this section have been regarded to devote solely to the company’s shareholders. However, this notion is seen as immoral. This is because according to the notion of corporate social responsibility, business must behave ethically, represents a broader recognition of stakeholders and must take into account economic, social and environmentalRead MoreTransparency Is Key Aspect of Corporate Governance1331 Words   |  6 PagesThe boards of directors are responsible for the governance of their companies so there has to be transparency in company reporting. Transparency is key aspect of corporate governance because of implementing corporate governance this will allow stakeholders and shareholders to r eview and evaluate performance of management and the company this ensures that the board of directors and the executive directors of corporations act in the best interest of shareholders and the corporations. It is implementedRead MorePublic Relations Institute Of New Zealand Essay1495 Words   |  6 Pagesterms of Systems Theory (Bertalanffy, 1968). This idea works around describing PR organisations as â€Å"open† or â€Å"closed† systems. These systems are theoretically made up of many smaller sections that work together simultaneously. The first model that fits into Systems Theory is â€Å"Public Information† (Grunig Hunt, 1984). This model aims to inform its publics with truthful information that satisfies the masses. If the organisation keeps its publics informed they will believe what the organisation tells