Business Stakeholders, Environment, and Ethical Standards

Internal Stakeholders

Internal stakeholders are individuals or groups with a vested interest in the business, including:

• Employees: The workforce that contributes to the organization's success.
• Owners: Shareholders who hold stock and possess a degree of influence over the organization.
• Board of Directors: Governing bodies in public and nonprofit corporations tasked with protecting the owners' interests.

External Environment

The external environment is divided into two categories:

Task Environment

Factors that have a direct impact on every organization, such as:

• Customers
• Competition
• Suppliers
• Labor force
• Governments

General Environment

Factors that may or may not impact an organization:

• Economy: Fluctuations in inflation and currency value.
• Technology: Rapid advancements affecting business operations.
• Society: Lifestyle changes that influence business trends.
• Demographics: Statistical data including gender, age, race, physical abilities, and sexual orientation.

Demographic Factors

• Gender: Increasing female participation in the workforce.
• Race: Hispanics represent the fastest-growing ethnic group.
• Age: The population is trending toward an older demographic.
• Physical Abilities: Legislation like the Disability Act mandates accessibility and employee rights.
• Sexual Orientation: Currently lacks comprehensive federal law protection.

Ethics in Business

Ethics refers to the standards of right and wrong that influence behavior. Ethical behavior is a profitable investment.

Frameworks for Ethical Behavior

• Golden Rule: Treat others the way you wish to be treated.
• Four-Way Test: Is it the truth? Is it fair to all concerned? Will it build goodwill and better friendships? Is it beneficial to all concerned?
• Stakeholder Approach: Making decisions that create positive outcomes for all stakeholders.

Managing Ethics

• Code of Ethics: Formal documentation outlining expected behaviors.
• Management Support: Leaders acting as role models for ethical conduct.
• Enforcement: Applying ethical standards equally to every employee.

Social Responsibility

Social responsibility involves making an effort to create a win-win situation for all stakeholders.

Levels of Social Responsibility

• Obstruction: Lack of social responsibility; potential for illegal actions.
• Obligation: Meeting minimum legal requirements.
• Reaction: Responding to outside pressure from society.
• Involvement: Proactive management to improve outcomes for all stakeholders.