Key Terms
Board of Directors
Sets mission, direction, products/services, and executive compensation. Most critical function: hiring the CEO.
CEO
Implements board policy; consults with board on major decisions. Only employee who reports directly to the board.
Functional Executives
Lead areas like finance, marketing, HR, legal, and manufacturing. Some serve as the contact point between the company an
Employees
Internal stakeholders in both their division and the broader organization.
Customers
Trust is the foundation. They review, refer, and can boycott.
Suppliers
High influence; command significant attention from businesses of all sizes.
Governments
Regulate through federal agencies down to local zoning boards.
Media
Traditional and social. Can spread word of unethical behavior rapidly.
Community
Expects businesses not to harm the environment or degrade quality of life.
Ethical minimum
Least a company can do while claiming an ethical position; complies with law but not necessarily more.
Ethical maximum
Strongest ethical action available in a situation.
Descriptive
Develops an accurate model of stakeholder relationships and tries to balance them fairly.
Instrumental
Argues that managing stakeholders well is useful because it helps the bottom line. Right thing to do AND good for busine
Normative
Each stakeholder group has intrinsic value — not just because they can help the company, but because they matter as ends
Enabling stakeholders
Permit the firm to function within economic and legal systems. Examples: shareholders, boards of directors, government r