home study business operations management operations man

home / study / business / operations management / operations management questions and answers / describe the primary differences between freeman\'s approach to business and friedman\'s argument. ...

Your question has been answered

Let us know if you got a helpful answer. Rate this answer

Question: Describe the primary differences between Freeman\'s approach to business and Friedman\'s argument. ...

describe in 1 page the primary differences between in Freeman\'s approach to business and Friedman\'s argument. In the process, be sure to include the following:

A definition of the term, \"stakeholder\". Who are stakeholders?

2. What does Freeman mean when he claims that we should \'manage for stakeholders\'?

Solution

Answer to Question No1:

Stakeholder is a person, group or organization that has interest or concern in an organization.
Freeman and Friedman have two very contrasting opinions on the goals and responsibilities of a business. Freeman supports the Stakeholder Theory in saying that anyone who has a stake/claim in the firm which may be the employees, stockholders, competitors, customers, the local community, etc.who has the right to be treated as a participating determining factor in the direction of a firm. They are not just a means to the end.

Friedman pretty much says the opposite. He believes that businesses have no responsibility outside of those who have ownership in the company. The primary differences between in Freeman\'s approach to business and Friedman\'s argument are as follows

1.Friedman believes that the managers\' duty is solely for the interest of the shareholders whereas Freeman believes companies should create a positive impact for all members of the public sphere which also means that they have bigger cause that they should work upone.

2.Friedman says no to corporation having social responsibilities. He thinks that it is the government responsibility but Freeman suggeest that the corporate should have a responsibility towards all stakeholders and also should be proactive in being socially responsible.

3. Friedman does not believe in CSR (Corporate Social Responsibility) but Freeman believes in giving back to the society as a part of CSR.

4.Friedman Theory suggests that Manager and shareholders only the main focus whereas Freeman suggests that to stay in the business for a longer term they should they should care for the stakeholders and also fr the planet and the society.

5. Friedman believes that the main motto of the company is to earn profit unlike Freeman he thinks that besides earning profit he should create a goodwill and a name.

Answer to Question No2:

In the traditional view of the firm, the shareholder view, the shareholders or stockholders are the owners of the company, and the firm has a binding financial obligation to put their needs first, to increase value for them. However, stakeholder theory argues that there are other parties involved, including governmental bodies, political groups, trade associations, trade unions, communities, financiers, suppliers, employees, and customers. Sometimes even competitors are counted as stakeholders. So when he means by saying “Managing for Stakeholders” he meas that the task of executives is to create as much value as possible for stakeholders without resorting to tradeoffs. Great companies endure because they manage to get stakeholder interests aligned in the same direction.