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Should Companies Prioritize Shareholders or Stakeholders?

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Should a company's priorities lie in the best interest of the shareholders or in the best interest of the stakeholders?

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The priorities of a company should seek to mutually benefit all individuals, which include both the shareholders and the stakeholders. Ideally, an organization, which is publically owned, or doesn't limit membership to a few individuals, should strive to serve clients, investors, the general public, and the ownership team.

Let's consider some of the world's leading organizations... CNN Money (2013) has provided a list of the top Fortune 500 organizations. The top four organizations recognized by CNN money include: the Wal-Mart Stores, Exxon Mobil, Chevron, and Phillips 66. Each of these organizations are publically ...

Solution Summary

This solution provides detailed information regarding whether a company should give priority to the shareholders or the stakeholders. A detailed description of preference rationale is provided along with complimentary references to support the answer.

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Cost Justified?

Topic: Strategic Planning, Policy and Control

Characters: Joe, District Manager of Computer Operations
Mary, Division Manager - Information Systems
John, President and CEO of a large company

Joe was recently promoted to the position of District Manager of Computer Operations for a large company. Mary, Joe's supervisor, calls him to her office. She has just been informed that the CEO has received an anonymous letter from an employee. This letter states that a recently installed (and very expensive) system does not perform as expected and has not achieved the expected results.

Joe has been aware that the system's actual performance is really as described in the anonymous letter. Joe had reported this performance problem to Mary before. Although Mary had listened to Joe, she had been the original supporter of the system and continually provides only positive feedback to the CEO on its performance.

Mary tells Joe that the CEO expects a reply to the letter. She tells Joe to draft the reply. It should say that the system is performing as projected and that all savings portrayed in the original justification documents are being achieved. She says the documentation provided with his reply should support those statements. `

Joe is upset by this directive. He feels that upper management is being misinformed in the interest of protecting a questionable decision. He approaches Mary with his concern. She says that if he does not provide the reply as requested, she will have serious doubts about his ability to perform the functions of a District Manager for the company. Joe has worked hard to achieve this position and is very worried about her statement.

Author: Originally developed by David Brickhaus, graduate student at Washington
University, as a class project in "Ethical Derision Making." Edited and submitted
by Dr. Raymond L. Hilgert, Professor of Management and Industrial Relations,
Washington University

Prepare a 3-page analysis in outline form. Your analysis should include the following:

? Who are the stakeholders in this case?
? What are the interests of the stakeholders?

Legal Analysis
? Do any of the laws from the eGuide apply to this case?
? If they do apply, analyze the legality of the corporation's actions in this case.
? If the laws do not apply to the actions in this case, explain why they do not apply.

Ethical Analysis
? If the decision maker applied the categorical imperative theory in this case, what would the result be, and why?
? If the decision maker applied the utilitarian theory in this case, what would the result be, and why?
? If the decision maker applied the rights theory in this case, what would the result be, and why?
? If the decision maker applied the justice theory in this case, what would the result be, and why?

Conclusion and Recommendation
Based on the above, as well as what you have learned about ethical theories and foundations of moral development, what is your final recommendation to the corporation regarding this case? Your recommendation should be at least two paragraphs and include at least three reasons, with specific references to course material, stating how you arrived at that conclusion.

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