Comments for The Leal Family Blog http://blog.marioandwindy.com A look into the minds that make up the Leal Family Thu, 19 Jan 2012 16:08:31 +0000 hourly 1 http://wordpress.org/?v=3.3.1 Comment on Stakeholder Theory: The Balancing Act by mleal http://blog.marioandwindy.com/2009/02/25/stakeholder-theory-the-balancing-act/#comment-28 mleal Thu, 19 Jan 2012 16:08:31 +0000 http://blog.marioandwindy.com/?p=64#comment-28 Thank you for your opinion! Thank you for your opinion!

]]> Comment on Stakeholder Theory: The Balancing Act by Luke Hamblyn http://blog.marioandwindy.com/2009/02/25/stakeholder-theory-the-balancing-act/#comment-27 Luke Hamblyn Thu, 19 Jan 2012 04:29:51 +0000 http://blog.marioandwindy.com/?p=64#comment-27 The above blog, "Stakeholder Theory: The Balancing Act", attempts to convince its readers that the stakeholder theory is superior to the stockholder theory when concerned with the social responsibilities of businesses. I will endeavour to show why the stockholder theory is superior to the stakeholder theory by critically analysing the arguments, and then putting forward fresh arguments that show the stockholder theory is superior. The first argument put forward is that the stakeholder theory is what will help generate trust between the business and the concerned stakeholders. Whilst it is true that trust must exist between the stakeholders and the business operators, it is simply farcical to imply that if the stockholder theory is adhered to that there will be no trust between the stakeholders and the business operators. Contracts between stakeholders and business operators are entered into everyday. If the dealings between the two parties were based on a premise of non-trust, these contracts would very rarely come to fruition. Without an initial feeling of trust between the two entities, and the belief that both parties will be benefiting in some way, business as a whole may struggle to exist. It is obvious that management must continue to deal with stakeholders in a fashion that induces trust. Managers realise that in order for a business to function effectively, there must exist trust between the business and the stakeholders for the business and the contracts to operate effectively, thus ultimately returning profits for the business, flowing onto the stockholders. The second argument states that stockholders are not the only stakeholders that have claims upon the managers of the business, meaning that their attention should not be devoted only to making the stockholders money. It is correct that many stakeholders should have attention paid to by them by management, they should be dealt with and cared for in a way that encourages these stakeholders to continue to deal with the business, as this is obviously beneficial for the business. However, it is true to state that while all the stakeholders should have management time and attention devoted to them, the stockholders are the only entity that have entrusted their own personal funds within the business for the specific means of making a profit. Other stakeholders have alternative investments in the business to obtain their goals through their dealing with the business, such as employees investing their time in their jobs to earn personal wealth, or suppliers whom supply necessary materials for the business to operate in return for their own businesses profits. Stockholders are the only entities that have an investment that requires the long term profit of the business. Whilst the other stakeholders receive their benefits relatively early through their investments, stockholders take larger risks through their investment in the company to hopefully see some return in the distant future. Without this capital investment from stockholders, it would be extremely difficult for the business to operate, thus specific and extra attention must be paid to the goal of maximising profit. There needs to be an incentive for stockholders to invest in business, and that incentive is to have a financial gain. If that incentive did not exist, there would be widespread shortage of capital investment, and many businesses would simply fail. If these businesses didnt exist, there would be detrimental effects on many of the would be stakeholders in the company. For other businesses, stakeholders, and individuals to reap the benefits of business, there needs to be the potential for the investors in the business to succeed in an economic sense, or else capital investment would not take place in the initial instance, which would adversely affect society as a whole. If there existed a widespread public perception that stakeholder theory was given preference to the stockholder theory, this again would stem the flow of capital investment. It would scare off many potential investors, as the risk of other stakeholders needs being at the top of the list as opposed to their own would imply that there would not be optimum economic returns through their investment, so their funds would go elsewhere. This is extremely dangerous for business, as for business itself to exist, there needs to be that initial capital investment. Stockholders would not trust their personal wealth in a company where the does not exist a fiduciary care placed upon the management of the business with the investors funds. The inappropriate application of these funds may amount to being considered an unsolicited tax, in which governments are entrusted to impose on society. Whilst I believe stockholder theory should be adhered to, stakeholder theory in the empirical theory of management sense, where the interests of all stakeholders are to be balanced to ensure the financial success of the business, should be applied as a tool by managers of a business to achieve the ultimate goal of the stockholder theory, which is to maximise profits. The above blog, “Stakeholder Theory: The Balancing Act”, attempts to convince its readers that the stakeholder theory is superior to the stockholder theory when concerned with the social responsibilities of businesses. I will endeavour to show why the stockholder theory is superior to the stakeholder theory by critically analysing the arguments, and then putting forward fresh arguments that show the stockholder theory is superior.
The first argument put forward is that the stakeholder theory is what will help generate trust between the business and the concerned stakeholders. Whilst it is true that trust must exist between the stakeholders and the business operators, it is simply farcical to imply that if the stockholder theory is adhered to that there will be no trust between the stakeholders and the business operators. Contracts between stakeholders and business operators are entered into everyday. If the dealings between the two parties were based on a premise of non-trust, these contracts would very rarely come to fruition. Without an initial feeling of trust between the two entities, and the belief that both parties will be benefiting in some way, business as a whole may struggle to exist. It is obvious that management must continue to deal with stakeholders in a fashion that induces trust. Managers realise that in order for a business to function effectively, there must exist trust between the business and the stakeholders for the business and the contracts to operate effectively, thus ultimately returning profits for the business, flowing onto the stockholders.
The second argument states that stockholders are not the only stakeholders that have claims upon the managers of the business, meaning that their attention should not be devoted only to making the stockholders money. It is correct that many stakeholders should have attention paid to by them by management, they should be dealt with and cared for in a way that encourages these stakeholders to continue to deal with the business, as this is obviously beneficial for the business. However, it is true to state that while all the stakeholders should have management time and attention devoted to them, the stockholders are the only entity that have entrusted their own personal funds within the business for the specific means of making a profit. Other stakeholders have alternative investments in the business to obtain their goals through their dealing with the business, such as employees investing their time in their jobs to earn personal wealth, or suppliers whom supply necessary materials for the business to operate in return for their own businesses profits. Stockholders are the only entities that have an investment that requires the long term profit of the business. Whilst the other stakeholders receive their benefits relatively early through their investments, stockholders take larger risks through their investment in the company to hopefully see some return in the distant future.
Without this capital investment from stockholders, it would be extremely difficult for the business to operate, thus specific and extra attention must be paid to the goal of maximising profit. There needs to be an incentive for stockholders to invest in business, and that incentive is to have a financial gain. If that incentive did not exist, there would be widespread shortage of capital investment, and many businesses would simply fail. If these businesses didnt exist, there would be detrimental effects on many of the would be stakeholders in the company. For other businesses, stakeholders, and individuals to reap the benefits of business, there needs to be the potential for the investors in the business to succeed in an economic sense, or else capital investment would not take place in the initial instance, which would adversely affect society as a whole.
If there existed a widespread public perception that stakeholder theory was given preference to the stockholder theory, this again would stem the flow of capital investment. It would scare off many potential investors, as the risk of other stakeholders needs being at the top of the list as opposed to their own would imply that there would not be optimum economic returns through their investment, so their funds would go elsewhere. This is extremely dangerous for business, as for business itself to exist, there needs to be that initial capital investment. Stockholders would not trust their personal wealth in a company where the does not exist a fiduciary care placed upon the management of the business with the investors funds. The inappropriate application of these funds may amount to being considered an unsolicited tax, in which governments are entrusted to impose on society.
Whilst I believe stockholder theory should be adhered to, stakeholder theory in the empirical theory of management sense, where the interests of all stakeholders are to be balanced to ensure the financial success of the business, should be applied as a tool by managers of a business to achieve the ultimate goal of the stockholder theory, which is to maximise profits.

]]> Comment on VMware/CentOS build by VMware Free Server Copy VM script « The Leal Family Blog http://blog.marioandwindy.com/2009/02/25/vmwarecentos-build/#comment-5 VMware Free Server Copy VM script « The Leal Family Blog Mon, 02 Aug 2010 14:47:47 +0000 http://blog.marioandwindy.com/?p=57#comment-5 [...] is a follow-up post to VMware/CentOS build where I showed how I built my CentOS/VMWare server step by step.  You’ll find that you will [...] [...] is a follow-up post to VMware/CentOS build where I showed how I built my CentOS/VMWare server step by step.  You’ll find that you will [...]

]]> Comment on Jihâd: A Struggle for Meaning by EmbabeLob http://blog.marioandwindy.com/2008/12/22/jihad-a-struggle-for-meaning/#comment-4 EmbabeLob Mon, 09 Feb 2009 16:13:57 +0000 http://blog.marioandwindy.com/?p=33#comment-4 Hi, cool site, good writing ;) Hi, cool site, good writing ;)

]]> Comment on Jihâd: A Struggle for Meaning by johnny http://blog.marioandwindy.com/2008/12/22/jihad-a-struggle-for-meaning/#comment-3 johnny Sat, 03 Jan 2009 14:59:45 +0000 http://blog.marioandwindy.com/?p=33#comment-3 w71wAc Thanks for good post w71wAc Thanks for good post

]]> Comment on Palin: An Initial Study by VivianP http://blog.marioandwindy.com/2008/08/30/palin-a-study/#comment-2 VivianP Fri, 05 Dec 2008 21:40:39 +0000 http://blog.marioandwindy.com/?p=11#comment-2 <strong>Hiya...</strong> Gotta love google, fine stuff. All the best.... Hiya…

Gotta love google, fine stuff. All the best….

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