STAKEHOLDERS,

CHAPTER
THE MISSION, AND 2
BUSINESS
ETHICS
Stakeholders
individuals or groups with an interest, claim, or stake in the company,
in what it does, and in how well it performs.

Divided into two:

Internal stakeholders
are stockholders and employees, including executive officers, other
managers, and board members.

External stakeholders
are all other individuals and groups that have
some claim on the company.
Examples: customers, suppliers, creditors
(including banks and bondholders) governments,
unions, local communities, and the general public.
All stakeholders are in an exchange relationship with the company
Each stakeholder group supplies the organization with important
resources (or contributions),and in exchange each expects its interest
• Stock holders provide the enterprise with risk capital and in
exchange expect management to try to maximize the return on their
investment.
• Creditors such as bondholders provide
the company with capital in the form of debt,
and they expect to be repaid on time with
interest.
• Employees provide labor and skills and in
exchange expect commensurate income
job satisfaction, job security and good
working conditions.
• Customers provide a company with its revenue and in exchange want
high-quality reliable products that represent value for money.

• Suppliers provide a company with inputs and in exchange seek

revenues and dependable buyers.

• Governments provide a company with rules and regulations that

govern business practices and maintain fair competition. In
exchanged they want companies that adhere to these rules and pay
their taxes.

• Local communities provide companies with

local infrastructure and in exchange want
companies that are responsible citizens.
The general public provides companies with
national infrastructure and in exchange seeks
some assurance that, the quality of life will be
improved as a result of the company's existence
 THE MISSION STATEMENT

A company's mission statement is a key indicator of how an

organization views the claims of its stakeholders. The mission
statement represents the starting point of the strategic planning
process. Although corporate mission statements vary, the most
comprehensive include four main elements: the mission, vision,
values, and major goals of a corporation. The mission describes
what it is that the company does.
Example: The mission of Kodak is to provide
customers with the solutions they need to capture, store, process
output and communicate images anywhere, anytime.“
Kodak is a company that exists to provide imaging
solutions to consumers. This mission focuses
on the customer need that the company is
trying to satisfy, the need for imaging. This is
customer-oriented rather than product-oriented
mission.
An important first step in the
process of formulating a
mission is to come up with a
definition of the organization's
business.
To answer the question, what is our
business a company should define
its business in terms of three
dimensions
• Who is being satisfied
• what is being satisfied
• how customer needs are being satisfied
(by what skills, knowledge, or competences)
This approach stresses the need for a
customer-oriented rather than a
product-oriented business
definition.
A product-oriented business definition focuses on the characteristics of
the products sold and markets served, not on which kinds of
customers needs the products are satisfying.
Such an approach obscures the company's true
mission because a product is only the physical
manifestation or applying a particular skill to satisfy
a particular need for a particular customer group.
In practice, that need may be served in many
different ways, and a broad customer-oriented
business definition that identifies these ways can
safeguard companies from being caught unaware
by major shifts in demand.
By helping anticipate demand shifts, a customer-oriented mission
statement can by helping anticipate demand shifts, a customer-
oriented mission statement can also assist companies in capitalizing on
changes in their environment.
It can help answer the question "What will our business be?"

Example: Recall that Kodak's mission emphasizes the company's

desire to provide customers with the solutions they need to capture,
store, process, output, and communicate images. This is a customer-
oriented mission statement that focuses on customer
needs, as opposed to a particular product
for satisfying those needs such as
chemical film processing. This customer-oriented
business definition is helping to drive Kodak's
current investment in digital-imaging Technologies,
which are starting to replace its traditional
business based on chemical film processing.
 VISION
The vision of a company lays out some desired future state: it
articulates, often in bold terms, what the company would like to
achieve.
Example:
The vision of RS Information
Systems, a company specializing in
information systems integration for
federal and state government agencies,
is to "become the leading African
-American owned information technology
(IT), scientific support, engineering
services, and management consultancy
provider in the United States.
VALUES
The values of a company state how manager
and employees should conduct themselves, how
they should do business, and what kind of
organization they should
build to help the company
achieve its mission.
Organizational Culture
the set of values, norms, and standards
that control how employees work to achieve an
organization's mission and goals.
GOAL
A precise and measurable desired future state that a company
attempts to realize
Well constructed goals have four Main Characteristics

1. They are precise and measurable. Measurable goals give

managers a yardstick or standard against which they can judge
their performance.

2. They address crucial issues To

maintain focus, managers should
select a limited number of major
goals to assess the performance
of the company.
3. They are challenging but realistic. If a goal is unrealistic in the
challenges it poses employees, employees may give up:, a
goal that is too easy may fail to motivate managers and other
employees.
4. When it is appropriate, they specify a time period in which they
should be achieved. Time constraints tell employees that
success requires a goal to be attained
by a given date, not after that date.
Deadlines can inject a sense of
urgency into goal attainment
and act as a motivator. However
not all goals require time constraints
THE ROOTS OF UNETHICAL BEHAVIOR
• first it is important recognize that business Ethics are not divorced
from personal ethics which are the generally accepted principle of
right and wrong to conduct individuals.
• second many studies of unethical behavioral in a business setting
have come to the conclusion that business people sometimes do
not realize they are behaving unethically, primarily because they
simply fail to ask the relevant question.
• Unfortunately, the climate in some businesses does not encourage
people to think through the ethical consequences of business
decisions. This is the third business
ethics, reducing all decisions to the
purely economic.
• A fourth cause of unethical behavior
that is related to this may be pressure
from top management to meet
performance goals that are unrealistic
and can be attained only by cutting
corners or acting in an unethical manner
BEHAVING ETHICALLY
• Hiring and Promotion It seems obvious that businesses should
strive to hire people who have a strong sense of personal ethics and
would not engage on illegal behavior. Similarly, you would rightly
expect a business not to promote people whose behavior does not
reflect generally accepted ethical standards.
• Organizational Culture and leadership
To foster ethical behavior, businesses need to build an organizational

culture that places a high value on ethical behavior .

Three things are particularly important in building an
organizational culture that emphasizes ethical behavior
• the business must explicitly articulate values that place a
strong emphasis on ethical behavior
• having articulated values in a code of ethics or some other
document, it is important that leaders in the business give life
and meaning to those words by repeatedly emphasizing their
importance, and then acting on them..
• finally, building on Organizational culture
that places a high value on ethical
Behavior requires Incentive and promotions
system that reward people who engage in
Ethical behavior.
Decision making processes
- In addition to establishing Culture in an organization, business
people must be able to think through the ethical implication of
decisions in a systematic way

1. Does my decision fall within the accepted values or standards

that typically apply in the organizational environment?

2. Am I willing to see decision communicated to all stakeholders

affected by it for example, by
having it reported in newspaper or on
television?

3. would the people with whom I have a

significant personal relationship, such
as a family members, friends or even
managers in other businesses, approve
of the decision.
Ethics officers
These are individuals who are responsible for making sure that all
employees are trained to be ethically aware , that ethical
considerations
enter the business decision making process, and that the company's
code of ethics is adhered to the
ethics officer acts as an internal ombudsperson
with responsibility for handling confidential
inquiries from employees, investigating
complaints from employees or others,
reporting, findings, and making
recommendations for change
Strong corporate Governance
- Procedure is needed to make sure that managers adhere to
ethical norms and, in particular to make sure that senior
managers do not engage in self-dealing or information
manipulation. The key for a strong corporate governance
procedure
is an independent board of
directors that are willing to take
top manager to task for
self-dealing and is able to
question the information
provided to them by managers.
Moral Courage
-
It is important to recognize that on occasion, manager need
significant moral courage that enables managers to walk away from
a decision that is profitable but unethical. It is moral courage that
gives the employees the strength to say no to a superior who
instructs her to pursue actions that are unethical and gives the
employees that integrity to go to the media and
reveal persistent unethical behavior in
a company. Companies can strengthen
the moral courage of employees by
committing themselves to not take
retribution on employees who exercise
moral courage.