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Stakeholders vs. Shareholders.

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EAE - Escuela de Administracion de Empresas INTERNATIONAL - MBA Business Strategy Stakeholders vs. Shareholders Startup report Group E: Liza Labrador Francisco P�rez Carlos Rangel Silvana Savino Marie Thepau Index Introduccion 3 Business and Values Chart 4 Share holders View 4 The Global Challenge Facts and Stakeholders arguments 5 News Stakeholders Theory. 5 Changing World 5 A Stakeholders process view. 6 Vison: 6 Core Values: 6 Commitments 6 Methology 6 Another Perspective Stakeholders vs Shareholders 7 Shareholders and Stakeholders and the Environment: 9 Shareholers Rol 9 Stakeholders Rol 10 An Unfolding Crisis in Business Ethics - Some examples? 14 Enron 15 WorldCom 16 Parmalat 16 Critical Process 20 Conclusions 21 Stakeholders vs. Shareholders Introduccion The overarching business practices of large, publicly traded, companies are typically divided into two categories: shareholder- or stakeholder-driven. The US model for business has been overwhelmingly shareholder-driven for the last 15 years where most CEOs believe that their mission is to maximize shareholder value. In other countries, suchas Japan and Germany, many companiesare managed using stakeholder-centered business practices (Inamori, 1997; Matsushita,1994; Nikkei, 2001a, b; Wessel, 2001). The success of the US economy in the late 1990s has propelled shareholders to pressure senior management for higher returns using US-style business practices (Taylor, 1999; Dvorak et al., 2000; Shirouzu etal., 2000; Shirouzu, 2000; Zaun, 2000; Wessel,2001). Senior managers that are strongly influenced by shareholders, or otherwise adhere to a purely economic view of business, must make tradeoffs between other key stakeholders such as: employees, suppliers, customers, governments, or labor unions optimizing business performance along a single dimension, with principal accountability to only one stakeholder, suggests that success is best achieved by dividing, rather than leveraging, key stakeholders. Importantly, local optimization diminishes senior management's ability to develop an accurate view of reality. Having an accurate view of reality would result in the spontaneous and universal characterization of business as a socio socioeconomic activity. ...read more.


Enron Corp. reached a settlement with stakeholders of Osprey Trust, an affiliate of the bankrupt energy trader. The settlement, which must win approval from Enron's bankruptcy judge, will allow the collapsed trading giant to move forward with its reorganization plan and sell some of its remaining properties, which range from South American pipelines to an Oregon utility. Stake holders will receive a cash payment of $75 million from Houston-based Enron, which filed for bankruptcy in December 2001, the second largest in U.S. history. The disclosure earlier this year of accounting irregularities led to the collapse of Enron's stock value, the evaporation of about $60 billion in market capitalization, the biggest bankruptcy filing in corporate history, the dissolution of a planned merger with shareholders and employees, and investigations by the Securities and Exchange Commission and Congress Enron's financial troubles stemmed from the discovery a few weeks ago of off-balance-sheet transactions that led to a $1 billion charge and write-down of shareholder equity. Employees have lost much of their retirement money because their pension accounts were built around Enron stock; stock that once sold for $85 a share now is selling for less than a dollar a $3.6 billion claim against it in bankruptcy court The shareholders who held Enron stock - many of whom were or are Enron employees - have suffered serious economic injuries. Their pensions were basically tied up in a stock whose value has plummeted. Moreover, they have apparently suffered these injuries as a result of wrongdoing. WorldCom Which will downwardly restate financial results in one of the biggest accounting scandals in history, joins Enron, Global Crossing and Tyco International among the tarnished success stories of the 1990s. Shareholders and bondholders who lost money in WorldCom would receive $250 million of common stock in the reorganized company. Employee retirement funds heavily to company stock; let misled employees take the fall when the stock tanks while executives diversify their holdings and cash out before the bad news goes public The five stakeholders representing ...read more.


And the people who manage this caind of organizations, that share a vision of global welth and the compromise of be a support for the people that cant figth their figths. In the midle of this two cainds of organizations exists the new model of global companies. Companies that have a very important stockholder orientation, but at the same time dont forget about the stakeholders. Companies that where created to produce money but htat have adapted as much as possible to the new demands of the society. This companies have a comitment to the shareholder to give them as much money as they can. At the same time the company is very concerned to the wel being of the comunity and have a compromise to give back to the society what the society have give to them. An example of this company is Xerox. Xerox is a company that is highly compromised with the shareholders of its company but it is also very interested on the part of the company that has to do with its stake holders. The company has inside it a code of conduct that stablish the conduct of the people that work inside it, from the general managers to the lowets employee. Also the company has shown their comitment towards the comunity by instaling a ISO 14000 program to asure the environment preservation on every country where they are. This is an action that this company is taking in order to respond to the new demands of the society. In nowadays the companies that want to succed in the new market have to take in to account two important factors. One is tehir economical welth and the second one is their implication towrds the society. The new generations of Companies and CEO's are aware of these facts and they are taking mesures to arrange this situation. The companies in some time form now will suffer a down hill fall if they do not start to do some serius revolution insede them to be in a good realtion wiht their internal and external stake holders. 1 ...read more.

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