To What Extent Should the Strategic Decision-Making Be Mainly Determined by the Interests of the Shareholders Rather Than the Broader Range of Stakeholders?

Topics: Stock, Stock market, Shareholder Pages: 3 (998 words) Published: February 15, 2011
Stakeholders are individuals or groups who have an effect or are affected by the activities of an organisation. The stakeholder approach means that the business focuses on the needs of its main stakeholders. These can include the local community, employees, customers and suppliers and can focus on environmental issues, regular orders and security of employment. In contrast to this the shareholders approach focuses on giving a good sized dividend to shareholders, which means the business objectives would be based on getting more profit.

When Dyson moved its manufacturing to Malaysia to be closer to suppliers, it could be said that it was adopting a shareholder approach. The costs of production in the Far East would be cheaper, as would transporting the supplies from the suppliers to the factory. Wages would be much cheaper and so as a result of all these profit margins would be higher making Dyson able to give a better dividend to its shareholders. In addition to this the move from Wiltshire to Malaysia caused over 800 job losses which would affect both employees who would have been made redundant and the local community as along with the 800+ job losses, there would be no future jobs available in the factory.

After the move Dyson’s manufacturing costs have dropped significantly and as a result his profits have increased. This would mean that Dyson has more money to put into manufacturing, research and development and marketing and has the capital to pull itself through any recessions or drops in demand which can not be predicted or forecasted. Dyson is in a much better position after the move than it was before. James Dyson said that the company may not exist at all today if it weren’t for the move. These points all suggest that a focus on shareholder dividends and therefore profits is the best way forward for a business.

However this is not necessarily true. A business must focus on the wants and needs of its stakeholders as well for it to be successful...
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