Strategic Management

Running head: MANAGEMENT
Strategic management
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MANAGEMENT
CHAPTER 11
1. Difference between stockholder and stakeholder
Stakeholders are the ones who are affected by the profit and loss of the companies
and organizations. There are two kinds of stakeholders- internal and external. The external
stakeholders are the customers, suppliers, creditors, government agencies, unions, local
communities and the public domain (Ansoff et al., 2018). On the contrary, internal
stakeholders include stockholder, employees, managers and board members. The companies
and organizations conduct inducements for identifying the stakeholders. Along with this, the
contributions towards growth, which is considered for determining the stakeholders.
2. What process does a company adopt to go through to and respond to stakeholders'
concerns?
At the initial stage, the stakeholders' interest and concerns are identified. Along with
this, their claims on organizational activities are considered. The utility value of the services
for the customers is calculated, which adds value to the operations. As per the arguments of
Noe et al., (2017), social media is tracked for assessing the response of the stakeholders
towards the levied services. This monitoring process helps the companies and organizations
to detect prospective stakeholders. The feedback process is adopted for gaining an insight
into the approaches of the stakeholders towards the services. Sessions are conducted for
gaining an insight into the individual tastes and preferences of the stakeholders. These
responses help in detecting the challenges, which obstruct the process of responding to the
complaints of the stakeholders (Lasserre, 2017).

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MANAGEMENT
3. What is the agency problem? What are the governance mechanisms that can be put
in place to guard against this problem?
Agency problem relates to the conflicts between stockholders and senior
management. Within this, the issue of asymmetries persists in disseminating the information.
Typical evidence of this lies in the situation when the agent possesses more knowledge than
the principal about the resources for management. Morden, (2016) is of the view that the
companies and organizations adopt agency theories for solving these conflicts. Statutory
bodies of law are involved in the process of achieving resolutions. Typical examples of this
lie in Code Determination Law, Security and Exchange Commission (SEC) and Generally
Agree upon accounting Principles (GAAP).
Governance mechanisms, used by the principals, include alignment of the incentives with the
agents and monitoring and controlling the performance of the agents. Strategic control
systems are used for formally setting the targets, measuring the performance and introducing
the feedback systems (Morschett, Schramm-Klein & Zentes, 2015).
4. Internal controls and strategies that can be implemented to ensure ethical behaviour
within a company
Code of ethics is one of the essential documents, which is needed for enhancing the
awareness of the staffs about authentic organizational behaviour. The managers ensure that
the teams practice and preach ethical conduct. Rationality and consciousness in this direction
is an initiative towards the creation of a positive organizational culture. According to Frynas
and Mellahi, (2015), one to one sessions are conducted for providing a platform to the staffs,
who hesitate to voice out their opinions in front of the other employees. This approach is an
initiative towards respecting the individualism of the employees. Setting targets and