Business Ethics and Law Essay Example | Topics and Well Written Essays - 2000 words

Business Ethics and Law - Essay Example Basically, the interests of stakeholders are to increase their benefits from the organizations. To achieve this goal, business has to incur cost and this will reduce the earnings of investors. Therefore, in most cases managers compromise the interests of stakeholders in order to increase the income of the shareholders. Question one Business owners invest their resources in businesses and appoint directors to run those businesses on their behalf. This is because in most cases the owners of the capital lack expertise to run those businesses by their own, or they have other things to attend to hence they are left with no time to manage their own businesses (Adam, 2009). Sometimes even where they are present the businesses are may be too enormous for them to run on their own. The directors are given authority to mobilize the resources of the investors in a way that will maximize returns for the investors. Therefore, managers have a duty to ensure that their activities are focused on incr easing the returns for investors. However, they also have to ensure that the company’s stakeholders are considered when making decisions for the company (Cameron, Seher, & Crawley, 2010). These stakeholders include government, the community, consumers, suppliers and even the business rivals. These stakeholders are very crucial in any situation because their individual decisions will influence the position of the business. The argument of Joseph Johnston is that organizations are established to serve the needs of both stakeholders and the shareholders (Wettstein, 2009). According to stakeholder’s theory, in case of any clash of significance between the shareholders and investors, the managers should compromise the investor’s benefit for the sake of stakeholders. The investors concern is to reap the best form their investments. The clients concern in the business is to have a constant supply of superior products at affordable prices (Ananymous, nd). The public wan t to ensure that the organization is not oppressing people. The employees want to get the best pay from the organization. Different stakeholders have different concerns in the organization (Bebchuk & Fried, 2004). In actual sense, I believe stakeholder’s theory does not work because of inconsistency of interests among the parties concerned (Cameron, Seher, & Crawley, 2010). Managers are in control of the organizations and they are responsible for setting strategies and meansto achieve them. Since the interest of the investors is to create more wealth their desire is to invest in ventures which guarantee them greater returns. However, in most cases ventures that have higher returns are prone to perils (Bomann-Larsen & Wiggen, 2005, p. 76). Therefore, managers generally do not like risking and desire to safeguard their jobs. As a result, the managers invest shareholders resources to less risky ventures despite their decreased returns to ensure that their jobs are stable. On the other hand, stakeholders such as clients will desire superior products at affordable prices. Producing superior commodities requires extra resources which results to increase in prices for the commodities. Since managers also want to ensure that their employers have vast returns, most of the time they charge higher prices for inferior products (Cameron, Seher,