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Stake holder and share holder- - Essay Example

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The paper shall show how these two concepts mean to the profitability and responsibility of any firm. Rules stipulate that firms have an obligation towards shareholders. They are always inviolable. The shareholders…
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Stake holder and share holder-
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Stake Holder and Share Holder By: Executive summary Stakeholders and shareholders are very important forany firm. The paper shall show how these two concepts mean to the profitability and responsibility of any firm. Rules stipulate that firms have an obligation towards shareholders. They are always inviolable. The shareholders are the ones to offer direction to any firm. In addition, firms determine the significance of these stakeholders using financial measure. Shareholders are stakeholders, but stockholders are not shareholders. The article aims to define deeply the perspectives of stakeholder and shareholder towards profitability and responsibility.
Stakeholder and Shareholder
Most corporations run through the watch of shareholders. The shareholders demand obligations from the management of the firm. The shareholders have a say in the corporation depending on their share prices. The level of their financial measure in the corporation determines their level of influence. Shareholders share the profits of the company based on the percentage of their shares. It also applies to losses. Stakeholders are individuals who have interests in the corporation. The company has no obligation towards the stakeholders. Employees are the perfect example of stakeholders (James & Jerryl.1996, pp. 1-4).
Perspective of profitability and responsibility
With the current world where globalization has taken effect, it is important for a company to pursue profitability. The corporations should fit themselves into the market economy using proper tools to maximize their profits. For good profitability, the company should have a certain responsibility, for example, social responsibility. It is evident responsibility, and profitability is contradictory, but they have to go together in any corporation. To ensure companies survive, they should produce high profits. The profits depend on the responsibility of the networks within the corporation, such as the people (Reed & Freeman, 1983, pp. 1-19).
In most cases, shareholders emphasize on profitability over responsibility. It is the perspective of the shareholders. The shareholders believe the corporations have full control from the owners. They attribute the companys success to factors such as share price, economic profits, and dividends. In addition, they rely on the management to give in their best, for great success of the corporation. The shareholders do not believe responsibility will make the corporation attain success. Any society will not measure the companys success by their level of social responsibility, according to the shareholders perspective. Furthermore, their perspective does recognize the importance of responsibility when it comes to issues like employment, preserving the environment, welfare activities (Porras & Jerry, 1996, p. 40).
The stakeholders have a perspective that corporations should consider the responsibility first, and then profitability will follow. They view corporations as instruments that serve all parties involved. Shareholders believe, by satisfying all the needs of stakeholders, the company has achieved success. They believe the management has a role in ensuring the corporation has attained success. In addition, they value the society, and they want to incorporate the society into the interests of the corporation. They believe the corporation has no obligation towards the owners or the shareholders. A corporation is always a collaboration between various resource suppliers who have an ambition of increasing their wealth (Yoshimori, 1995, pp. 50-126).
There are differences in perspective of responsibility and profitability by shareholders and stakeholders. The shareholders want to maintain market based relationships that exist between stakeholders and institutions. Walmart is an example of the corporation that has attained success by specializing on the shareholder perspective. The CEO of Walmart only cares about the interest of the shareholders (Murray, 2013, pp. 1-2). Shareholders mostly have self-interest. Stakeholders believe in motivation of employees and involvement of all parties in pursuing a common interest as a source of success.
Murray, M., 2013. Stakeholder Capitalism vs. Shareholder. Blue Hampshire, pp. 1-2.
Porras, J. C. C. &. J. I., 1996. Building Your Company’s Vision, Havard: Havard.
Porras,C & James C., 1996. Building Your Company’s Vision, Havard: Harvard Business Review.
Reed,D & Edward F., 1983. Stockholders and stakeholdes: A new perspective on corporate governance, Los Angeles: University of Carlifonia.
Yoshimori, M., 1995. Whose company is it? The concept of the corporation in Japan and the West, s.l.: Elsevier. Read More
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