Identify a firmâ€s stakeholders and explain why such identification is critical to effective strategy formulation and implementation.
Stakeholders are individuals or groups who have an interest in an organizationâ€s ability to deliver intended results and maintain the viability of its products and services (Carpenter & Sanders, 2008). Selecting the right stakeholders is critical for the following reasons:
1.Its influence as either originator or steward of the organizationâ€s vision and mission
2.It responsibility for formulating a strategy that realizes the vision and mission
3.Its ultimate role in strategy implementation
Managers perform stakeholder analysis in order to gain a better understanding of the range and variety of groups and individuals who not only have a vested interest in the formulation and implementation of a firmâ€s strategy but who also have some influence on firm performance (Carpenter & Sanders, 2008). Stakeholder analysis enables organizations to better formulate, implement, and monitor their strategies, and this is why stakeholder analysis is a critical factor in the ultimate implementation of a strategy.
Take a look at some of the models that are used to identify stakeholder power and interest in this regard. How does this play out in your own organizations?
For the company that I work for the stakeholders are:
1.Employees- This stakeholder group aims for job security, career development and fair employment practices.
2.Customers- The interests of this stakeholder group are high quality automobiles and service, along with reasonable pricing.
3.Investors- These stakeholders are interested in business profitability.
4.Environment- The main interests regarding the environment as a stakeholder include business sustainability and environmental conservation.
5.Communities- Corporate social responsibility strategies address this stakeholder group through various community development and support programs.
How Ethics and Biases may affect decision making
History has shown that corporate scandals have occurred because of biases in decision making. People will try to justify such scandals by saying it was done to accomplish corporate goals. Due to high stakes and pressure managers face to accomplish goals, often they will resort to unethical practices. However, no matter how high the stakes are managers must make every effort to maintain the companyâ€s integrity. Managers should weigh two additional factors before committing themselves to a major strategic endeavor: (1) weather the decision is ethical and (2) whether any potential biases have clouded your strategic decision-making process (Carpenter & Sanders, 2008).
Why Organizations are Vulnerable to Ethics Violations
Organizations are vulnerable to ethics violations for two main reasons: authority structures and incentive systems. In some authority structures, people are discouraged from whistle-blowing and alerting proper authorities. Even worse, sometimes positions of authorities are the ones who are engaging in criminal activities. As for incentive systems, when the potential reward is larger, the more people are willing to compromise their standards (Carpenter & Sanders, 2008). When authority structures are lacking and large incentives are in place this can cause many people to violate ethics.
What are Some Threats to Rational Decision Making
Threats to rational decision making include: theories about ourselves, theories about other people, and theories about the world.
Theories about ourselves
·Illusion of favorability
·Illusion of optimism
·Illusion of control
·Escalation of commitment
·Self-serving fairness bias
·Overconfidence bias
·The consequences of bias
Theories about other people
·We give ourselves more credit than we deserve and others less
·We expect more credit and reward and expect others to accept less
·We view the positive future outcomes as more likely than negative outcomes and so give more that the outcomes achieved by others are likely to fail
·We think that weâ€re better than others at judging uncertain futures and so give more credence to our plan than to those of others
·We believe that although weâ€re acting on the best knowledge of present and future conditions, others are acting on imperfect knowledge
·Ethnocentrism and stereotyping
Theories around the world
·Top executives must be able to understand global events; otherwise, itâ€s too easy to misjudge the risks and consequences of an action with international ramifications.
(Carpenter & Sanders, 2008)
Relationship between stakeholders, corporate ethics and leadership
Stakeholders are individuals or groups who are vested in an organizationâ€s ability to deliver intended results and maintain the viability of its products and services. Stakeholders value consistent and transparent performance, so organizations must put in their best efforts to communicate results to the stakeholders. Often times, this will call ethical practices and measures. This might take the form of an annual report for stockholders, an open-door policy for employees or a social media account where customers can leave feedback (Bradley, 2018). Essentially, all levels of management and stakeholders work together to foster leadership within the organization.
References
Carpenter, M.A. & Sanders, Wm. G. (2008). Strategic Management: A Dynamic Perspective. Upper Saddle River, NJ: Pearson Education.
Bradley, J. (2018). Corporate Social Responsibility & Ethical. Retrieved from Leadershiphttp://smallbusiness.chron.com/corporate-social-re…
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