Activity 3.9
Introduction:
The purpose of this report was to focus on the Stakeholder theory with major emphasis on the ethical practice of business and commitment to the interest of all involved parties, the stakeholders. The exercise involved a customized internet search of the key elements of the theory. The four papers adopted in literature review have been acquired from Bradford Library Catalogue were searched using the Google Scholar search engine.
Summary of findings:
Stakeholder theory is about stimulating values in the organizational management and promoting ethics within the practice of business. The theory recommends impartiality in all aspects of decision-making, welfare improvement, and satisfaction to all parties, while maintaining corporate integrity. The merit of this outlook is that it grants an equal footage on the running of the business and decision-making process, which might be critical in the progress of the firm in future. Though the theory has some of the greatest strengths, it is also prominent in its theoretical liabilities (Cohen, 2010).
The differing perception has consequently yielded two prevailing groups either advocating or criticizing the stakeholder theory. Critics assert that corporate only use the strategy of bringing as many different groups into the business for the purposes of optimizing profit to the immediate business owners (Enyinna, 2013). This approach is taken as insincere, since the corporate only seeks to exploit the support of the public domains yet insignificant progress is attained.
Critics assert that corporate only use the strategy of bringing as many different groups into the business for the purposes of optimizing profit to the immediate business owners, while the rest of the parties suffer significant marginalization. This approach is taken as insincere, since the corporate only seeks to exploit the support of the public domains yet insignificant progress is attained (Enyinna, 2013; Hasna, 2013).
Proponents of the stakeholder theory espouse that improvement in state of living or creation of wealth must be creative, with each member within the stakeholder assortment must strive to improve the lives of their partners; however, this barely occurs. This bottleneck therefore prompts the revision of the legal, economic and ethical nexus of the stakeholder contracts and working relations among various parties in the firm (Cohen, 2010; Laczniac & Murphy, 2012).
One of its major weaknesses is that from the traditional concept of stakeholder outlook, the owners of the company consider themselves highly important and deserving improvement in status, such as wealth build convenience. In addition, this outdated notion asserted that the company has its binding obligation, which is considered legal, to consider their needs first; that is, to increase value for themselves (Enyinna, 2013).
The managers would make investment pledges, such as maintaining easy consumer credit, fair pricing to products and services among its subscribers. Nonetheless, many of these marketing promises go unmet; rather the operations and commercial dealings of these firms trigger adverse effects on their stakeholders and the public. This case-scenario ideally describes the promotion of tobacco, soft drinks, and alcoholic related products.
Primarily, the business firms identify consumers as subjects designed for short-term satisfaction, with no regard to other material needs, and thus the inclination to the exploitative behavior. These marketing schemes are only troubling and manipulative to the entire society. There exists scientific evidence that many individuals, most of them who were shareholders to these companies, have suffered significant financial implications over ailing health after long-term use of these products (Laczniak & Murphy, 2012).
When companies give inadequate attention to their stakeholders, they do this at a great peril; their clientele, employees, companies, and the society suffer considerably. The continued negligence in industrial waste management, the ever-soaring- product prices are an attestation to the public disillusionment that is owed to misleading product promotional enticements among companies. The negligence to pledges of stakeholder loyalty and welfare improvement eventually translates to aversion and stakeholder withdrawal; customers lose trust and confidence from what they had formerly esteemed (Enyinna, 2013).
The term normative stakeholder theory has taken root in redefining the stakeholder theory through a lens of justice and business ethics. The inception of stakeholder theory had been entrenched on the philosophy of normative justice, rather than the prevalent one-faceted growth model, where only the management and company owners improve their well-being in financial gains (Hasnas, 2013).
Freeman envisioned a setting where all involved parties would be legally and morally bound to the collective progress of the firm through the normative concept. The normative outlook espouses the unwavering implementation of ethical practices in dealing with the claims and needs of all inter-linked parties (Enyinna, 2013).
The normative model is progressively gaining attention out of its core strategy essential in averting stakeholders’ welfare imbalances. The normative concept advocate for common good rather than the one-side rewarding scheme practiced by virtually all companies. Therefore, the judicious implementation of the model would be critical in creating more constructive and integrative synergies, and hence replacing the exploitative marketing schemes concealed in the concept of corporate social responsibility (Laczniak & Murphy, 2012).
Activity 8.8
Question 1:
H0: The organization annual profit is less than the sector’s average (Organization’s average < industry’s average)
H1: The organization annual profit is greater than the sector’s average (Organization’s average > industry’s average)
Question 2:
Based entirely on this p value we would accept the null hypothesis at 5% significance level. The reason for this is that the p-value is greater than 0.05.
Question 3:
Z-score = (x - μ) / Standard Deviation
Where,
x = 1203
μ = 1228
Standard Deviation = 104
= (1203-1228) / 104= - 0.195
= 42.3%
Question 4:
I would accept the null hypothesis at 1% significance level since the p-value calculated is greater than 0.01. This implies that significance has been reached.
Question 5:
This is a Type I error.
Question 6:
- It is assumed that the industry data on average profit per employee is normally distributed.
- It is assumed that the sample data utilized is an accurate representation of the entire population
References:
Cohen, M. (2010). 'The Narrow Application of Rawls in Business Ethics: A Political Conception of Both Stakeholder Theory and the Morality of Markets', Journal of Business Ethics, 97, 4, pp. 563-579.
Crane, A., & Ruebottom, T. (2011). ‘Stakeholder theory and social identity: rethinking stakeholder identification’. Journal of business ethics, 102(1), 77-87.
Enyinna, O. (2013). 'Is stakeholder theory really ethical?’ African Journal of Business Ethics, 7, 2, pp. 79-86.
Harlow, L. L., Mulaik, S. A., & Steiger, J. H. (Eds.). (2013). What if there were no significance tests?. Psychology Press.
Hasnas, J. (2013). ‘Whither Stakeholder Theory? A Guide for the Perplexed Revisited', Journal of Business Ethics, 112, 1, pp. 47-57
Jensen, M. C. (2010). ‘Value maximization, stakeholder theory, and the corporate objective function’. Journal of Applied Corporate Finance, 22(1), 32-42.
Laczniak, G., & Murphy, P. (2012). 'Stakeholder Theory and Marketing: Moving from a Firm-Centric to a Societal Perspective', Journal of Public Policy & Marketing, 31, 2, pp. 284-292.
Mainardes, E. W., Alves, H., & Raposo, M. (2011). ‘Stakeholder theory: issues to resolve’. Management Decision, 49(2), 226-252.
Russo, A., & Perrini, F. (2010). ‘Investigating stakeholder theory and social capital: CSR in large firms and SMEs’. Journal of Business Ethics, 91(2), 207-221.
Wilcox, R. R. (2012). Introduction to robust estimation and hypothesis testing. Academic Press.
