Business Roundtable

I need someone to look at my essay and correct it checke my grammar my chose of word and if I’m answering the questions correctly

Case Study Essay

Name: Gorgees Zia Student ID: 44830769 The following statement: “This essay is my own work”

unit name: BUSL204

Question 1:

After stating for 40 years that the primary obligation of business is to shareholders, in 2019 the Business Roundtable – comprised of 181 of the United States’ biggest companies – released a new statement that corporations have ‘a fundamental commitment to all of our stakeholders’. Critically analyse the Business Roundtable’s full statement in light of relevant ethics theory. Begin by outlining what, according to R. Edward Freeman, a stakeholder is. Then identify the main stakeholders the Business Roundtable identifies, and explain why, according to Freeman, businesses would have an ethical obligation to these stakeholder groups. Finally, critically evaluate the Business Council’s statement from Milton Friedman’s perspective: What, if anything, would Friedman think is wrong with the Business Roundtable’s statement? Conclude by analysing whether the Business Roundtable was right to issue this statement.

The case study and the research will explain the key ideas and the main thesis of the Business New Roundtable’s Statement according to the ”181 CEOs who signed a new bill to lead their companies for benefits and developments of all stakeholders and not just for shareholders” (Roundtable Statement 2019). The new ideas that were shared by CEOs for stakeholders are mostly relevant to the ethics theory such as Universalists theory which includes (utilitarianism and Duty-based (Kantian).

The essay will discuss what the stakeholder is according to R. Edward Freeman, as ” Freeman suggests that a company’s stakeholders are “those groups without whose support the organization would cease to exist”, (Edward Freeman, 2014). Also, it will identify the main stakeholders according to the Business Roundtable’s statement and these stakeholders will include (Customers, employees, suppliers, communities, and shareholders), furthermore, according to Freeman businesses would have an ethical obligation for stakeholders groups, because Freeman believes that organisations need to be open and mindful not just for the shareholders but also for those who work inside or invest in the company, and for those who live near its companies.

Lastly, the essay will evaluate the Roundtable’s Statement on Milton Friedman’s perspective, which he believes that organisations only maximise profits from its shareholders, where he also thinks that stakeholder can be a wrong term to use for company’s profit. According to Milton Friedman ”that in capitalism, the only stakeholders a company should care about are its shareholders” (Archie B. Carroll and Ann K.2014). At the end, the essay will demonstrate if Business Roundtable was right to issue this statement.

Business plays a vital role in America’s economy, the new roundtable statement in 2019 many CEOs from numerous companies have signed a new statement to all stakeholders.

The main reason for the new statement was to serve all Americans who’s working for the companies. According to the statement (2019), many CEOs have shared that the fundamental commitment to all their stakeholders was for ” delivering value to their customers which they believe that customers play an important role in the company’s profit. Investing in their employees: mainly to provide support and help for their employees. Dealing fairly with its suppliers, which is working together with other partners. Also supporting the communities to protect the environment and the people who live near the companies. And lastly, give rise to long-term value for shareholders, which allow the organisation to invest and grow”. Each one of these stakeholders is essential to the companies and to the company’s long -term value of profit.

The new roundtable statement shows that ethics theory was clearly demonstrated, it looks like the most important ethic theory was the universalist theory, which emphasise on the two key universalist theories such as (Utilitarian and Kantian). Each of these ethics has a different definition and meaning to the business.

Utilitarianism is one of the first ethical theories that we need to consider because it has a significant impact on the modern world, and it has shaped politics, economics and public policy. Utilitarianism is consequentialist ethics, good or bad acts are determined by their consequences and it is about happiness, as Joseph DesJAEDINS (2006, p.30), stated that ”maximizing the overall good”, or ”the greatest good for the greatest number”. The new statement of roundtable shows that CEOs are committed to making everyone happy at their workplace and to ”be serving everyone – such as investors, employees, communities, suppliers, and customers,” (Roundtable statement 2019).

Also, the Kantian theory is very clear in the statement which all stakeholders must act only according to those maxims that could be universally accepted and acted on, (Joseph DesJAEDINS 2006). For example, Kant believed that that truth-telling could, but lying could be not, be made a universal law. In the statement, the CEOs have shown that respecting everyone is a vital role, and this can be virtue ethics.

Stakeholder theory becomes a very popular term in the corporate world in the last few decades. Stakeholders means all people who works for the company or its profit. According to Freeman (1983) distinguish two senses of stakeholders. The “narrow definition” includes those groups that are vital to the survival and success of the corporation. The “wide definition” includes any group or individual who can affect or is affected by the corporation”. As Freeman’s definition of the narrow senses of stakeholders are those primary groups such as employees, customers, suppliers, and key government agencies this includes communities and shareholders. But on a wider level, these stakeholders are public interest groups, protest groups, trade associations, unions and competitors, (Freeman, 1984). Freeman mostly focuses on the narrow sense of stakeholders because he believes that those groups are like ”Red blood cells to have life” or as he stated that ”if you get all stakeholders in the same direction, the company will have momentum and real power”, (Archie B. Carroll and Ann K.2014).

Many CEOs in USA from different companies have demonstrated the primary source of the New Roundtable Statement is to deliver the principles or values to all their stakeholders and not just their shareholders, and to maximise values and not only for profits. As the business Roundtable identifies the most important stakeholders are customers, employees, suppliers, and the communities in which they work and certainly shareholders, (Roundtable Statement, 2019). Each of these stakeholders is important to the future of the company and the country. According to R. Edward Freeman, all these stakeholders have a special value in the firms such as, ” Suppliers, interpreted in a stakeholder sense, are vital to the success of the firm, for raw materials will determine the final product’s quality and price” or ”Customers provide the lifeblood of the firm in the form of revenue”. As the author Freeman believes that, businesses should have an ethical obligation to all stakeholders, and they must treat all stakeholder groups with accepted ethical standards such as honesty and respect. Also, he believes that it is fundamental for organisations to have moral rights and individual rights, it is suggested by ‘Freeman’ that if all organisations treat their stakeholders ethically, they will enjoy higher profits. And management must keep the relationships among stakeholders in balance for a better success of the company’s value, (Freeman, 1993). In many countries around the world, it is important to treat employees, customers, and other parties because its codified in-laws that ”treating all stakeholders is a requirement of any form of business firm”, (John R. Boatright, 2006).

The business Roundtable from Milton Friedman’s perspective is would probably very different from Freeman’s perspective. Friedman believes that companies should just focus on the shareholders as they are the company’s profits. According to the ”Business Roundtable’s old statement of purpose espoused economist Milton Friedman’s decades-old theory that companies’ only obligation is to maximize value for shareholders” (David Benoit, 2019). The new Roundtable Statement has identified that all stakeholders are essential in a business world which is clearly opposite to Friedman’s view. The author also believes that the only stakeholders a firm should care about are its shareholders. Therefore, according to Friedman, ”he states that a company has no real “social responsibility” to the public since its only concern is to increase profits for the shareholders”, (Archie B. Carroll and Ann K. Buchholz, 2014).

Friedman would think that the new Roundtable statement is completely wrong in terms of stakeholders, as mentioned before the primary obligation of the business’s profits is just for shareholders. The new statement shows that each of those stakeholders such as customers, employees, suppliers, and communities are the main characters in the business. Friedman would disagree with the new statement which he believes maximise profit just from shareholders. According to Friedman, ‘’the only people have responsibilities. A corporation is an “artificial person.” Since business is not a person, it does not have social responsibilities”, (Jon Mertz, 2019).

Many people and CEOs think that it was right to issue the new Roundtable statement, as it is mentioned in the statement the business in the 21st century is mostly focused on ”generating long-term value for all stakeholders” (Roundtable, 2019). They also, consider sharing prosperity for both business and society and to have a better future for the company and everyone.

To conclude, the new business Roundtable statement has shared new ideas about stakeholders, many CEOs have signed the new statement to commit to benefiting for all their stakeholders such as customers, employees, communities, suppliers, and shareholders as well. The statement is showing that ethics theory such as (Utilitarian: is about happiness which makes all stakeholders happy and connected to their workplaces and this can result in higher profit for the company. And Kantian or duty base ethics which means all stakeholders should follow the right rules of the company just like universal laws). According to Freeman stakeholders are (1984), ”It suggests that a company’s stakeholders include people like employees, customers, community members, and shareholders. And the statement has the same stakeholders mentioned that they are the main stakeholder for the business. For example, said Jamie Dimon, Chairman, and CEO of JPMorgan Chase & Co. and Chairman of Business Roundtable (2019). “Major employers are investing in their workers and communities because they know it is the only way to be successful over the long term”. Friedman’s view is very different from Freeman’s perspective, as Friedman believes that the only stakeholder of maximising profit just from shareholders and also he would think the new statement is wrong.