Who runs organizations?

Whoruns organizations?

Whatare the key stakeholders of an organization and the claims of each?

Inevery organization, there are two main categories of stakeholders:outside stakeholders and inside interested parties.

Outsidestakeholders comprise of people who are not owns of organization oremployees, but have an individual interest in the organization or itsactivities. They include suppliers, customers, local communities,trade unions,investors,groups with special interest, and government.In an organization, customers are the greatest outside stakeholders.Mostly customers choose service or product from alternative servicesor products. Suppliers are also vital outsider stakeholder theycontribute towards an organization with excellent quality inputs toreduce doubt in production operations or technical. Insidestakeholders comprise of people who are inside an organization withmost direct claims on organizational resources. They include nomanagerial employee, managerial employees, and shareholders.Shareholders are the owners of an organization or company. Forinstance, company’s shareholders raise capital for a company byissuing shares to investors. Non-managerial employees are members oforganization’s workforce with duties and responsibility that theymust perform. Managerial employees are organization’s workforcewith responsibility to ensure that organizational resources are wellco-ordinated, and goals are successfully achieved(Jones, 2010).

Whatare some of the problems facing organizations in their quest tosatisfy stakeholder claims?

Shareholdersvalue a company or organization by return received from an investmentwhile customers look for reliability and quality of products relativeto prices. Employees and managers evaluate a business or organizationby salaries they receive, career prospects, conditions ofdevelopment, and stock options. The conflict of goals andstakeholders groups should bargain over appropriate the balancebetween inducements they supposed to receive and contributions theyshould make. Due to this, organizations are always regarded ascoalitions or alliances of stakeholder groups. They directly bargainwith stakeholders and use their influence and power to change thebalance of contributions and inducements in their favors(Jones,2010).

Wheredo authority and responsibility reside within an organization, andwhy do they reside at those levels?

Responsibilityis a duty to meet objectives related to an organization and positionhe or she held. For instance, managers in any organization havesimilar primary responsibilities when performing their duties.Authority is viewed as personal reasonable right to exercise power,or use reasonable right to accomplish actions, make decisions ordirect problems. For instance, managers have authority to ordersupplies or hire employees. Chief Executive Officer is at top ofhierarchy and can influence organizational efficacy anddecision-making process in four ways: through setting goals anddesigning structure, selecting the main executives for top-levelpositions in hierarchy, through determining top management incentivesand rewards, controlling and allocating scarce resources amongdifferent divisions and functions(Jones, 2010).

Whatis the agency problem?

Conflictsarise when agents stop trusting one other and start to care abouttheir interest using their authority to meet their benefits. It is acommon problem found in every organization, union clubs, government,and companies. Currently, organizations solve problems throughestablishing measures like harsh agents screening process, rewardingagents for good behaviors, punishing those with bad behavior, as wellas establishing supervision department(Jones, 2010).

Whatare the mechanisms that can be used to align managerial behavior withorganizational goals?

Accordingto agency theory, the main issue is to solve an agency problemthrough using governance mechanisms of control that align interestsof agent and principal. The alignment should be in a way that allowsboth parties to have courage to work together and maximizeorganizational effectiveness. The most operative way of aligning theinterests of shareholders and management is to make rewards formanagers contingent on outcomes of their performance(Jones, 2010).

Whatrole do ethics play in an organization?

Ethicalvalues come from three primary sources such as individual ethics,societal ethics, and professional ethics. Professional ethics ismoral rules that control or govern the way professionals performtheir duties. For instance, medical ethics controls the way nursesand doctors perform their functions and how they treat theirpatients. Societal ethics is found in society’s legal systems,customs, practices, unwritten norms, as well as value used by peopleto interact. Individual ethics is moral and personal standards use bypersons to structure how they will interact(Jones, 2010).


Jones,G. R. (2010). Organizationaltheory, design, and change.Upper Saddle River, N.J: Prentice Hall.