The Proper Focus of a Business Firm: Stakeholders or Shareholders
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The Proper Focus of a Business Firm: Stakeholders or Shareholders
The question of whether a business firm should focus on the stakeholders or the shareholders may at times be puzzling, with institution going to the two extremities. The shareholders are the owners of a firm while the stakeholders handle the business and its processes. The focus of the shareholders is whether their shares will generate profit, and therefore whether the company is profitable and they will raise issues when the company is not performing well financially. It is incumbent upon the stakeholder to ensure progress and good performance of the company in general and financially.
A company cannot make profits when its processes and stakeholders are not performing appropriately. Stakeholders include any persons associated with the corporation in one way or another and can affect or are affected by the organization achievements (Hosmer, 2011). They range from the workers of the firm, people involved in the chain, consumers, and any other person with interest at the stake of the company. Just as per the CEO of Procter and Gamble in Hosmer (2011), the focus on stakeholders is essential due to the complexities of the global economy and the company processes.
Concentration on interested parties in a firm is important in improving efficiency and competitiveness. Without a focus on them, the performance of a business and gains, which is the interest of the shareholders may be minimal or almost none. It is not a political role or focus, but concentrating on stakeholders means thinking of the company processes, competitiveness, and performance. How the actual people involved can be engaged and what they should do to ensure that the company is in a better position or what can be done to them to improve performance. I would not say that the approach distracts the CEO’s from their main job, but it should be undertaken appropriately with the interest of the company.