Stakeholder Theory Case

The stakeholders theory is a principle of corporate organization on management and

business ethics ,in order to apply on norms ,values and management. It is originally

elaborated by Edward Freeman. It is a concept of attempting success in any kind of

business. It indicates the importance of the value and relationship between the

company and stakeholders internally and externally. For internal stakeholders:

employees ,managers and owners. For external stakeholders: suppliers, society,

government, creditors shareholders and customers. (Appendix A) (E Freeman,2010)

It is necessary to concentrate in any aspect of those with no isolation, and establish the

same direct and interest together. Otherwise, the business might consequences in

decline or remain unchanged. In short ,it endeavors to streamline the principle of what

truly counts . Four examples of connection failure in stakeholders theory will be

demonstrated below.(Appendix B)

1.The suppliers are going to take order merely from above and do the same job at all,

instead of trying to make their products to be better ,more innovative and creative.

2.Employers do not give enough motivation to their employees; hence employees do

not want to be in the workplace and pay 100% effort during the duty. The productivity

might decrease accordingly.

3. Managements ignore and collide the local convention and regulations of other

foreign places, do not focus on the quality of life in the society , aspect of corporate

responsibility and topic of sustainability.

4. The management level do not create the reasonably enough profitability for their

financial supporters and shareholders.

It is a notion to equalize and accelerate the relationships for everyone in the group, so

as to focus that they do have the same interest and directions. Moreover, it also

presents that if a business merely concentrate on financiers, it would easily lose the

integrity capitalism. As the external and internal stakeholders can actually originate

something that no one of stakeholders can work in singularity. (E Freeman,2010)

(315)

PART 2B

In the other hand, shareholder theory has always been comparing to the stakeholder

theory. While shareholder theory advocate of maximizing the profits for shareholders,

stakeholder theory is more about to pay attention to the stakeholders

In shareholders theory , only shareholders are paramount to the tradition standpoint of

business organization, and the company has the binding obligation to put their needs

in priority ,to increase value for them. However, stakeholders theory dispute that there

are many various parties involved. And its including strategy management, corporate

planning system theory ,organization theory and corporate responsibility . The biggest

difference between both theories is the normative, for the reason that companies are

inevitable to deal with the stakeholders, companies are not supposed to believe that

stakeholders have any intrinsic value to deal with them in anyway . Therefore, the

point passes into how the way to regard them. Stakeholders theory is a principal facet,

"The groups matter usually have a normative relationships and it is necessary for

companies to consider stakeholders as opposed to the way companies do treat them or