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Stakeholder capitalism

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In Germany, under the model of "stakeholder capitalism", employee representatives sit on company boards of directors. In the German model of business, it is assumed that both labor (employee representatives) and capital (shareholder representatives) have important stakes in the enterprise and should work in harmony with each other. In the United States, the board of directors usually represents only the owners of the business. What advantages are there to employees as stakeholders are available in Germany that are not provided to employees in US companies? In the United States, how do employees let management know their stakeholder concerns?

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This is an issue of corporate governance. One of the issues about corporate governance focuses on whether the organization owes a greater responsibility to the shareholder who has invested in the company or to the stakeholders and those who can most be affected by its actions, namely the employees, suppliers, creditors, and customers.
As per scu, European companies give more stress on Corporate governance too. In late 2002, France "became the first and only country to date to place a legal obligation on companies to report their social and environmental impacts," (H. Bettignies, personal communication, April 13, 2004).
As in the question, it is stated that German's give lot of emphasis on social role of the organization and also taking care of the interest of the employees and other stakeholders. Stakeholders play an important role in ...

Solution Summary

The solution includes the discussion on corporate governance and stakeholder capitalism.

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Business Ethics and Stakeholder Theory

1. Describe what you consider to be the responsibility of top leadership in a large organization with respect to reaching a balance between profits and stakeholder concerns. Please support your position by giving some examples from the text or from other sources where CEOs did a good or poor job of finding this balance.
2. Terris discusses the history of business ethics in America since the late 1800s with respect to anti-competitive practices, seeking unfair advantage through immoral arrangements with suppliers and public officials, failing to adhere to laws and regulations, and lack of transparency. Discuss to what extent you believe things to be better or worse in the present day for businesses in general.
3. Describe welfare capitalism and its role as a forerunner of the contemporary business ethics movement.

For Question 4 below here is the scenario:
A public corporation of 980 employees manufactures a popular brand of garments (mostly jeans) that are primarily made and sold in America nation-wide. It has a large contingent of employees in several small rural communities in the Eastern US and is the primary employer in all of those communities. Two if its 5 shops are unionized but the union and management have a good working relationship. The company has traditionally marketed its clothing line as "Made in the USA" and attracted a bit of a "cult like" following as a result, but an outside consulting firm has suggested that significantly greater profits are possible if a different strategy is employed. The corporation is subsequently considering whether to off-shore its manufacturing facilities to a poor nation to save money on labor. It would also discretely discontinue its "Made in the USA" marketing ads and hopefully ride the wave of its previous marketing campaigns for a while. It is estimated that total cost per unit of production will be decreased by one third which equates to tens of millions of dollars.
4. Provide a paragraph summarizing the concept of stakeholder management based on above scenario.
5. How do you think the following stakeholder groups in the above scenario will be impacted?
• Employees/unions
• Communities
• Stockholders
6. What would you recommend the employer described above should do?

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