The History Of Business Ethics And Stakeholder Theory In America Essay

Stakeholder Management
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Stakeholder Management
Organizations are characterized by different stakeholders who play a role in the success or failure of the organization. To achieve the former, organizations have to establish and meet the needs of all these stakeholders (Aderibigbe & Fragouli, 2020). Stakeholders, in this case, include any person/ group of people who are affected by the actions of the organization or who influence the success of the organization. According to Aderibigbe and Fragouli (2020), stakeholders do not influence the organization the same way and their needs can be contradicting, at times. This is where stakeholder management comes in. Stakeholder management entails building and maintaining effective relationships with stakeholders by engaging them in various levels of decision-making (Lehtinen, Aaltonen, & Rajala, 2018). It involves identifying the different stakeholders that are instrumental to the organization's success, determining what their key needs are, and establishing strategies to meet these needs. It is about managing and directing the interaction between the business and various stakeholders, such as suppliers, employees, shareholders, communities, and others, to create value for the business (Freeman, 2017). Organizations need to have a stakeholder management plan to guide them on how to effectively engage stakeholders and improve the business-stakeholders’ relationship. Stakeholder management ensures that the organization can develop a competitive advantage and improve its bottom line (Laplume, Walker, Zhang, & Yu, 2020). This is especially important at a time when companies are working towards achieving the triple bottom line for business sustainability.
In the case scenario, various stakeholders will be impacted by the company’s decision to off-shore its manufacturing facilities to a developing nation to reduce labor costs. The following is a short description of how employees/ unions, communities, and stockholders will be impacted:
* Employees/ unions
One of the key effects that this decision might have on employees is that it will negatively affect their wages. Moving to poor nations means that the company is looking to cut on its labor costs. As revealed by Wolszczak-Derlacz and Parteka (2016), offshoring negatively impacts the wages of employees in the home country. Normally, the wages in developed countries are higher than those in developing countries. When companies decide to offshore to developing countries, they are directly putting downward pressure on the developed countries’ wages. Employees might be forced to accept lower wages to keep their jobs. Also, this decision will reduce employment opportunities. The company might need to lay-off some employees in favor of the cheap workforce in a poor country. This will not sit well with the employees and their unions. Further, if some of the employees have to be relocated to the poor nation, they might demand a better compensation package for hardships in the poor nation, which will put a strain on the relationship between the company and the union.
* Communities
The loss of employment opportunities will not only be felt by the current employees but als...