Shareholder Theory Vs. The Competing Ideas Of Stakeholders Theories

Stakeholder theory looks at the relationships between an organization and others in its internal and external environment. It also looks at how these relationships affect how the organization conducts its activities. You can think of a stakeholder as a person or organization that can affect or be affected by your organization. Stakeholders can come from inside or outside of the

The stakeholder theory made popular by Ed Freeman (1984) does seem to represent a major advance over the classical view (Freeman, 1984). It might seem inappropriate to refer to the stakeholder position as neoclassical. Bowie (1991: 56-66) has defined stakeholders as a group whose existence was necessary for the survival of the firm--stockholders, employees, customers, suppliers, the local community, and managers themselves.

The purpose of this paper is to recognize the definition and what a stakeholder is and what it does. I will also explain the two groups of the stakeholders and put the stakeholders in the group where they belong. I will explain what the stakeholders responsibilities are, what their ethical responsibilities to the company. Will explain what would be the appropriate response to the situation in the company. And finally explain what Joe should propose to the management team and how Joe should support his proposal.

Stakeholders are the significant part whose actions determine the outcomes of your business actions. Stakeholder are very critical to the success of actions in the business. Stakeholder management is one of the basic requirement for making big difference in the outcome of business decisions.

In general ,the stakeholder approach may be more conducive to balancing a wide variety of corporate interests and thereby discouraging impropriety.Executives and boards should take the perceptions of both shareholders and stakeholders into account when formulating strategy and enunciate their stance in all organizational communications. Only within that kind of clearly delineated context, can managers be expected to make appropriate decisions. Indeed, some of the most successful businesses are those which have embraced stakeholder values for example Bodyshop. However, we see that generally, shareholder value

According to Svenskt Naringsliv (2004, p. 4), the main objective of business is to "develop, produce, and supply goods and services to customers." The objective of this, in turn is to make a profit. To do this, a company must have a much deeper understanding of its environment than simply suggested by supply and demand. The company must also have an understanding of the social environment and the values of the area within which it operates. The values the company operates under must then be

goals that promote individuation, and those that promote affiliation in generating individual differences in self-construals (Guisinger and Blatt, 1994)( Kagitcibasi,2005)( Markus and Kitayama, 1991) (Singelis, 1994). Others have created details that formulations that refer to differences in the perspective people take vis-à-vis the self (Kitayama and Imada,2008), distinctive variations of propositional and, to a lesser degree, conceptual self-representations (Schlicht,2009), diverse levels of inclusiveness of the self's conceptualization (Brewer and Gardner, 1996), and diverse degrees and extends to which people are connected in an informal community (Muthuswamy,2007).

This paper will have a detailed discussion on the shareholder theory of Milton Friedman and the stakeholder theory of Edward Freeman. Friedman argued that “neo-classical economic theory suggests that the purpose of the organisations is to make profits in their accountability to themselves and their shareholders and that only by doing so can business contribute to wealth for itself and society at large”. On the other hand, the theory of stakeholder suggests that the managers of an organisation do not only have the duty towards the firm’s shareholders; rather towards the individuals and constituencies who contribute to the company’s wealth, capacity and activities. These individuals or constituencies can be the shareholders, employees,

The stakeholder theory is a theory of organizational management and business ethics that addresses morals and values in managing an organization. Creating a balance of all stakeholders including employees, stockholders, customers, owners, and the community is important. It is recommended that Family Dollar make an effort to consistently and ethically value and balance the interests of its stakeholders in their decision-making process. This will help to redefine the purpose of the company. This balance serves to let stakeholders know that the sole purpose of the company is not to just turn

So far everyone has the same common goal and for one to achieve their own goal they must help the other to achieve their goal. The main driver force of a company is the labor, which everything starts with them and flows into the shareholders. The Stockholder Theory is more ethical than the Stakeholders Theory, because it must take a team and from the Utilitarianism viewpoint this creates greatest happiness due to everyone achieving their goal to help others make their goal, which creates the greatest happiness.

The goal of corporations has constantly been changing, as to be expected the goal of any corporation is to be successful and profitable. In 1814, Francis Cabot Lowell sold stock to fund his business and a public company was formed. Throughout history selling stock has been a successful way to fund businesses and stimulate the economy from the development of these new businesses. CEOs originally saw their objective as overseeing the welfare of the employees and customer. If a decent profit was reached then the company paid out dividends but over time greed and corruption started to occur. Instead of placing employees and customers as priorities corporations started placing shareholders as the top priority. This concept was introduced by Michael Jensen and William Meckling and became well adopted. Shareholder prioritization opened the doors for much corruption that later followed.

The (word) stakeholder means any person with an interest in business, someone who can contribute to the company grows and success or who benefits from its success. The various stakeholders in business have differing role and their level of involvement in the enterprise varies

The Shareholder approach to managerial responsibility was highlighted in Milton Friedman’s New York Times article “The Social Responsibility of Business is to Increase Profits”. In essence, that article states that the responsibility of a manager is solely to the shareholders; he or she must follow the shareholders’ interests as long as it stays within legal and certain social parameters. In this essay, I will further explain Friedman’s arguments, address main counterpoints, and ultimately argue that Friedman’s conclusion is a correct and normative view of the moral responsibility from the perspective of management in a non-private company.

Most companies are profit oriented. Companies survive and live on profit. Even governmental institutions, NGO's and NPO's are profit oriented, what they do with profit is different though. Saying this means that companies seek always to be at a position where profit is maximized. As we know by now this happens when MC=MR but this is an always changing point as supply and demand are dynamic, effectively meaning that if firms get it right once they can't just do the same eternally, they still need to adapt to every market factor as a new change is a new reality all together that needs to be studied and addressed. All

2.     Rational behavior on the part of the firm to achieve its goal of profit maximization.