Summary Week 2 Lecture Videos BSS MCM

A snapshot of the summary - Week 2 Lecture Videos BSS MCM

• 1 Introduction

• Peter Ducker says the following: "Profit for a company is like oxygen for a person. If you don't have enough of it, you're out of the game. But if you think your life is about breathing you're really missing something."  What does he consider as the purpose of business? Note that this is very different to the view of Friedman.

  Essentially he states that the purpose of business is to create and keep a customer.
• Jack Welsh states: "On the face of it, shareholder value is the dumbest idea in the world. Shareholder value is a result, not a strategy. ..." What does he argue with regards to the purpose of business?

  Your main constituents are your employees, your customers and your products.

• 1.1 Stakeholders

• There are two views that can be distinguished when defining a stakeholder, which two views are these?

  1. Narrow view.
     
  2. Broader view.
• Who is seen as the founder of Stakeholder Theory?

  Freeman.
• What does stakeholder theory aim to explain?

  The nature of relationships between organisations and those persons with a 'stake' in the operations and outcomes of business activity.

• 1.1.1 Narrow View

• What is an example of a narrow view for defining stakeholders? Given by Clarkson, 1995

  Those who have place something at risk in relationship with the firm
• Why is the definition of Clarkson considered to be a Narrow definition?

  By using the words 'place something at risk' you: 
  

  1.  Imply that the stakeholder has made a decision to be a stakeholder of the company.
     
  2. Imply someone has something to loose.
• In what sense can you have placed something at risk as a stakeholder and have something to loose, what could you have to loose?

  1. Financial or 
     
  2. Human capital.
• What do, according to the Mitchell, Agle & Wood article, narrow views of stakeholders attempt to define?

  Relevant groups in terms of their direct relevance to the firm's core economic interests.
• Those who favour a narrow definition of stakeholders search for a "normative core" of legitimacy, what does this mean for managers?

  That managers can be advised to focus on the claims of a few legitimate stakeholders.