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Stakeholder/Shareholder (Shareholder theory (Grant (In an increasingly…
Stakeholder/Shareholder
Stakeholder analysis
needs to invest time in identifying and seeking to understand what significant stakeholders want or expect
Freeman’s formal definition of a stakeholder is very broad: ‘any group or individual who can affect or is affected by the achievement of the firm’s objectives
businesses fail to take account of the interests of a sufficiently wide range of groups with whom they interact
Shareholder theory
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traditional view of the purpose of the firm is that it should act to achieve the interests of its principal stakeholders
firms ‘accidentally’, but inevitably, create value for a wide range of parties by focusing specifically upon maximising value for their owners
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positive externalities
dependable incomes, timely repayment of debts,
good-quality goods or services, fair competition, and business taxes
Grant
In an increasingly competitive world, any organisation not seeking profit maximisation will lose its existence
If managers do not single-mindedly pursue profits, the owners of the organisation will replace them with managers who will
The interests of a wider community of stakeholders will inevitably be better served by an emphasis upon profit maximisation
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