Understanding Stakeholders in Organizations

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Questions and Answers

What is the primary concern of managers within a company?

  • Maximizing shareholder value
  • Minimizing employee workload
  • Influencing company ethics
  • Ensuring operational efficiency (correct)

Which of the following is NOT an interest of managers in a company?

  • Maximizing sales (correct)
  • Job security
  • Career advancement
  • Healthy work environment

What is a potential result if the interests of managers are not met?

  • Collective action such as strikes (correct)
  • Enhanced customer satisfaction
  • Improved company morale
  • Increased employee training

What motivates shareholders in a company?

<p>Maximizing the value of their investment (D)</p> Signup and view all the answers

Which of the following best describes the relationship between connected stakeholders and a company?

<p>They have a contractual relationship with the company. (D)</p> Signup and view all the answers

What perspective does Femi, the company director, primarily focus on?

<p>Long-term company expansion and objectives (A)</p> Signup and view all the answers

How do shareholders typically influence company management?

<p>By hiring managers aligned with their interests (B)</p> Signup and view all the answers

What is Nasir's main concern as a factory worker?

<p>Completing tasks effectively for job security (D)</p> Signup and view all the answers

What defines internal stakeholders within a company?

<p>People who work inside the company (D)</p> Signup and view all the answers

Which of the following best describes the role of managers within a company?

<p>To oversee daily operations and employee performance (C)</p> Signup and view all the answers

What is a primary interest of shareholders in a company?

<p>To maximize the company's profit and their returns (A)</p> Signup and view all the answers

How do stakeholder interests impact business operations?

<p>They can dictate internal policies and company direction. (A)</p> Signup and view all the answers

What defines an internal stakeholder?

<p>People employed by the company who perform most of the company’s activities. (C)</p> Signup and view all the answers

What is essential for governing the actions of internal stakeholders?

<p>Effective governance and oversight mechanisms (A)</p> Signup and view all the answers

What role do directors and senior managers play in relation to stakeholders?

<p>They may face challenges in balancing conflicting interests of different stakeholders. (C)</p> Signup and view all the answers

Which group is primarily responsible for the company's day-to-day operations?

<p>Employees and Managers (C)</p> Signup and view all the answers

Which of the following best describes shareholder interests in a company?

<p>Shareholders typically demand transparency and financial returns. (A)</p> Signup and view all the answers

Which of the following statements is true regarding the board of directors?

<p>They are agents of the shareholders with a fiduciary duty. (A)</p> Signup and view all the answers

How do differing stakeholder interests impact business operations?

<p>They may lead to conflicting demands requiring careful management. (B)</p> Signup and view all the answers

What is one of the concerns that external stakeholders, such as environmentalists, might have?

<p>The pollution produced by the manufacturing plant (B)</p> Signup and view all the answers

What is the effect of a stakeholder's power and interest on the management's focus?

<p>Management focuses more effort on stakeholders with higher power and interest. (C)</p> Signup and view all the answers

What is the primary responsibility of an agent in relation to a principal?

<p>To perform duties as specified and authorized by the principal. (B)</p> Signup and view all the answers

In Mendelow's matrix, what does it mean if a stakeholder is positioned in the 'Keep Satisfied' quadrant?

<p>They have high power but low interest. (B)</p> Signup and view all the answers

What factor primarily influences the governance of stakeholder actions?

<p>The stakeholder's level of power and interest. (C)</p> Signup and view all the answers

Flashcards

Stakeholder

An entity that can affect or be affected by an organization.

Principal

The person or entity who grants authority to an agent.

Agent

Someone given authority to act on behalf of a principal.

Internal Stakeholder

Employees or individuals performing company activities.

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Connected Stakeholder

Individuals or organizations with contractual relationships.

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Manager's Interests

Managers prioritize appropriate compensation, job security, career advancement, work-life balance, and a healthy workplace.

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Stakeholder Interest

Level of concern a stakeholder has for the company.

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Stakeholder Power

The ability to control another entity's actions.

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External Stakeholder

Individuals, groups, or organizations outside the company.

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Poor Manager Performance Outcomes

If manager interests aren't met, consequences can include poor work performance, resignation, or collective action (like strikes).

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Shareholder's Interest

Shareholders' main goal is increasing the value of their investment and also aim for sustained & ethical practices of the company.

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Manager's role

Managers organize the workforce to ensure company activities are conducted efficiently.

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Employee's primary concern

Employees prioritize job security and a reliable income.

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Director's Goal

Company directors focus on efficiency, profitability, achieving objectives, and providing returns to shareholders.

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Managers and Employees

Individuals who work for the company.

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Board of Directors

The primary decision-making body in a company, responsible to shareholders.

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Senior Management

The managerial team, who work to implement the board of directors' decisions.

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Shareholder Influence

Shareholders can influence the company by appointing managers and directors of their liking.

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Fiduciary Duty

The legal obligation of senior management to act in the best interest of the shareholders.

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Study Notes

  • Stakeholders are entities that can affect or be affected by an organisation.
  • Agents act on behalf of a principal, who empowers them.
  • Internal stakeholders work within a company and perform its operations.
  • Internal stakeholders include directors, managers, and employees.
  • Connected stakeholders have a contractual relationship with a company, potentially investing or directly dealing with it.
  • Connected stakeholders include shareholders, lenders, customers, and suppliers.
  • External stakeholders are not directly involved but may be interested in the company's activities.
  • External stakeholders include the government, local communities, environmental groups, and the general public.
  • A stakeholder's level of interest in a company depends on circumstances.
  • Power is the ability to control another entity's actions.
  • Influence is the ability to affect another entity's thinking, decisions, and actions.
  • The Mendelow Power-Interest Matrix classifies stakeholders into four quadrants based on their power and interest levels.
  • Key players have high power and interest.
  • Keep satisfied stakeholders have high power but low interest.
  • Keep informed stakeholders have low power but high interest.
  • Minimal effort stakeholders have low power and low interest.
  • Companies need to consider how stakeholder interests may conflict and respond to them.
  • Managing stakeholders requires understanding potential actions and their impact.
  • Managing stakeholder relationships is crucial for company success and sustainability.
  • Examples of stakeholder conflicts include: retaining profit vs. paying dividends, job security vs. job cuts, growing the business vs. protecting the environment.
  • Example stakeholder actions and responses in conflict situations are possible.

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