Business Theory Comparison Essay

Business Theory Comparison Essay

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1. What is the purpose of business? This question can have an endless amount of answers and they all can be correct. The goal will not be to find a definite answer but to explore four main business ethics theories to get a better understanding of what the purpose of business is.
2. A solely profit based business model would define stockholder theory in which the paramount goal of the business is to produce the most earnings for their stockholders. Prioritizing profits over a positive public image Goldman Sachs becomes an excellent example of stockholder theory. Entitlement and Desert theory can be used to support stockholder theory.
3. When stock is purchased in a company that person is entitled to the profits or loses that those shares in stock are worth, entitlement theory supports stockholder theory in which stockholders are entitled to reap the benefits of stock as long as it has been purchased justly. Desert theory states that if the action is morally right, then the person should be able to reap the benefits and take the loses. Stockholder theory supports this as being a stockholder in a company is morally accepted, but if an unethical act is preformed in buy or selling stock Desert Theory would not support Stockholder Theory. When Martha Stewart was arrested for insider trading she demonstrated that doing an in-moral act voids Desert Theory.
4. Stockholder theory revolves around pleasing one stakeholder, the stockholders; Stakeholder Theory broadens up that view to try and please all of the stakeholders. The Ben and Jerry's company was a good example of Stakeholder Theory as they kept the pay differences between the CEO and lowest paid worker to only ten fold. Utilitarianism and Virtue Ethics Theory can be used to suppo...


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...n company and benefit from the earnings that stock can bring.
9. Stockholder and Stakeholder Theory being vastly different become the extremes on a business ethics spectrum, between these lie the Kantian Minimum view and Rawlsian Position. Kantian Minimum view lies closer to Stockholder view, but the main difference is to not treat any stakeholder group as a mere means to a end. The Rawlsian Position lies closer to Stakeholder view in which life is not fair, but if you did not have knowledge in what position you would be in, you would choose the situation that would benefit your best interest. Upon overview of the four views the Rawlsian Position would be most ethically justified. It is benefiting from net happiness in which there is no vast difference between stakeholder groups, and there is also room for promotion between groups as all stakeholders are not even.

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