Reading Summary - Book Report/Review Example

Reading summary January 30, Reading summary The position is that a conflict exists on interest of stakeholders to business organizations and managers should play an active role in balancing the interests, through the management for stakeholders’ approach, to ensure sustainability of their respective organizations. Two approaches to ensuring sustainability, managerial capitalism that focuses on shareholders and managing for stakeholders, exist. The managerial capitalism focuses on returns to shareholders and implies undermining interests of other stakeholders.

It focuses on profitability but faces such challenges resistance to change and conflict with law and ethics. The management for stakeholders approach, however, focuses on all stakeholders, and considers organizations’ executives as stakeholders with responsibilities to the other stakeholders. The management for stakeholder approach has such advantages as positive consequences on stakeholders, and legal and ethical compliance (Donaldson, Werhane, and Cording, 2002). I agree with the author’s argument for management for stakeholders approach because each of the stakeholders to a business plays a significant role to an organization’s long-term sustainability.

Returns that shareholders earn depend on profitability that is a factor of relationships between an organization and its stakeholders. Failing to meet consumers’ expected level of utility, for example, can reduce sales and profitability to mean lack of returns to shareholders. Suppliers may also fail to deliver production materials or deliver poor quality materials and reduce an organization’s competitiveness. Consequently, all the stakeholders’ interests are interdependent and should be balanced.

Interdependency of stakeholders to a business organization is the presupposition in the text and the writers argue for focus on all stakeholders (Donaldson, Werhane, and Cording, 2002).Reference Donaldson, T., Werhane, P., and Cording, M. (2002). Ethical issues in business: A philosophical approach.8th ED. Englewood Cliffs, NJ: Prentice Hall.