Contents

• Introduction
• Classical view
• Socio-economic view
• Discussion
• Conclusion
• Reference list

Description

In today’s world of cut-throat competition, businesses are trying to have an edge over their competitors in any way possible. Bottom line thinking exists largely. The main aim of the management is maximisation of share prices, and thus shareholders’ wealth. However, there is another school of thought, which believes that maximising shareholders’ wealth is the secondary goal. The primary goal of any business is to survive in the race of management. Only thinking about profits can mean that the company is fast headed towards dooms-day. For surviving, a company must look after all its stakeholders in the business environment. Stakeholders of a company include its employees, customers and suppliers, the environment, government and regulatory agencies, and the community at large. This essay aims to look at which school of thought should a business follow and whether the use of company’s resources for engaging in social activities is actually a mismanagement of shareholders’ money.