Assignment:
Which group of stakeholders do you feel is the most important? Is one any more important than the next? Why? Thoughts?
Responsibility of Businesses
Businesses flourish due to the society in which they exist. Therefore, a business cannot be viewed in isolation. A business cannot be only concerned with making money, excluding the society and the environment in which it works. While running its operations, a business owes responsibility to its stakeholders, the society, and the environment.
Responsibility towards Stakeholders
Businesses owe responsibilities towards the following stakeholders:
• Customer: A typical business believes that the customer is king. Sometimes, in order to win over a customer, businesses follow practices that may be harmful to the customer. For example, the promotion of cigarettes or liquor is meant to entice the customer to consume larger quantities of these products, although businesses may know that excessive consumption is injurious to health. Seagrams promotes its products of liquor, but it repeatedly promotes drinking in moderation and cautions people to not mix drinking and driving.
• Employees: According to the U.S. law, organizations should have a clear-cut policy of no discrimination on the basis of race, color, or gender. This policy should be clearly explained to all employees, and any deviations should be severely punished. Similarly, the working environment for employees should be friendly and should enable the employees to focus on work and give their best work performance.
• Distributor: Organizations' practice of using strong-arm tactics, forbidding distributors to have a free choice, and punishing them for keeping the competitor's products. The organization should have a fair business relationship with its distributors and vendors and should treat them as partners.
• Supplier: A similar practice of unnecessarily pressurizing suppliers, forcing them to accept unfair terms and conditions. An organization should have a fair business relationship with its distributors and vendors and should treat them as partners. Microsoft is accused frequently of acting as a big bully to the suppliers because of its size.
• Shareholders: Sometimes, an organization or the management does not keep the shareholders interest in mind, playing for short-term gains. An example was Michael Eisner, CEO of Disney, who continued to get a multimillion-dollar salary and bonus while the company's performance suffered. A company should strive to maximize the shareholders' value. As the agents of the shareholders, the management is responsible for running business operations and should always be concerned with the long-term benefits of the organization.
• Creditors: Creditors give loans on the basis of the company's performance. However, some companies follow the practice of hiding true facts and brushing up the financial performance by dressing figures. This practice takes the creditors for a ride.