Stockholders vs Stakeholders: Distinguishing Roles in Companies - Essay Sample

Paper Type:  Essay
Pages:  6
Wordcount:  1419 Words
Date:  2023-02-25

Define Stockholders and Stakeholders. What Is the Difference Between the Two? How Companies Distinguish Stakeholder.

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Stockholder is an individual, a group of people, or an organization that supplies or owns stock in a business organization. A stakeholder is a term used for a person or a group of people who are influenced by or have an interest in a corporation. The distinctive feature between a stockholder and a stakeholder is the latter is the person interested success of a company; a good example is an employee, whereas a stockholder is that individual with financial investment in a corporation (Clark, Steckler, & Newell, 2016). Companies view stakeholders as a company's resources. The stakeholders invest their efforts in the success of the corporation.

What Process Does A Company Adopt to Go Through to And Respond to Stakeholders' Concerns? What Are the Steps in This Process?

Stakeholders are concerned with the governance of the organization. Therefore, to address their concerns, the organization has to address policies that govern the organization. It gives the stakeholders assurance that the shareholder's interests are in control. The stakeholders are also concerned about the continuity of the organization, and therefore the organization has to address the succession processes of the organization.

The processes involved in responding to stakeholders' concerns include identifying the stakeholders, then defining the interests of the stakeholders, determining the correct tools or means of communication with the stakeholders, and then creating a strategy of action. The last step involves managing the plan and monitoring the project to ensure that it's effective and serves the purpose it's intended.

What Is the Agency Problem? What Are the Governance Mechanisms That Can Be Put in Place To Guard Against This Problem?

Agency problem refers to conflicts or misunderstanding in an organization resulting from people given authority over others use their position of power to cater to their own needs. For example, managers who have no invested capital in an organization may use their position to limit the profits of the organization. Thus, there arises a conflicting interest between the managers and the owners of the organization or business.

The solution for agency problems is introducing what's popularly known as ESOP, Employee Stock Ownership. In other words, the ownership interest of the organization is induced into the workforce or employees. The ownership interest is offered to the employees as a form of incentive or remuneration. Thus, employees have a sense of ownership and avoid cases of conflicting interests.

Describe Internal Controls and Strategies That Can Be Implemented to Ensure Ethical Behavior Within A Company. Why Internal Controls to Maintain Ethical Concerns Are Essential?

Internal controls are processes and approaches that an organization uses to promote financial and accounting integrity to prevent fraud and embezzlement of organization's resources. Ethical behaviors in a company are propagated from the top management of the company down to the juniors. The managers ought to be a role model for their subjects. Thus, senior managers have to act in a way that promotes ethics in the company.

The company should have a set of code of ethics that each employee is to follow. By having the code of ethics outlined to the employees, chances of ambiguity and misconduct are low in the organization.

The business organization should have workshops and training that aim at instilling ethical behaviors to the employees. The workshops will help the organization to reinforce the code of ethics. It also offers a chance for the employees to learn together and point out any possible ethical dilemmas.

An organization can address internal control and ethical issues by implementing strategies that aim at rewarding employees that portray ethical behaviors in the organization. It also can put in place ways to punish employees who fail to uphold an organization's ethics.

Internal control to maintain ethical behaviors in an organization is essential because it ensures the organization's assets are safe (Noe, Hollenbeck, Gerhart, & Wright, 2017). The employees are unable to steal from the organization. Nevertheless, it helps to enhance the efficiency of the organization by ensuring timely and accurate deliveries.

How Can Organizational Design Contribute to Competitive Advantage?

An organization has to develop an organizational design that includes a useful operating model, an organizational structure, establishing governance mechanisms, and put in place a system to check the performance of the personnel.

Through organizational structure, the organization can identify and design the business in such a way that it can gain the desired competitive advantage. Proper governance ensures that the chain of command in the organization is manageable (Kostova, Nell, & Hoenen, 2018). Therefore, the business can benefit from competitive advantages by having proper management, which translates to increased efficiency.

To maximize competitive advantage, the management should have means to access the performance of the employees. Employees are vital resources in the organization. Therefore, the business must put in place means to check on performance of employees and ensure that this performance is continuously increasing. All these approaches are crucial and help in quality improvements, improved customer relations, reduce employee failures, and generally contributing to a competitive business environment for the organization.

What Elements in Organizational Design Are Essential?

The elements that are important include; useful operating model, an organizational structure, establishing governance mechanisms, and put in place a system to check the performance of the personnel within the organization.

Describe How A Robust Organizational Culture Leads to Transparency, Ethics, And to A Competitive Advantage Within A Company.

The culture serves as the only identifier of the organization. It helps the business to stand out in the face of employees, management, and clients. Thus, the organizational culture helps in clearly defining the vision and mission of the organization. These are passed down whenever new employees join the organization. Therefore, the workers are trained to trail specific codes of ethics in their dealings with clients in the business.

How Do Corporations Develop Strategic Plans for Single or Multidivisional Structures? What Are Some Advantages and Problems in Implementing A Multidivisional Structure?

To develop strategic plans, corporations divide and classify the single or multidivisional business structures into units referred to as strategic business units. These units are in different categories according to their relationship in terms of markets, technological requirements, and the competitive environment. If the corporation finds it necessary to share and allocate resources to the strategic business units, it will then use the BSG matrix after the classification (Guy, 2019).

Multidivisional organizational structure helps a corporation in terms of accountability since a manager is accountable for his division. The divisions under the multidivisional construction are conscious of any changes in the markets within the divisions. Thus, the divisions can respond quickly to changing market conditions. Multidivisional arrangements are helpful in terms of decision making since the decisions are at the divisional level.

Nevertheless, multidivisional structures have the disadvantage of increased operating costs and reduced chances for economies of scale. This is caused by duplication of organizational functions. There are chances of a lack of standardization of products and services due to the independent nature of production.

How Do Companies Implement Strategies at A Global Level? What Organizational Structures Help Them Develop A Competitive Advantage?

At a global level, companies focus on implementing plans and strategies that work on a worldwide scale. The companies, therefore, use global standardization of its goods and services. In addition to this, the company uses strategies such as localization strategy, which focuses on customers' behaviors, purchasing power and culture in a foreign country. A translational plan is also an essential approach that an organization uses when taking its product and services to a global market (Binder, 2016). It means using the language used in the foreign country. Overall, companies use international strategy to implement the comprehensive approach. At the global level, the companies use complex organizational structure. The complex structure involves using a form of a grid set up for employees to report to the managers.


Binder, J. (2016). Global project management: communication, collaboration, and management across borders. Routledge.

Clark, C. E., Steckler, E. L., & Newell, S. (2016). Managing contradiction: Stockholder and stakeholder views of the firm as a a paradoxical opportunity. Business and Society Review, 121(1), 123-159.

Guy, J. S. (2019). Structure and Agency: Problem and Solution. In Theory Beyond Structure and Agency (pp. 25-47). Palgrave Macmillan, Cham.

Kostova, T., Nell, P. C., & Hoenen, A. K. (2018). Understanding agency problems in headquarters-subsidiary relationships in multinational corporations: A contextualized model. Journal of Management, 44(7), 2611-2637.

Noe, R. A., Hollenbeck, J. R., Gerhart, B., & Wright, P. M. (2017). Human resource management: Gaining a competitive advantage. New York, NY: McGraw-Hill Education.

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Stockholders vs Stakeholders: Distinguishing Roles in Companies - Essay Sample. (2023, Feb 25). Retrieved from

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