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Ethical Considerations Essay - Primary and Secondary Stakeholders

Essay by   •  August 19, 2011  •  Research Paper  •  775 Words (4 Pages)  •  1,504 Views

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Ethical Considerations

The type of business decisions made within a company will determine the success and longevity of the company. Everyone involved in the company is responsible for some sort of business decision made that affects the company and these are primarily considered as the stakeholders of that company. A company is made up of stakeholders who invest in making sure the company runs smoothly and makes money.

Primary and Secondary Stakeholders

The first rule when making business decisions for a company is determining who will be the primary and secondary stakeholders in the company. The primary stakeholders will generally be the customers, employees, shareholders or owners, suppliers, and maybe even the government ( Trevino, 2007). These individuals or groups have a formal, contractual relationship with the company ( Trevino, 2007). Secondary stakeholders are other individuals or groups to whom the organization has obligations, but who are not formal, contractual partners, such as opinion formers, community, and authorities (Trevino, 2007).

When making business decisions, primary stakeholders should consider what is best for the overall company. They should consider what type of product is being invested, the materials used in making the product, and the quality of the product. Product safety should also be considered. It has to be a product that will sale and has a competitive advantage. Financial risks should also be considered. Stakeholders need to know where their money is going and if the risk of loss is high or low. Also, primary stakeholders should consider the environment of the company. Is it a safe workplace? Is there a code of conduct put into place that will regulate the rights of the employees and the employer? Secondary stakeholders, such as the communities, are to consider if the company is safe for the environment. The community in which the company resides has to be aware of hazardous chemicals that may pollute the air. The Environmental Protection Act was created in 1969, to protect the air, water, and earth from the activities of businesses and individuals (Trevino, 2007).

For- Profit and Nonprofit Organizations

For profit organizations are organizations that exist only to gain a profit. Their main goal is to bring in more money than they have to spend. The owners can either put the money back into the business or put it in their pockets. They could also decide to share with their employees through benefit options or bonuses. Nonprofit organizations are just the opposite. The owners do not work for a profit. They exist to provide a service to the community. Nonprofit organizations work under laws that forbid owners to accept profit for their work.

Social Responsibility and For-Profit/Nonprofit Organizations

The level of social responsibility

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