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Archie Carroll (1979) and Ed Freeman (1984) by taking the interests of all of
the firms stakeholders into account, the firm could do better (achieve
greater performance) than by simply focusing on shareholder interests
Carroll corporations have 4 major responsibilities: economic (generate
shareholder wealth), legal (obey laws and regulations), ethical (recognize firm
is part of a community, therefore has obligations and an impact on others),
discretionary (engage in philanthropy)
By creating value for its stakeholders, it will create value for its shareholders
in turn
Stewardship Theory: humans may put the interests of others, including the
organization, above their own self-interest. Positive approach to
organizational dynamics and corporate governance
Business Models
Value creation: customers want to buy products from you
Value capture: customers willingness to pay
Adjusted depending on the purpose, and types of goods/services
Create a balance between Creation and Capture
Keep innovating (new ideas and plans) in order to keep up with the market
Sustainable Business
The process of meeting present needs without compromising the ability of future
generations to meet their needs
Why sustainability is important today
- Climate change and potential effects on people, businesses, communities,
and countries
- Lapses of judgement and unethical business practices that have ruined
many peoples lives and the fall of formerly great companies
- Global economic crisis, partly because of changes in key financial policies
in certain parts of the world had grave effects on people, businesses and
communities far removed from the worlds share markets
Three Pillars of Sustainability
Environmental Sustainability
Preservation of environmental resources and biodiversity, creation of sustainable
access to safe drinking water, and enhancement of quality of life among the
most impoverished
There is belief that unless Environmental Sustainability is ensured, both social
and economic sustainability are impossible
Conservation Movement; Reducing Greenhouse Gas Emissions; Problems on
reliance on Fossil Fuels; Green Economy and Green Jobs; Pollution, Waste, Plants,
Animals, and Environmental Sustainability
Social Sustainability
Improvement of daily life for the greatest number of people through improving
fair income distribution; promoting gender equality; ensuring equal access to
land ownership, employment and education; investing in basic health and
education; and enlisting the participation of beneficiaries
It is the way in which natural resources, education, skills and social institutions
build human QoL. Recognition that the conditions of quality, equity, education,
opportunity and protection of all basic human rights are pivotal to the creation of
a truly sustainable global society
Child Labour; Slavery, Safety and Risk at Work
Economic Sustainability
An economys capacity to regularly produce outcomes consistent with long-term
economic development (sustainable development)
Corporate Social Responsibility (CSR)
A form of corporate self-regulation that builds sustainability and public interest
into business decision making and activities. The term used to describe how
businesses and institutions address environmental, social and economic
sustainability
CSR has its roots in corporate philanthropy giving money, time, services or
products in the service of supporting peoples wellbeing
Environmental: Cleaner environment, Environmental stewardship
Social: Contribute to a better society, Consider full scope of impact on
communities
Economic: Contribute to economic development, Preserving profitability while
also thinking about the future
Stakeholder: Many stakeholders to consider, How we interact with our
employees, suppliers, customers, and communities matters a lot
Voluntariness: Engage in CSR because it is the right thing to do, Acting on
values and ethics, beyond legal obligations
How Can Companies Approach CSR
Obstructionist Approach
A firm gives little or no attention to social responsibility. For managers in these
companies, CSR takes a distant backseat to profits and operations.
Obstructionists engage in unethical and sometimes illegal actions in order to
hide their socially irresponsible behaviour
Defensive Approach
Module 2
Impact of General and Market Environment (Week 4)
Things that happen outside the business, that is uncontrollable, but has an
impact positive or negative
PESTE Understanding Business Environment
Political, Economic, Social, Technological, Environmental
Porters Five Forces Analyses level of competition within an industry, and
competitive forces that shape an industry
Week 5
Buyer Decision Process
1) Need Recognition Internal Stimuli (hunger, thirst, ran out, etc.); External
Stimuli (advertisement, discussion, etc.)
2) Information Search Amount searched depends on drive for product.
Personal sources (family, friends, etc.); Commercial sources (advertising,
salespeople, etc.); Public sources (internet, mass media, etc.); Experiential
sources (handling, examining, using, etc.). Influence varies with product,
and buyer
3) Evaluation of Alt. Choosing other brands, depends on customer,
sometimes intuition, asking friends, no evaluation, online reviews, etc.
4) Purchase Most of the time, purchase top preferred brand. But 2 factors
can come between Purchase Intention Purchase Decision: attitude of
others, and unexpected situational factors (income, economy change,
competitor price drop, etc.)
5) P.P. Behaviour Satisfied? Dissatisfied? Answer lies between customers
expectations and products perceived performance.
Low Involvement (no excitement/interest in buying the product e.g. toothpaste)
Need Recognition Purchase Post Purchase Evaluation/Behaviour (not all the
time)