BUS 101 1st Edition Lecture 4 Outline of Previous Lecture - Section 3: Stakeholder/ Stockholder Theory Intro to Stakeholder/ Stockholder Theoryo Facts of Stake/ Stocko Stakeholder/ Stockholder considerationso Others affected by marketo Business to other stakeholders tend to be one-sided Government involvemento Mission statement of governmento Why middle aged, single men are not the only workers, if most productive? Why companies should adopt stakeholder theoryo Coping strategyo Self interesto Social contracto Fundamental fairnessCurrent Lecture- Section 4: Adopting Stakeholder Theory & Case 1 Rights in Americao What are happening to rights? o Greater individual libertieso Freedom to fail Stakeholder Theoryo Stakeholders don’t impose standards, they change themo Second reason to adopt stakeholder theory: self interesto Two most dominant reasons to adopt Stakeholdero Stakeholder theory: legal and moneyo Third reason to adopt stakeholder theory: Social Contracto Fourth reason to adopt stakeholder theory: Fundamental Fairness Case: Inland Banko Must close one of two branches of bank- Section 4: Four reasons to adopt stakeholder theoryThese notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute. Rights in Americao What are happening to rights?  Expanding – more access- Decriminalizing drugs, supporting gay marriage other minorities- Free speech – today we can say things we could have been arrested for in the past Greater individual liberties- Cleaner environment- Modern business decision-making projects into future; gets in front of and adopts change. Proactive, thinking outside of box- Create own regulation so government does not regulate themo IBM – hierarchy structure, wouldn’t adapt to computers and technologyo Japanese markets and American health care – flat structure, allows for innovation and open communication of ideas- Hierarchy – no new ideas, very little communication, too much structure and no freedomo Supervisor gets credit for idea v. team getting credit for ideas TED Talk – China unitary- Political pluralist society is a good system- Unitary system in China is just as good as a systemo To achieve political power, such as a president, must be trained, have expertise, and know the systemo Democracy within communist system: stable, efficient, productive system- Have very little innovation, take western products and adapt themo Hierarchy – does not like ideas that are different- If a business is doing well, may look at them to see that innovation is supportedo Freedom to fail Adaptation, look into future and lead the change- Keep government out of business- Expand everyone’s rights Expand investor rights- Transparency – holds business accountable; market corrects itself with transparencyo More transparent – less government involvemento Less transparent – more government involvement Stakeholder Theoryo Stakeholders don’t impose standards, but change them People have a natural resistance to change- Market change is accelerating, constantly changingo Technologyo Time is not instantaneouso Peoples rights are instantaneous- Motivation of market change are pressures from the outsideo Second reason to adopt stakeholder theory: self interest What businesses are looking for in stakeholders- Customers – loyalty- Supply chain – reliability- Employees – productivity: invested, satisfied, long-term- Investors – reinvestmento Loyalty is the bottom line of self interesto Sustainability with investmento Goal to rule – how to treat people: kindness with leadership Self interest – you stand by us, we’ll stand by you- Transparency – treat you how you treat them- Short term v long termo Most are focused on short term goals o Two most dominant reasons to adopt stakeholder Government staying out of market Business self interesto Stakeholder theory – legal and money Everyone is in competition- Investors, suppliers, employees- Get the most money, don’t care who they screw over- Liaise-faire competitive market Stakeholder theory- Illegal to utilize trusts- Gain more money if you collaborateo Investors and employees collaborate, productivity will increase o Third reason to adopt Stakeholder Theory: Social Contract What kind of society do we want to live in? Social concerns are a major issue- We are communities, fiercely individualistic with little credence to community, have unspoken rights, obligations and expectations to communityo Fourth reason to adopt stakeholder theory: Fundamental Fairness No bless oblige – obligation of the nobility - Protect the people that you rule over that do not have access to the same resources - If you have wealth, you are obligated to help others who are lacking Case: Inland Banko Amy Miller, manager of strategic planning. Must close one of two branches for bank.  Branch 1: Rockdale - Old and declining, $500,000 to improve the facility- Able to use bank in Culver Heights, 10 minute drive, bus route directly to the bank from Rockdale Branch 2: North Madison- Very poor, income $2,000 less than other towns in area. High welfare and public assistance usage- Considering replacing bank with an ATM and online banking- Take away 20 jobs, few would be able to find other work Other information- Picketers in Rockdale trying to stop loss of bank, feel as though company does not care about old people- Good relationship with federal and state agencies, must gain approval before closing bank. Instituted a reorganization plan where banks must disclose deposits and where they are invested to, ensuring money is fairly allocatedo Make banks pay attention to community needs Solution:- Close Rockdale:o Unsure of whether they will be able to make up for the investment to update facilities. o Have bus route going to new banko Population is older and may not be around much longer- Keep North Madison Open:o Population is already poor, closing would cause more disparityo Cannot replace with ATM or online banking, may not have skills and knowledge to use machines correctly, may not have computer for online bankingo Need additional assistance to take care of