Chapter 11 Questions
Define a stockholder and stakeholder. What is the difference between the two?
A stockholder is an individual with the claim over owning part of the company in such a way that he/she has ownership of the stock and has an influence on the finance of the corporation. A stockholder can at the time be referred to as the shareholder. A stakeholder, on the other hand, is an individual with the interests of the organization or corporation. And for this case, the stakeholders has some other interests other than the stock appreciation of the Corporation (Lindsay, 2016).
A stockholder is an individually that will take part in the electing the directors of the company and another small number of additional issues that he/she can handle. At the same time, a stockholder is entitled to dividends. A stockholder can be part of the stakeholders group, but a stakeholder is not regarded as stockholders. The positions outlined that stockholding is within stakeholding.
A stakeholder is any individually that represents a wide group of the persons with the interest in the operations (success or failure) of the company. The group has a big impact on the general operations of the company as it is wide and it includes the stockholders (shareholders), the creditors, customers, the local community, employees and the government. A stakeholder takes greatly part in the management of the corporations as their influence brings about the loss or the decline in the organization performance. They have a high impact on the decisions undertaken within the business.
What process does a company go through to respond to stakeholder concerns? What are the steps of this process?
In the operations and general management of an organization, the stakeholders play a crucial role as they take part in the decision-making process. To get the stakeholders concerns responded to by the managers, different methods can be applied. However, based on the role they play engagement is the most reliable principle to go about the task. Once they are engaged, the creation and the maintenance of the business value are upheld. The stakeholders’ engagements strategy is defined by the social business relationship (BSR) background. The strategy can be implemented through five distinctive steps of engagement strategy (set), stakeholder mapping (Define), Preparation (Focus), Engagement (Conduct), and Action Plan (Identify).
The engagement strategy comes before understanding that engaging stakeholders mean taking and treating the issues and opinions of the stakeholders as the outside concerns.
Stakeholders mapping stage defines the collaborative undertaking of research and conducting a discussion to have the identification of the key list of the company stakeholders. The mapping is done through the steps of identifying, analyzing, mapping and prioritizing. The success of the stakeholders’ identification will depend on the knowledge of the participants in the research and discussion.
The preparation stage once more defines the examination of the identified organization stakeholders to have a good understanding of their concerns, positions, and interests. The follow-up step of identifying is the determination of the best method of incorporating the concerns within eh company with the best understanding of the risks associated with the engagement. This defines the action plan which upholds to the system of the participant (managers) that goes by the engagement, communicating and informing. Engaging defines the stakeholders, communication, on the other hand, defines the stakeholders with the highest level of willingness to engage and inform defines the seeking of the information than conversations (Morris & Baddache, 2012).
What is the agency problem? What are the governance mechanisms that can be put in place to defend from this problem?
An agency problem can be defined as the conflict of interest that may exist between the management of the organization and the stockholders of the company. In this case, the managers within the management bracket define the agents who have the official task of making sound decisions that will get to maximize the profits (dividends) to the stockholders.
The corporate governance comes in to provide the balance through the sharing of powers amongst the directors, management and the stockholders with the aim to maximize the shareholder value and protect the stakeholder’s interest. The way to go about the agency problem is to ensure that the company complies with local, state and federal statutes. Establish some standards that should comply. Thirdly, implement best practices as suggested by the professional organizations.
Describe internal controls and strategies that can be implemented to ensure ethical behavior within a company.
The development of an ethics program within the organization will get the ethical behavior implemented. The program should get done through the establishing, communicating and the monitoring of the ethical values. The values are expected to characterize the company history, culture, and the operating system. The program should accommodate the codes of conduct to the employees.
Develop ethical standards and take the employees through the training about the standards. Also, ensure that the employees comply with the ethics, and this can be measured through the comparison of the ethical employee performance.
Chapter 12 Questions
How can organizational design contribute to competitive advantage?
There are so many ways in which an organization can be structured based on the objectives of the organization. An organization is usually referred to as a group of entities which operate to achieve the same common goal or goals. The structure of any organization influences the performance of the organization. Organizational structures offer the capability to specify responsibilities for assorted functions and processes to entities including workgroup, individuals, branch, and department. People who operate as individuals are often hired for specified time periods in organizational structures to carry out contracts of work, orders for work, permanent contract employment or even under program orders. Constantly increasing competitive pressure correlates with changing organizational structures and the involved processes to improve the competitive advantage of the organizations. The existence of skills and resources that are better outside the organization increased application of the use of alliances, down scoping or outsourcing by firms tend to cause the firms to draw in the narrow scope of activities.
Describe how a strong organizational culture leads to transparency, ethics, and to competitive advantage within a company.
Effective organizational structures make better the relations of work among the several entities that exist within the organizations. This will improve the efficiency of carrying out activities within the organizational units and hence enables an organization to develop an order and control, which is important for the monitoring of various processes that exist in the firm. The organization, therefore, supports command for carrying on with a variety of orders and changes in the conditions for performance of work. The organization incorporates the use of skills from individuals to introduce ease of change and application of creativities. With the expansion of business, the chain of command becomes longer and hence expands the span of control. With age, the flexibility of the organization will reduce with the creativity fatiguing. This makes it necessary for the organizational structures to be often changed to accommodate recovery.
How does the implementation of functional structures lead to more organizational control and more effective strategic planning?
Organizational culture influences the way in which specialists in the organization think and carry out their responsibilities. It is influenced positively by important reconfiguration of the part played by human resources in the development of the organization. As a result of organizational culture, there is improved performance within organizations and increased flexibility in the demand of the market. A strong corporate culture is known as an imperative driver of innovation to forces from the outside.
The culture of a company is derived from the values, structures, assumptions which are essential for the survival of an organization in a given industry. Organizational culture is transparent to workers in the firm, investors, and customers. It sets the picture of the organization at present and in the future. The organizational culture creates a strong relationship with the group that is difficult to break. The culture can either be the strongest asset or the biggest liability to the organization. Its impact is more than talents present in an organization and apparently possesses significant influence on the goals of the organization.
Organizational culture assists in the development of ethics that are expected in an organization. This is because it outlines what each and every individual in the organization is expected. If well incorporated into the culture of the organization, the ethics are easily followed by the stakeholders in the firm as well as its employees and management. It also encourages transparency since all the individuals surrounding the organization can observe what the organization stands. This increases trust by customers and even investors since the organization becomes very easy to understand regarding operations and policies.
Organizational structure outlines how activities in an organization are directed to the achievement of the organizational goals through the allocation of tasks, supervision, and coordination. The organizational structure, therefore, serves as a way through which people see their organization and the environment of the organization. It influences the activities of the organization in ways such as the provision of the foundation on which the accepted standards of operation and procedure routines. This makes it a very important tool in the strategic planning. It also determines which members of the organization are given the role of making decisions which determine the extent to which their opinions affects the line of action to be taken by the organization.