Question 1
According to the article by Joseph Johnston, he argues that stakeholders’ interests are worth in a social aspect, but they prove to be hard in imposing them. In this case, Joseph explains the objective of starting a business enterprise and compares with the social responsibilities a company is obliged to fulfill. Additionally, the social responsibilities of a company usually conflict with the main objectives of starting a business enterprise. Generally, managers are owed the responsibility of social welfare and benefit for the community at large. Therefore, a business enterprise is expected to function in favor of both shareholders’ interests and stakeholders’ interests. In practice, stakeholders involve the employees, creditors, customers and the community at large. Therefore, establishment of a business enterprise in a particular location will act in the benefit of stakeholders as well as the shareholders.
In this case, the stakeholders will have an advantage in the establishment of the company. For instance, the employees will get remuneration for working in the company. Additionally, creditors and suppliers will equally benefit from the company for their services. On the other hand, the community in general will have benefited from the company due to the fact that it will offer employment opportunities and improve the status quo of the region. Additionally, the company shareholders will benefit from the company as long as the company stays in operation and continues to make profits. In this perspective, the shareholders will have their share of the company’s profits in the form of dividends. Therefore, the shareholders would not have any benefit if the company does not make profits. It is thus important to mention that closing an unprofitable business will adversely affect stakeholders’ interests.
Question 2
According to Steven Kelmar, cost-benefit analysis can be used is a technique used to value benefits over costs and thus help in the decision making of a company. In this context, a company performs cost-benefit analysis in order to determine whether to undertake a particular project or not. Therefore, it is a corporate responsibility to carry out a cost-benefit analysis to find which project is profitable for a company. Additionally, a company will weigh the benefits versus the costs in determining the most profitable project. However, Steven Kelmar contradicts the cost-benefit analysis technique by stipulating that not all projects which have more benefits than costs will be profitable to a company. Therefore, he argues that the whole process of cost-benefit is usually flawed. In this perspective, he considers environmental factors and analyses their benefits against costs. Consequently, some right environmental, safety and health regulation decisions are made even if the benefits do not outweigh the costs.
Therefore, regarding the environmental, safety and health regulation issues, Steven Kelmar critique proves to be valid. On the other hand, there are some benefits which cannot be categorized in monetary terms. Therefore, in such cases it proves hard to analysis their benefits against costs in determining the viable project to carry out. In practice, a company has a corporate sustainability obligation in order to ensure its continuous existence and performance in the industry. In this perspective, a company requires several techniques in order to attain the goal of corporate sustainability. Therefore, a company will have to establish a good relationship with the stakeholders do as to have a good social relationship within the society. Additionally, transparency and having a focus on the future prospects of the company are of great importance.
Question 3
According to Edward Freeman’s model of stakeholders’ analysis, he postulates that both the stockholder and stakeholder have specific rights to a company. Generally, both have some significant influence over a company’s operations. In this case, the stockholder acts in the aim of making profit to the firm and control of the general management. Therefore, stockholders have the right to influence the management of a business enterprise as well as give instructions to directors and managers of a company concerning its governance. Generally, stakeholder theory postulates that customers, suppliers, creditors, government bodies, and the public in general have an influence over the company. In this perspective, the stakeholders have the right to influence the management of a company thus affect its future performance and profitability. Additionally, Edward Freeman defines stakeholders as a group of persons who influence or are affected by a corporation. On a narrower perspective, he postulates that stakeholders are a group of people who influence the success of a
business enterprise.
Therefore, based on the above facts, the interests of stakeholders’ and stockholders’ interests act in conflict. In this case, the twin objective of a corporation in achieving both stakeholders’ and shareholders’ interests are conflicting. Additionally, by achieving the shareholders’ objective of maximizing profit will act in the interest of the stakeholders. However, if the shareholders do not make profits out of the company’s operations, stakeholders still will benefit from their operations. Therefore, stakeholders will have continuous benefits from a corporation even if it operates under no profit situation.
Question 4
- In this case, shipment of defective wafers will have a significant effect on all the parties involved in the transaction process. Generally, the business will not undergo losses since the food products will be sold cheaply to the local poor people in the inner city. Therefore, the company and the suppliers would be the beneficiaries of the whole operation.
- On the other hand, shipment of these infeted food products to the local poor would act as harm to them. The business entity presumes that the poor will have the privilege to consume the products at a lowered price since they cannot afford the real products at a normal price. Therefore, consumption of infested food products will affect their health situation and thus act as harm to consumers.
- Alternatively, the suppliers will have exercised their rights since the wafers were infested during their shipment. Therefore, the suppliers had no responsibility for the infested wafers. On the other hand, the business entity will have a moral responsibility for selling the infested wafers to the inner city.
- Additionally, the customers will have their rights ignored since the products being sold are infested with insects. In this case, there will infringement of customers’ rights.
- In this perspective, the business will have incurred some loss in the whole business transaction. On the other hand, the poor in the inner city will have their rights as consumers meddled.
- Accordingly, the business entity will incur a lot of expenses compared with the income being made. Generally, it is not ethical to sell harmful products to customers with the objective of making profits. Therefore, the entity should have reconsidered the act before disposing the products to the poor.
- In conclusion, the entity should have taken the responsibility of the infested food products. In this perspective, it is illegal for the entity to dispose the infested food products intentionally.
Works Cited
George, Richard T. De. Business Ethics. New York: Prentice Hall, 2009.
Shaw, William H. Business Ethics. California: Cengage Learning. Copyright, 2006.
Verstraeten, Johan. Business Ethics: Broadening the Perspectives. New York: Peeters Publishers, 2000.
