Syndicate 5 :
Fithri Hidayani Megantari 29116377
Yunia Apriliani Kartika 29116364
Bayu Rifqi Aulia Rachman 29116483
I Nyoman Sujana Giri 29116418
3.1 Social Responsibilities of Strategic Decision
Makers
Social responsibility is proposes that a private
corporation has responsibilities to society that extend
beyond making a profit.
Friedmans traditional view of a business firm:
Argues against the concept of social responsibility.
Primary goal of business is profit maximization not
spending shareholder money for the general social
interest .
Carrolls four responsibilities of business: (in order of
priority)
1. Economic
2. Legal
3. Ethical
4. Discretionary
Being socially responsible does provide a firm a more
positive overall reputation. A survey of more than 700
global companies by the Conference Board reported that
60% of the managers state that citizenship activities had
led to (1) goodwill that opened doors in local
communities and (2) an enhanced reputation with
consumers. Another survey of 140 U.S. firms revealed
that being more socially responsible regarding
environmental sustainability resulted not only in
competitive advantages but also in cost savings.
Sustainability : More than environmental?
Crane and Matten point out that the concept of
sustainability can be broadened to include economic
and social as well as environmental concerns. For
example, even though environmentalists may oppose
road-building programs because of their effect on
wildlife and conservation efforts, others point to the
benefits to local communities of less traffic congestion
and more jobs.
Corporate Stakeholders
Corporations task environment includes a large number
of groups with interest in a business organizations
activities. These groups are referred to as stakeholders
because they affect or are affected by the achievement
of the firms objectives. In any one strategic decision,
the interests of one stakeholder group can conflict with
those of another. For example, a business firms
decision to use only recycled materials in its
manufacturing process may have a positive effect on
environmental groups but a negative effect on
shareholder dividends. the corporation may need to
craft an enterprise strategyan overarching strategy
that explicitly articulates the firms ethical relationship
with its stakeholders. This requires not only that
management clearly state the firms key ethical values,
but also that it understands the firms societal context,
and undertakes stakeholder analysis to identify the
concerns and abilities of each stakeholder.
Stakeholder Analysis
Stakeholder analysis is the identification and evaluation
of corporate stakeholders. This can
be done in a three-step process :
1. Identify Primary Stakeholders, those who have a
direct connection with the corporation and who
have sufficient bargaining power to directly affect
corporate activities. Primary stakeholders are
directly affected by the corporation and usually
include customers, employees, suppliers,
shareholders, and creditors.
2. Identify the secondary stakeholdersthose who
have only an indirect stake in the corporation but
who are also affected by corporate activities.
3. Estimate the effect on each stakeholder group from
any particular strategic decision. Because the
primary decision criteria are typically economic,
this is the point where secondary stakeholders may
be ignored or discounted as unimportant.
Stakeholder Input
Once stakeholder impacts have been identified,
managers should decide whether stakeholder input
should be invited into the discussion of the strategic
alternatives. A group is more likely to accept or even
help implement a decision if it has some input into
which alternative is chosen and how it is to be
implemented.
Before making a strategic decision, strategic managers
should consider how each alternative will affect various
stakeholder groups. What seems at first to be the best
decision because it appears to be the most profitable
may actually result in the worst set of consequences
to the corporation.
Question
How do we determine what social and environmental
contribution that will maximize value/profit for the
corporation and its stakeholders? Assuming that the
increase in profit will also increase the social contributin
in the future.