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

Business Ethics and Law - Essay ExampleBasically, the interests of stakeholders ar to increase their benefits from the organizations. To chance upon 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 stand opposite things to attend to hence they are left with no eon to manage their own businesses (Adam, 2009). Sometimes until now 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 increasing the returns for investors. However, they also have to ensure that the bon tons 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 critical in any situation because their individual decisions will influence the position of the business. The argument of Joseph Johnston is that organizations are naturalized to serve the needs of both stakeholders and the shareholders (Wettstein, 2009). According to stakeholders theory, in case of any clash of conditional relation between the shareholders and investors, the managers should compromise the investors benefit for the sake of stakeholders. The investors allude is to reap the best form their investments. The clients concern in the business is to have a constant supply of transcendent products a t affordable prices (Ananymous, nd). The domain want to ensure that the organization is non 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 stakeholders 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 hand them. Since the interest of the investors is to create more wealth their zest 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,