Essay About Investors Of The Novel Idea And Primary Stakeholders Of The Company

Shareholders Vs. Stakeholders
The silent partners are the investors of the Novel Idea, in other words, they are the shareholders of the corporation, even though they do not have the actual responsibility to implement the management functions, their interest and the corporation’s state of operation are closely linked, therefore, their purpose is to seek the profit-maximizing, which means they are willing to get the decent return or dividend at the end of the year. In this case, the Novel Idea’s sales decreased, their net income and profits will decrease as well, which directly impact the silent partners’ interests. Their concern is that they may not get enough dividends to cover their initial investment or the returns that they received are lower than their expectations. So as a wise shareholder, the silent partners may ask the managers to make an action to decrease the expense and increase the profit. In this situation, the shareholder’s decision is to fire a full-time employee and replace him with a part-time employee. And if the shareholder is not satisfied with the manager’s decision, they may choose to withdraw their capitals to avoid the potential loss and reinvest it in another business. Just as Milton Friedman summarized about the shareholders: “there is one and only one social responsibility of business- to use its resources and engage in activities designed to increase its profits so long as it engages in open and free competition, without deception or fraud. (Smith, 2003)”But the employees hold the different point of view in this case.They are the primary stakeholders of the company, which means the company is depending on them to achieve the long-term survival (Williams, p81), and under the stakeholder’s view, their most important responsibility is not just maximizing the profits, it is achieving the long-term development of both the shareholders and stakeholders. In the company Novel Idea, when sales decreased, the employees will worry about the operation condition of the company, but they are more concern with their own situations, which is whether they are affected by the decrease of selling in the company (Brandt & Georgiou, 2016).