Introduction Although primary objective for managers is to maximise shareholders’ wealth, but many firms are started to focus on other stakeholders’ interests in recent years. Company can prevent transfer the damage of stakeholders’ wealth to shareholders when focus on stakeholders’ interests. In other words, “social responsibility” for the companies is to maintenance stakeholders’ relations in order to provide long-term interests to shareholders. By this way, conflict, turnover and litigation of stakeholders can be minimise. Obviously, company can achieve their primary objective by cooperation with stakeholders instead of conflict with stakeholders (Smart, Megginson, Gitman, 2002). Stakeholders are interest of an individual or groups that directly or indirectly affected by the organisation’s activities, policies and objectives (Henry Frechette, 2010). Stakeholders can be divided as internal (managers and employees) and external (shareholders, customers, and suppliers) (BPP F9). Different stakeholders may have common interests or conflict interests with company. Company board members or management must take care about stakeholders’ interest. They can’t make the decision based on their own interest or their relation with others organisation. Conflict of interest will arise when interests of organisation act in concert with managers’ personal interests or interests of another person or organisations, (Anon, no date). Management vs. Employees Every employee wants maximise their salaries and benefits based on particular skills and the rewards available in different employment. Most employees also want to continue their employment (ACCA F9). However, when sexual discrimination was happened in a company, there... ... middle of paper ... ...because it will affect shareholders interests if company not doing well their business. This paper discussed the reasons why Wal-Mart doesn’t doing well in global market. The main reason that Wal-Mart faced currently is internal and external problems. The internal problems included management and employees’ conflicts, while the external problems are suppliers and environment conflicts. These conflicts may cause Wal-Mart loss shareholders’ confidence to invest in their company and company’s share price also will affect. It will cause Wal-Mart difficulty to fight with their competitors in global market and spread their business to new market. To avoid these problems arise, Wal-Mart should find some solutions to resolve the conflicts. So that Wal-Mart can maintain a good relationship with their stakeholders and shareholders rather than break their relationship.
People organization or groups that have a direct or indirect interest in a one particular organization or surrounding are called stakeholders.
Stakeholder is anyone with an interest in a business; stakeholders are individual, groups or businesses. They are affected by the activity of the business. There are two types on stakeholders who are internal and external. Internal stakeholder involves employees, managers/directors and shareholders/owners. External stakeholder involves suppliers, customers, government, trade unions, pressure groups and local and national communities.
The definition of stakeholder is “ Any group or individual who can affect or is affected by the achievement of the organizations objectives.” (Freeman, 1984). Three stakeholders that have been identified are old employees (50s-60s), young employees, and shareholders. These three stakeholders could be affected the most by the CEO’s decision.
In Edward Freeman's A Stakeholder Theory of the Modern Corporation he suggests a transformation of the corporate system by replacing the notion that managers have a duty to stockholders with the concept that managers bear a fiduciary relationship to stakeholders (56). In its narrow definition stakeholders refer to customers, suppliers, management, owners, employees and the local community- those that are vital to the survival and success of the corporation. This direct approach of focusing on the interests of all those that are vital to its survival embraces all of the elements that have evolved in our society as a result of the absence of direct concern or lack of morality for the stakeholders in the Stockholders Theory.
According to Smithson, Walmart can expand its markets to new and emerging markets especially in the third world countries, which can significantly increase its revenues. Secondly, the company can reform is employment practices and improve the quality standard and in doing so, attract more customers and improve its brand image. On the other hand, the company faces threats such as the rising healthy lifestyle trend I that the company in most cases does not provide customers with healthy goods. At the same time, the company can capitalize on this aspect and increase its revenues. Aggressive competition from other discount retailers such as Target creates a great threat to the company (Smithson, 2015).
Organizations are responsible for many types of interest that stakeholders may hold. Most of these interest come from a stake held in the products, industry, markets, or outcomes (O. Ferrell, Thorne, & L. Ferrell, 2016). There are two main categories of stakeholders that include primary and secondary (O. Ferrell, Thorne, & L. Ferrell, 2016). The primary stakeholders can be broken down into those that are absolutely necessary for the survival of the organization, and others that are not essential are called secondary (O. Ferrell, Thorne, & L. Ferrell, 2016).
Hence, the stakeholders which are described as those who are affected by the organisation performance ,actions and duties and those actions includes employees, clients, local community and investors as well. The theory of stakeholders also suggests that it is the responsibility of firm to make sure no rights of stakeholders are dishonoured and make decisions in the interest of stakeholders which is also the purpose of stakeholder theory to make more profit and balancing it while considering its stakeholders (Freeman 2008 pp. 162-165). In the other words organisation must also operates in a more socially accountable approach by carrying out corporate social responsibility as (CSR) activities.
Regarding to organizational stakeholders, there are three main groups of stakeholders: customers, employees and investors. The company attempts to link stakeholders’ needs and expectations to the company’s goals. For customers, the company must treat them fairly and honestly. For employees, the company needs to treat them fairly, make them a part of the company and respect their needs. For investor, managers should comply with the accounting procedure, do not manip...
The shareholders and financial community like banks, financial institutes etc are regarded as the important stakeholders in the company. The company meets the investors across the globe and organise Annual General Meeting. The company sends the quarterly and half-yearly reports to them and updating them about the different policies that the company is planning to do. The company also organizes Shareholders Relation Meet and Customer Forum. The Managing Director also calls for a conference with the customer groups. The meeting with the shareholders is done as per plan annually. The company has to do this because they have to inform the shareholders that how the company is doing and they have to build trust among the shareholders and financial institutes because they are the ones’ who have invested in the company and company has to take proper care of them in respect from making the policy for the company. Both the stake holder and finanical communites have high power and high interest in the operations of the company. So are regarded as key players in the stakeholder analysis.
Stakeholders’ analysis is the analysis which tells that how the company is dealing with the people which are directly or indirectly related with the company’s operations. These are called stakeholder and they include the employee, society, suppliers, buyers, shareholders, got and other tax related companies.
Stakeholder theory recognizes that organizations have obligations not only to shareholders but also to these other interest groups. Also, Stakeholder theory has two branches which are the ethical and managerial. The ethical branch concerns the right of all the stakeholders to assess the information and rights in order not to be violated that can be acknowledge and can lead to improve the corporate financial performance of the company. While the managerial refers to, the commitment of corporate management to satisfying the information demands of those stakeholders who are important to its ongoing survival. Stakeholder theory requires a systematic analysis approach in order to identify their key expectations and areas of concern in their own organization. This now becomes important for the non-profit organizations and for social enterprises because they have many different stakeholders to whom they must
Stakeholders are those groups or individual in society that have a direct interest in the performance and activities of business. The main stakeholders are employees, shareholders, customers, suppliers, financiers and the local community. Stakeholders may not hold any formal authority over the organization, but theorists such as Professor Charles Handy believe that a firm’s best long-term interests are served by paying close attention to the needs of each of these stakeholders. The modern view is that a firm has responsibilities to all its stakeholders i.e. everyone with a legitimate interest in the company. These include shareholders, competitors, government, employees, directors, distributors, customers, sub-contractors, pressure groups and local community. Although a company’s directors owes a legal duty to the shareholders, they also have moral responsibilities to other stakeholder group’s objectives in their entirely. As a firm can’t meet all stakeholders’ objectives in their entirety, they have to compromise. A company should try to serve the needs of these groups or individuals, but whilst some needs are common, other needs conflict. By the development of this second runway, the public and stakeholders are affected in one or other way and it can be positive and negative.
The main threat to the Wal-Mart is the competitors. Two major competitors Tesco and Care-Four attempt numerous tactics to overwhelm the standing of the company in industry. The tariffs and taxes are also a challenge in the industry that the business has in different countries, each countries has its rate of taxes and tariff that makes added expenses for the company (Li, 2011). The culture of some clients in other countries is another threat since not being able to suit other cultures means losing markets and spoiling the investments made.
Stakeholders and stockholders are a group of individuals that can affect the company and also are affected by the company. In order to be a successful company needs to maintain their investor’s confidence. Stockholders are also able to develop value for the customer because they invest on ideas that will produce success for the company. Stakeholders are all the individuals that have an interest in the company such as employees, customers, and the surrounding community.
Stakeholders refer to individuals or groups of people that have an interest in a business. Management argues that as long as there is wealth for shareholders, then anything is done in a responsible manner and things should be done to promote the interest of other stakeholders.