To What Extent Should the Strategic Decision-Making Be Mainly Determined by the Interests of the Shareholders Rather Than the Broader Range of Stakeholders?

1012 Words Mar 1st, 2011 5 Pages
Stakeholders are individuals or groups who have an effect or are affected by the activities of an organisation. The stakeholder approach means that the business focuses on the needs of its main stakeholders. These can include the local community, employees, customers and suppliers and can focus on environmental issues, regular orders and security of employment. In contrast to this the shareholders approach focuses on giving a good sized dividend to shareholders, which means the business objectives would be based on getting more profit. When Dyson moved its manufacturing to Malaysia to be closer to suppliers, it could be said that it was adopting a shareholder approach. The costs of production in the Far East would be cheaper, as would …show more content…
This means making tough decisions and prioritising some groups above others which could cause problems.
In conclusion, I think we should look again at Dyson’s decision to move to Malaysia. Although it seemed like James Dyson was using a shareholder approach moving from the UK and causing many job losses, his success from this move means the company has more profit to feed into the community’s needs and it has enabled him to create another 100 jobs in Britain not in manufacturing but in more rewarding areas such as developing new products. In addition to this there is another, more in-direct advantage. As a result of the lower production costs, the company pays more corporation tax which could be fed into hospitals or schools as well as other things aiding the community in general.
I think focus purely on stakeholders would be a bad idea as it is such a long term approach, unless the business had sufficient funds to keep it going until the benefits could be gained, but it can be done as shown by OneWater who focus on helping bring clean water to overseas countries. Similarly, a focus on shareholders alone would not be the best strategy as it could give the company a bad image and cause shareholders to sell up, lowering the share price as with BP in 2005 when an explosion at their Texas oil refinery killed 15 people. Overall, I believe that a company’s strategic decision-making should focus both on profit and stakeholder needs as this will give the