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The shareholder and stakeholder theory management essay

Order now Over the last decade, with the rapid development of business management, the Shareholders who are the effective owners of the company invest money into the business and want as much profit as possible as a return for their investment. Shareholders will engage manager to help them to run the business and make various decisions in different aspects in order to maximize potential wealth. There seems to be no doubt that a manager has a legal responsibility to shareholders.

However, if the manager only considers the interests of shareholders, will the business be successful for a long time? This essay aims to explain in addition to the shareholder, why it is also necessary for a manager to demonstrate responsibility to the various stakeholders. An integrated and clear definition of stakeholder will be introduced in the first paragraph. The content will show that stakeholders play different significant roles to help the firm to reach the long-run benefits in the second paragraph.

Last but not the least, the third part of this thesis will utilize a negative example to reveal the bad influence if a manager only shoulder the responsibility to shareholder.

Stakeholders are all person or group which have various interests or concern upon the company and be involved in the daily routine of it, meanwhile they will also be affected by the economic, moral action processed by the firm.

Customers, employees, business associates, the community and the natural environment are the representative members of stakeholders. For instance, Primark, a textile manufacture and clothing distribution industry in the UK divided its stakeholders into the form of external and internal. Employees are the internal stakeholder and suppliers, customers, trade unions, civil society groups, and the communities are the external stakeholder of the Primark.

Thus the relationship between shareholder and stakeholder is comprehensibly revealed.

According to the content introduced above, there are different kinds of stakeholder in the business. Whether they have the same effect to the business?

Shareholder and stakeholder Essay

It is necessary to analyse that each stakeholder will have diverse attention about the business activities and their power of influencing the company are in disparate level. Refer to Mitchell et al 1997, p854the stakeholders can be identified as the following attributes: It is necessary to consider the needs and objectives what stakeholders want.

Improving the satisfaction of the stakeholders can help business obtain a competitive advantage and long-term benefits. In addition, to compared with the consumers the shareholder and stakeholder theory management essay the past, the customers are increasingly care about how the firms trade their stakeholders nowadays wider than generating economic wealth. Consequently, placing the awareness of working with different stakeholders at the heart of business values for mangers is crucial.

Firstly, providing the shareholder and stakeholder theory management essay employees a good pay, better working conditions and further training in career path in order to encourage them to work harder. Secondly, sharing stocks to the employee to contact staff interests and the interests of the company together. In that case, the employees are not only working for company but also working for themselves. Employees as a vital part of stakeholders in Michelin help it to be the tyre industry leader in the world.

This is why stakeholders needed to pay a great attention by manager.