Is Profit the Only Business of Business? Essay Example

a growing importance by society that businesses act ethically.

If a more open market, and globalization on the rise, it is important that companies keep in mind society and culture. Currently there is little regulation in for business activity. As long as a firm is acting within the law, the government can’t touch them. While leadership remains important about the leader’s own human capital, the trend is growing towards developing social capital by forming relationships that open up human capital to others.

In this sense it is not so much acting alone of your ethics, but it is acting on the principal of a social contract.In this contract, there is an invisible duty upheld among businesses (Mayer, 2005) Overall, the Stakeholder model takes a look at all the aspects that go into making decisions- employees, customers, suppliers- or anyone that has the potential to influence the firm. The Stakeholder Model, that was developed my R. Edward Freeman, and states that collectivist ends can be attained without collectivist needs.

It is important to distinguish a stakeholder from a stockholder. A stakeholder is any group or individual that has a vital interest in the actions of a specific corporation.The stockholder is in fact a stakeholder of the firm, but their interest is the share owned of the firm and how much money has been invested in the firm (Frey & Cruz-Cruz, 2009). The stakeholder theory looks at a firm as a series of groups with different relationships spread among the corporation. A stakeholder could be an internal organizational member, such as an employee, or an external, member; such as a customer or supplier Stakeholders has the potential to

influence the company through words, deeds, and actions (Schneider, 2002).

The stakeholder theory asks two questions. First, what is the position of the firm? By asking the firm has to articulate the send of value they create, and what’s in it for their core stakeholder. The second question is what responsibilities does management have to stakeholders. This question reflects what the business’ true intentions are, what they want and who they are (Freeman & Wick, & Parmer, 2004).

Using the stakeholder model, a firm focuses on more aspects than just profit.It takes a look at all the factors that go into being a socially responsible company, and utilizes them. This can result in better public relations, quality relationships with suppliers, lower staff turnover, and. more favorable reporting. By this theory, these aspects can only be achieved if the firm completely commits to the theory. There is a growing importance by society that businesses act ethically.

If a more open market, and globalization on the rise, it is important that companies keep in mind society and culture.Currently there is little regulation in for business activity. As long as a firm is acting within the law, the government can’t touch them. While leadership remains important about the leader’s own human capital, the trend is growing towards developing social capital by forming relationships that open up human capital to others. In this sense it is not so much acting alone of your ethics, but it is acting on the principal of a social contract.

In this contract, there is an invisible duty upheld among businesses (Mayer, 2005)Overall, the Stakeholder model takes a look at all the aspects that go

into making decisions- employees, customers, suppliers- or anyone that has the potential to influence the firm. “Business creates value in a responsible way that takes care of the environment, that tries to make the world a better place, that engages employees, and it makes money for shareholders. ” - Edward Freeman “Business creates value in a responsible way that takes care of the environment, that tries to make the world a better place, that engages employees, and it makes money for shareholders.” - Edward Freeman The Stakeholder Model The Stakeholder Model The shareholder (sometimes known as the stockholder) theory was developed my Milton Friedman. He stated that the Purpose of Business is to make money for the owner or stockholders.

The purpose of business is not to provide employment, eliminate discrimination, avoid pollution, help the community, or make a better life for society. The base of the theory is of free society, and if business were to focus on anything besides making profits, this would undermine this right.