University:
McMaster University
Course:
COMMERCE 2FB3 | Managerial Finance
Academic year:

2024
Views:

192

Pages:

2
Author:

Sabrina S.

COMMERCE 2FB3 Balancing Shareholder Value with Social Responsibility - Discussion Questions 1. What is the main contradiction between the shareholder’s value and social responsibility? The primary conflict is that while the economics of the firm consist in the strategic maximization of shareholder value by a company, social responsibility thinks in terms of a strategic and sustainable realization of several societal economic interests. - While aiming at the increase of their profits, some organizations may be pushed to lower expenses and outgoing, lay off more employees, or pollute more than necessary strategies counter to social responsibility. 2. In what ways can the idea of social responsibility become embedded into corporate planning? Some aspects, through which companies can include social responsibility are by implementing environment friendly production procedures, practicing fair labor policies, undertaking community welfare projects and have an accountable system of governance. Also, they can establish targets on the change they would like to see in the society and use reports to update stakeholders on the outcomes. 3. Now answering the second question, what are the possible advantages of putting the interest of shareholders with that of social responsibility? 1. That correlates the goals of a shareholder to the goals of responsibility to society can contribute to a better brand image and thus, more loyalty from customers and more sustainable future returns. 2. It can also get fix investors who want to invest in companies that conduct their business in socially responsible manner hence increasing the number of investors. . 4. Can the management position that business has social responsibilities and act upon this by striving to achieve a greater level of social responsibility, indeed lead to a competitive advantage? If so, how? By performing social responsibility, there is a possibility of gaining a competitive edge due to the reduced similarities with other companies. The share of the ethical consumers is rising worldwide, and they prefer the companies that are involved with ethical behaviors and environmental concerns. - Besides, it may result in improvement of operations, reduction in costs, and development of innovations with the help of sustainable measures. 5. The objective that comes from this is: What part do stakeholders have in managing shareholders’ value and social policy? Another factor is the involvement of other stakeholders, namely: Organizational members, customers, suppliers as well as the society, who ensure that organizations are answerable for their behaviors. They can affect the business practices through campaigning, sharing their opinions, suggestions for improvement and, more importantly, through their personal consumption that puts value in societal justice into practice. It is stated that integrating the stakeholders into COMMERCE 2FB3 the decision making process should be of benefit to foster a balance between both the financial and social gains.