2 Stakeholder Approach & Environment

2.Stake Holder & Environment-Senator Nur Bahagi@

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STAKEHOLDERand

BUSINESS ENVIRONMENT


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Schematic Presentation

• Business Firm View• Stakeholder Analysis• Business Interaction

• Business Environment


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Business Firm View

• Traditional View – Business as Economic Institution– Business as Sociopolitical Institution

• Systemic View– Business as Multipurpose Institution


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Traditional View

• Business as Economic InstitutionBusiness as economic entity that interact with

society only through transaction in the marketplace

• Business as Sociopolitical InstitutionBusiness as sociopolitical entity that interact with

society through complex interaction for increasing wealth and prosperity of society


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Business as an Economic Institution

Business Firm

Choice of Employees

Uses ofResources

Quantities ofOutput

Price & ProductQuality


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Business as Sociopolitical Institution

Business Firm

InternationalEnvironment

Changes inIdeologies &

Values

Increased Govt.Intervention:

•Statutory Law• Admnistrative Law

Upgrading of Ethical Standard

Increased Influenceof external or public

Interest Group

Changing Att.ofSociety toward

Business

Increased Importanceof Internal

Stakeholder Group

Improved Communication&

Increased Impt ofMedia


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System View of Business

Business as an living organism that interact with and affected by environment for economic and social motive ( multipurpose motive ) by using

the limited resources

Key To Survival is Capacity to adapt efficiently the changing

condition posed by the environment


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Business as Multipurpose Institution

Market:Competition

Stakeholder:Expectation

Business:•Economic•Social•Political

Government:•Political Action•Legislative Act•Judicial Action•Regulatory Act

Equity

Efficiency MarketProcess

Public PolicyProcess

Economic Response

Sociopolitical Response


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Stakeholder?

All the groups affected by a corporation’s decision and policies

Primary Secondary


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Primary Stakeholder

Business

Employees(union)

StockholderWholesalerRetailer

Competitor Creditor

SupplierCustomer

Skill

Material

Lend Money

Distribute

Compete

Money

Capital


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Nature of Interest and Power Interest PowerStockholder - Return/Dividend - Exercising Voting Right - Capital Gain - Exercising right to inspect book and recordEmployee - Stable employment - Strike - Fair pay - Union bargaining power - Safe and comfortable - PublicityCreditor - Repayment of loan - Calling in loan - Interest -Take over loan’s collateralSupplier - Regular order - Refusing to meet order - Paid promptly - Supplying to com[etitorDistributor - Good product quality - Buying from competitor - High reliable product - Boycotting companyCustomer - Fair exchange - Purchasing from competitor - Safe & reliable product - Boycotting companyCompetitor - Be profitable -Forcing to”keep up” - Gain a larger market - Charge lower price


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Secondary Stakeholder

Business

LocalCommunities

Central/Local Govt.

GeneralPublic

BusinessSupport

Foreign Govt.

Social ActivistMedia

Skill,Environment

Social Demand

FriendlyHostile

Opinion

Services

Image,Publicity

RegulationTax


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Nature of Interest and Power Interest PowerLocal Com. - Employ Local residents - Restricting operating licenses - Environment is protected - Lobbying government for - Local area is developed regulation of the companySocial - Ensure that company - Publicizing the negative issues Activist conform to legal and - Lobbying government for ethical standard regulation of the companyMedia - Keep the public informed - Publicizing the negative issues on all issues - Monitor the companyBusiness - Provide services and - Assist company in businessSupport information endeavor & dev. effortGovernment - Taxes - Regulation, licenses,& permit - Economic development - Boycotting companyForeign Gov. - Economic development - Permit to do business - Social improvement - Regulation General - Social value Protected - Support activist Public - Prosperity for society - Condemn or praise company - Risk minimized - Press government to act


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Business

Government Society

Interactive Model of Business-Government-Society


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Interactive Model of Business

Business Firm

Local Communities

Central/Local Govt.

Foreign Govt.

Social Activist

Media

General Public

Business Support

Stockholder

Employee

Creditor

Supplier

Distributor

Customer

Competitor

Market Non Market


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Business and ConsumerBusiness Consumer

Market• Monopoly• Oligopoly

• Free Market


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Free Market System

BusinessFirm Consumers

CompetitivePrice

VoluntaryExchange

Supply

Good & Services

Demand

Needs & Wants

Profit Satisfaction


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Consumer Bill of Right

• Right to safety• Right to be informed

• Right to choose• Right to be heard


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Protection to the Consumer• Legal Liability to Consumer

• Privity of contract• Warranties

• Tort Liability• Consumer Legislation

• Provide consumer with better information• Protect consumer against possible hazards

from product• Towards competitive pricing


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Business and Community

Request Made to Business– Assistance for less advantages people– Support for air and water pollution control– Support for cultural and artistic activist– Employment and advancement of minority and

women– Assistance in urban planning and development– Support of health care program– Donation


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Business and CommunityCommunity Services Desired by Business:

– Complete Public Services– Cooperative problem solving approach in working

with mutual benefit– Equitable taxes– Cultural and recreational environment that support

a balanced quality of life for employee– Adequate family recreational facilities– Etc


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Business and GovernmentAssure good and beneficial relations between business ant its stakeholder

Regulating Empowering Controlling


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Business Environment

Corporate Managers

Environmental Knowledge

Corporate StrategicPlanning

Copying WithPublic Policies

Linking BusinessAction to

Social Values

for

need


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Type of Business Environment

• External Environment– Societal ( Macro ), influence the entire

businesses in the same way and magnitude– Stakeholder, do not influence the business in

the same way and magnitude• Internal Environment


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Internal•Structure•Culture

•Resources

SocietalEnvironment

Primary Stakeholder

Secondary Stakeholder

StakeholderEnvironmentSociocultural

Forces

TechnologicalForcesPolitical-Legal

Forces

Economic Forces


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Internal EnvironmentIdentify strength and weaknesses for responding to the external environment

• Corporate Structure– The way of the corporation is organized in term of

authority, work and information flow, communication

• Corporate Culture– The collection of beliefs, expectation and value, shared

by its members– Produce norms that shape the behavior of employees

• Corporate Value– Explain the action taken with respect to an issue

• Corporate Resources


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External EnvironmentIdentify opportunities and threats for

survival and future success

BusinessFirm

Economic

Politic Social

Technology

•Interest rate•Unemployment•Inflation,GNP•Poverty Rate, etc

•Demographic•Life style•Population Growth•Age Distribution•Social Value, etc

•Political relationship, processes, changes

•Stability of Government •Regulation & Legal aspect

•Social Value, etc

•Product & Process•Innovation

•Scientific Discovery•Etc


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Basic Strategies of Environmental Changes

• Inactive Strategy– Do nothing

• Reactive Strategy– Environment changes first ant then organization

responds to it

• Proactive Strategy– Organization initiates changes and than

environment altered

• Interactive Strategy– Organization and environment are changing

simultaneously in the same direction


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Linking Environmental Analysis To Planning

Scanning

Action

Monitoring ForecastingScenarioBuilding

StrategyDevelopment

IssuesManagement

ContingencyPlanning

Analysis:Opportunity

Threats

2 Stakeholder Approach & Environment

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