A Stakeholder Theory of the Modern Corporation

A Stakeholder Theory of the Modern Corporation
Before talking about stakeholder theory, we must know the definition of stakeholder. Stakeholder is a person, group, organization, or system who affects or can be affected by an organization's actions.
Types of stakeholders are :
• People who will be affected by an endeavor and can influence it but who are not directly involved with doing the work. In the private sector, People who are (or might be) affected by any action taken by an organization or group. Examples are parents, children, customers, owners, employees, associates, partners, contractors, suppliers, people that are related or located near by. Any group or individual who can affect or who is affected by achievement of a group's objectives.
• An individual or group with an interest in a group's or an organization's success in delivering intended results and in maintaining the viability of the group or the organization's product and/or service. Stakeholders influence programs, products, and services.
• Any organization, governmental entity, or individual that has a stake in or may be impacted by a given approach to environmental regulation, pollution prevention, energy conservation, etc.
• A participant in a community mobilization effort, representing a particular segment of society. School board members, environmental organizations, elected officials, chamber of commerce representatives, neighborhood advisory council members, and religious leaders are all examples of local stakeholders.
Market (or Primary) Stakeholders are those that engage in economic transactions with the business. (For example stockholders, customers, suppliers, creditors, and employees)
NonMarket (or Secondary) Stakeholders are those who - although they do not engage in direct economic exchange with the business - are affected by or can affect its actions. (For example the general public, communities,activist groups, business support groups, and the media.
A narrow mapping of a company's stakeholders might identify the following stakeholders:
• Employees
• Communities
• Shareholders
• Creditors
• Investors
• Government
• Customers
A broader mapping of a company's stakeholders may also include:
• Suppliers
• Labor unions
• Government regulatory agencies
• Industry trade groups
• Professional associations
• NGOs and other advocacy groups
• Prospective employees
• Prospective customers
• Local communities
• National communities
• Public at Large (Global Community)
• Competitors
• Schools


The Attack on Managerial Capitalism
The Legal Argument
The basic idea of managerial capitalism is that in return for controlling the firm, management vigorously pursues the interest of the stockholders. Central to the managerial view of the firm is the idea that management can pursue market transaction with suppliers and costumers in an unconstrained manner.

The Economic Argument
In its pure ideological form managerial capitalism seeks to maximize the interest of stockholders. In its perennial critics of government regulation, management espouses the invisible hand doctrine. It contends that is creates the greatest good for the greatest number, and therefore government need not intervene.
Externalities, moral hazards, and monopoly power have led to more external control on managerial capitalism. There are de facto constraints, due to these economic facts of life, on the ability of management to act in the interest, of the stockholders.

A Stakeholder Theory of the Firm
The Stakeholder Concept
Corporations have stakeholder, that is, groups and individuals who benefit from or are harmed by, and whose rights are violated or respected by, corporate actions. The concept of stakeholders is a generalization of the notion of stockholders, who themselves have some special claim on the firm.
Freeman and Reed (1983) distinguish two senses of stakeholder. The “narrow definition” includes those groups who 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.

Stakeholders of the Modern Corporation
The stakeholders in a typical modern corporation involve owners, employees, suppliers, costumers, the local community, competitor and government.

The Role of Management
Management plays a special role, for it too has a stake in the modern corporation. On the other hand, management’s stake is like that of employees, with some kind of explicit or implicit employment contract. But, on the other hand, management has a duty of save-guarding the welfare of the abstract entity that is the corporation. In short, management, especially top management, must look after the health of the corporation, and this involves balancing the multiple claims of conflicting stakeholders.
A stakeholder theory of the firm must redefine the purpose of the firm. The stockholder theory claims that the purpose of the firm is to maximize the welfare of the stockholders, perhaps subject to some moral or social constraints, either because such maximization leads to the greatest goods or because of property rights.
Example : firm have to give social responsibility for it communities, like program baby care by Johnson & Johnson that give concern for mother and their babies.

Dana Peumakmue Gampong (BKPG) Obstacled

Dana Peumakmue Gampong (BKPG) Obstacled
Government was operating Financial Support of Peumakmue Gampong (BKPG) in previous July. Each village that helped for the first step, village accepts Rp50million from 100million (twice steps). Dana Peumakmue Gempong is a program of developing economic of society at the based of village. The vision of this program is to increase independence, self-supporting, and teamwork in develop infrastructure of economic village, education facilities, health, religion, social, and the culture of villagers. The last goal is to increase villager’s income and prosperity in order to decrease the poor and absorb the unemployment in village or city. But, in recent time, that just eight percents financial support has released (government just helped 810 villages of 6411 villages). A part of government said that the obstacle of BPKG caused by village in filling proposal documents which different between sub districts. I don’t blame the villager’s mistakes. If that is true, why government didn’t give them guidance about how filling proposal was. Whereas, the time of realising the financial support only stay two months more.
I think that all of the systems are true, but I’m sure that there are “some irresponsibility lines” that make obstacle. I hope that if the working of system is incapable, Gov. Irwandi must makes assistant for resolving these obstacles and observes who the masterminds are and gives them punishment. Mechanism is clear, if there are mistakes, I’m certain that will appear from the first step in the filling the proposal before sending to the sub district vice. So that, I doubt about villager’s mistakes, maybe some masterminds make scapegoat that villagers.
Talking about giving Dana Peumakmue Gampong (BPKG), in other reason I’d rather disagree about it. In my opinion, maybe our government has many good goals, but I think that the goals of developing village are not paid by money. Money can’t change at all, giving them some money just make villagers be lazy and turn the spirit of theirs work off. Many programs designed by Governor to change Acehnese’s bad life, but in the doing of mechanism always meet obstacle. Affairs with government always difficult, I suggest that we are must independent in all sectors of life for the better life.

The Utilitarian Theory

The Utilitarian Theory

Definition of Utilitarianism
Many references define about what the definition of utilitarian theory is. Utilitarianism is a normative ethical theory that places the locus of right and wrong solely on the outcomes (consequences) of choosing one action/policy over other actions/policies. As such, it moves beyond the scope of one's own interests and takes into account the interests of others.
Utilitarianism is often described by the phrase "the greatest good for the greatest number of people", and is also known as "the "Greatest happiness principle" Utility, the good to be maximized, has been defined by various thinkers as "Happiness" "Pleasure" "Pain" "Preference utilitarianism" define it as the satisfaction of preferences. It may be described as a "Life stance" "Intrinsic value (ethics)"
">Bentham's Principle of Utility:
(1) Recognizes the fundamental role of pain and pleasure in human life,
(2) approves or disapproves of an action on the basis of the amount of pain or pleasure brought about i.e, consequences, (3) equates good with pleasure and evil with pain, and
(4) asserts that pleasure and pain are capable of quantification (and hence 'measure').
In measuring pleasure and pain, Bentham introduces the following criteria: intensity, duration, certainty (or uncertainty), and its nearness (or farness). He also includes its "fecundity" (will more of the same follow?) and its "purity" (its pleasure won't be followed by pain & vice versa). In considering actions that affect numbers of people, we must also account for its extent.
">John Stuart Mill adjusted the more hedonistic tendencies in Bentham's philosophy by emphasizing
(1) It is not the quantity of pleasure, but the quality of happiness that is central to utilitarianism,
(2) the calculus is unreasonable -- qualities cannot be quantified (there is a distinction between 'higher' and 'lower' pleasures), and
(3) utilitarianism refers to "the Greatest Happiness Principle" -- it seeks to promote the capability of achieving happiness (higher pleasures) for the most amount of people (this is its "extent").
Act and Rule Utilitarianism
We can apply the principle of utility to either particular actions or general rules. The former is called "act-utilitarianism" and the latter is called "rule-utilitarianism."
Act-utilitarianism -- The principle of utility is applied directly to each alternative act in a situation of choice. The right act is then defined as the one which brings about the best results (or the least amount of bad results).
Criticisms of this view point to the difficulty of attaining a full knowledge and certainly of the consequences of our actions.It is possible to justify immoral acts using AU: Suppose you could end a regional war by torturing children whose fathers are enemy soliders, thus revealing the hide outs of the fathers.
Rule-utilitarianism -- The principle of utility is used to determine the validity of rules of conduct (moral principles). A rule like promise-keeping is established by looking at the consequences of a world in which people broke promises at will and a world in which promises were binding. Right and wrong are then defined as following or breaking those rules.Some criticisms of this position point out that if the Rules take into account more and more exceptions, RU collapses into AU.More general criticisms of this view argue that it is possible to generate "unjust rules" according to the principle of utility. For example, slavery in Greece might be right if it led to an overall achievement of cultivated happiness at the expense of some mistreated individuals.
Some Cases of Utilitarian Theory
We find a more significant objection to Utilitarian moral theory in the following sort of case. Consider Fulan, who goes to the doctor for a check up. His doctor finds that Fulan is in perfect health. And his doctor also finds that Fulan is biologically compatible with six other patients she has who are all dieing of various sorts of organ failure. Let us assume that if Fulan lives out his days he will live a typically good life, one that is pleasant to Fulan and also brings happiness to his friends and family. But we will assume that Fulan will not discover a cure for Leukemia or bring about world peace. And let us make similar assumptions about the six people suffering from organ failure. According to simple act utilitarianism, it looks like the right thing for Fulan’s doctor to do is to kill Fulan and take his organs for the benefit of the six patients who will otherwise die. But intuitively, this would be quite wrong. Act utilitarianism gets the wrong result in this sort of case. This case seems to provide a clear counterexample to simple act utilitarianism. Can the utilitarian view be modified to avoid this sort of counterexample?
One move open to the utilitarian is to evaluate rules for acting rather than individual actions. A version of rule utilitarianism might say that the right action is the action that follows the rule which, in general, will produce the highest utility. A rule that tells doctors to kill their patients when others require their organs would not have very high utility in general. People would avoid their doctors and illness would go untreated were such a rule in effect. Rather, the rule that doctors should do no harm to their patients would have much higher utility in general. So the move to rule utilitarianism seems to avoid the difficulty we found with act utilitarianism. Or at least it seems to when we consider just these two rules.
Other cases, we can see at the production system of Nabisco production biscuit. As we know that most people love that biscuit, especially for children. This product also has reached price for us. In my opinion, at the beginning, the system of production Nabisco is going smoothly, good, and suitable on nutrition and food test. But, in recent year, there are information which tells us about embezzlement of raw materials that can be dangerous for human health because contain melamine. This is happened by the reason of economic crisis global that influence of raw materials is more expensive and the implication for the profit of product management is lower. They want to decrease cost of production by using “uncertain the raw materials”, whereas that inflict financial loss and medical loss for the costumer.Not only Nabisco(which is a large enterprise) but also small sellers, who sell various food, such as gulali (a kind of candy), fruit ice, fried chicken, bakso, etc fix their products with sweeteners, unnatural dye, borax, or other dangerous materials which can be bad impact for consumer. Where is the seller’s responsibility?
Based on utilitarian theory that act and policy on decision taking must be evaluated so that can be “fairness”. So, the want for taking biggest profit must do by fair production and give benefits for people and get the good name of enterprise for the consumer back.
Utilitarianism seems to fall short in failing to afford respect for persons. I find a compelling reason here for rejecting utilitarianism as a complete moral theory. But this is not to deny that producing happiness is important from an ethical point of view. One can take the utilitarian theory to capture something that is important about acting well even while taking respect for persons to override utilitarian reasons in cases like above where there is a conflict. This conclusion – that everybody's interests should be considered equally when making decisions – is a core tenet of utilitarianism.

Task Three My opinion about:” Schwarzenegger to Shriver: Put down the cell phone"

This is the true story how the wife of governor violating a state law" "http://news.yahoo.com/s/ap/us_shriver_cell_phone".
I think that Shiver did an unethical deed. She is the first lady, wife of a governor; surely she will be an icon for California citizens. Right or wrong her attitude will be the examples for California citizens. I am very disappointed by her.
About the law of cell phone, a driver must know and do the role; everyone must not hold the cell phone except use the hands free. The purpose of the cell phone law is to protect the driver in order to get the safety condition for the driver. It is possible if the driver held her phone behind the wheel, the accident would be occurred.
Then, I am proud of Schwarzenegger that takes the swift action although the cell phone law has broken by her wife. But, I hope that his swift action not only ask her wife not to hold the phone while driving but also punish her in order no body of other citizens do like that.
In fact, we can see, not only in California but also in Indonesia, everyday on the street, we still find some people hold their phone and don’t care about that role. Not only about cell phone law, but also about other law violence. In Aceh, for example, many drivers often turn on the right at Peurada intersection whereas that is violation of law. Surely, that are a bad attitude, unethical, and very dangerous for the driver or street user, the driver must have the swift action because of the crime and it is about public interest. Whereas the driver can pull the vehicle over to the sidewalk for holding the phone, but that law has not applied by the driver too. Remember that the way will be the killing field, so put down your cell phone or the cell phone would put you down!
So we can take a summary that the Schwarzenegger’s wife did an unethical deed and make her husband as a governor ashamed, whereas she is the first lady there. She must be a good icon for other citizens.

Task Two My Opinion (About the Statement of Qory Sandioriva)

It is about my opinion about the statement of the winner of Puteri Indonesia 2009, Qory Sandioriva : “Saya menanggalkan jilbab saya dengan izin dari Pemda Aceh. Semoga keputusan saya bisa diterima” on Friday (9/10/2009) “from "http://www.detikhot.com/read/2009/10/10/105951/1219007/230/puteri-indonesia-2009-berbohong-soal-jilbab"
Actually, I am really proud of NAD victory on qualified site as an inhabitant of Nanggroe Aceh Darussalam like MTQ, debate, science Olympics, and other . But, I don’t agree with Putri Indonesia site. Why? Because I think Putri Indonesia site is not appropriate with Islamic law. I sense there are has positive side; competition of talent, attitude, wide conceptions. But I really don’t agree with the Moslem woman who not take veil or take her veil off and show her parts of body. In my opinion, Qory Sandioriva is not a consistent girl, because of three of her statements;
o Firstly she talked that she took her veil off for Putri Indonesia site;
o Second, she talked that NAD government allow her for taking her veil off ; and
o Finally she talked that she really doesn’t take veil on daily life.
So, Which one the truth?
For the first statement, I think that Qory only wants to get personal or group interest. Maybe she is worry if doesn’t get the crown of Putri Indonesia, so she takes her veil off. It is possible if there are some people take the chance to make the bad names of NAD.
For the second, in my opinion NAD is a special province which has special authority for applying Syari’at Islam as law. So, it is impossible if NAD government gives her allowance.
For the last statement, maybe it is true if she doesn’t take veil all day, she was born and grow in Jakarta, not in Aceh, but why she gives some “doubt statements like that?”. That just make ashamed and unethical attitude.
She is the Putri Indonesia 2009, we know that a Putri Indonesia is an good icon for all girls in Indonesia and she will bring the name of Indonesia to the world in Miss Universe site. Of course she will dress in disgraceful way. We can see Artika Sari Devi, Nadine Chandrawinata, and Zivanna (the previously of Putri Indonesia), they accept belittling comments from Indonesian because they wear bikini and show it for all people in the world. Surely show bikini is not Eastern culture. Maybe Qory will be like that too (a vice of NAD show bikini). Of course an icon must have good ethics. But what happen with Qory? What icon of attitude that she show for all Indonesian really doesn’t make Indonesian proud of her, especially for Acehnese which applied Syariat Islam on its guidance. As an Acehnese and an Indonesian, I am certain disappointed.
It is not only about that veil, but also about ethical attitude. It is a freedom for Qory to follow whatever site which one she wants. But, in fact she must not makes us disappointed like that and she should be consistent about what she talked. What about veil? In Al-Qur’an surely Allah tells us about take the veil is a must for adult woman (QS.An-Nur :31 and 60, Al-Ahzab:59). It is absolutely clear. I think that hair is a crown for a woman, but it is not mean that a woman must show her “crown” to other man who is not her mahram (degree of consanguinity between a man and woman that renders marriage impossible but gives them the right of association) , but to protect her “crown” in order to can’t be touched by other man.
According to the Qory’s statement, perhaps in other people sight Qory is brave girl and brings a good name for Nanggroe Aceh Darussalam and Indonesia in the world, but I really don’t agree with her, Qory just a inconsistent girl and brings a bad name for my beloved province, Nanggroe Aceh Darussalam.
All of the truth come from Allah…and the mistake of my opinion come from me as an unperfected human. Wish that Allah always take care and guide our heart, mind, statements, and deed. Amen.

Task One Business Ethics On Our Society

Task One
Business Ethics On Our Society


If we talked about business ethics, we’ll imagine that what business ethics is.
Ethics is the discipline that deals with what is good and bad and with moral duty and obligation. Ethics can also be regarded as a set of moral principles or values. Morality is a doctrine or system of moral conduct. Moral conduct refers to that which relates to principles of right and wrong in behaviour. Business ethics, therefore, is concerned with good and bad or right and wrong behaviour that takes place within a business context. Concepts of right and wrong are increasingly being interpreted today to include the more difficult and subtle questions of fairness, justice, and equity (Caroll & Buchholtz)
Ethics is a philosophical term derived from the Greek word “ethos,” meaning character or custom. This definition is germane to effective leadership in organizations in that it connotes an organization code conveying moral integrity and consistent values in service to the public.
(R. Sims, Ethics and Corporate Social Responsibility – Why Giants Fall, C.T.:Greenwood Press, 2003)
Thus, there are some keywords :
• Ethics: Is the discipline that deals with what is good and bad and with moral duty and obligation, can also be regarded as a set of moral principles or values.
• Ethical behavior: Is that which isaccepted as morally “good” and “right” as opposed to “bad” or “wrong” in a particular setting.
• Morality: A system or doctrine of moral conduct which refers to principles of right and wrong in behaviour.
On the Business Ethics Case Studies and selected Reading (book written By Marianne M. Jennings); Ethical standards are not the standard of the law. In fact, they are a higher standard. Sometimes referred to as normative standards in philosophy, ethical standards are the generally accepted rules of conduct that govern society. Ethical rules are both standards and expectations for behavior, and we have developed them for nearly all aspects of life.
Ethics consist of those unwritten rules we have developed for our interactions with each other. Ethics is more than just common, or normative, standards of behavior. Ethics is honesty, fairness, and justice.
Business ethics means a great deal more than obeying the civil law and not violating the moral law. It means imagining and creating the new sort of world based on the principles of individual creativity. Business ethics means meeting the responsibilities of corporations and smalls business.
Experts often crack jokes that business ethics are a contradiction term because in business ethics have contradiction between ethics and individual interest that orientated to look for the profit. When there are conflicts between ethics and profit, business prefer profit better than ethics.
Nowadays, maybe a part of society doesn’t know what ethics in business are. It can be they assume business doesn’t need ethics, because the matter of ethics only is in society that has forcefully culture. Or ethics only be as someone privacy area. But, in fact ethics still be on society and applied on themselves. How with the firm environment? Firm also a part of organisation that has surely structure of management. Many interactions of interpersonal and institutions implicated on it. Besides, conflict and corruption easy happened. So, in organisation needs ethics as a control of policy.
But, can ethics applied on society and sensed by people who must get it? In fact, many firms prefer to get profit than apply ethics. It can be manipulation and corruption for get the firm importance. For the cases that are, Lapindo mud in Porong, Sidoardjo, Buyat Bay, and so on. Where is the responsibility of the businessman? Could we see it? That all happened because of unapplied ethics in business. In the ethics contain appreciation, honourable, moral and social responsibility towards human and nature. That are two important things; firm and society must balance. Within also contain rights and duties that have to fulfilled. For other case, we can see in our district, some businessmen that have unfair attitude, like sale meat ball (bakso) without cow meat, but from rat, cat, and other animals, or fill their merchandise with formalin, borax, and other dangerous materials. We know that materials can damage people health. What shall we do? What a poor attitude!
Lets we make introspection, unapplied ethics in the business can be boomerang for the people or firm who do that unethical attitude. That can be much cost for resolving the cases and the bad value of the firm in society. That matters will damage the firm. Whereas, the research write that, business ethics can increase firm earnings, profitability, market value added, and better revenue twice or three times than firm which unapplied business ethics (De Paul University, 1997). Such was the cases; the people must apply the business ethics on society for having many benefits, like the sustainability or long term business.
The implementation of ethics always influenced religious factor and cultural factor. Such as the Islamic law (syari’at Islam) in our district , Nanggroe Aceh Darussalam, that give general regulation and standard of ethics that connected with business concept, such as the matters of ownership, fairness, price, competition, and relationship between owner and worker. Normatively, basic values that give guidance in business attitude reflected by Rasulullah SAW attitude. As a trading manager, his attitude has motivation and Qur’any attitude, such as vision to the next life and important for making plan (QS 59:18). In ethics concept like that, human should pay attention for the next life (akhirat); public interest, like emphasize the important of professionalism at business (such as commitment of quality, job productivity, effectiveness, efficiency, and others). Business ethics are the regulation of business based on Al-Qur’an, Hadits, and the regulations made from the fuqaha. Islamic business ethics have some principles that are tauhid, responsibility, fairness, and truth. So, it can make a best relationship between someone with Allah, other people, and nature.
I’m sure that Islamic business ethics on our society can increase the quality of job and also human resources. We hope that people aware that everything what it right or wrong that people do, Allah can watch it everywhere and every time. So, everyone is a leader, he has responsibility of his job.