Question

the manager of a large retail chain recently spoke to a group of postsecondary students about being successful in the business world. he focused particularly on the importance of fulfilling the purpose of the business organization: that is, to produce and market profitable products needed by society. in so doing, he indicated that a shareholder, not the society as a whole, invests in a corporation to earn a return on their investment and that a company is legally obligated to act in shareholders' interests. what concept do the manager's comments reveal?

Answer 1

The manager's comments reveal the concept of shareholder primacy, which highlights the legal obligation of a company to act in the interests of shareholders. This perspective contrasts with stakeholder theory, which emphasizes a balance of interests among all stakeholders.

Step-by-step explanation:

The manager's comments reveal the concept of shareholder primacy, which emphasizes that a company is legally obligated to act in the interests of its shareholders. According to this concept, shareholders invest in a corporation to earn a return on their investment, and it is the responsibility of the company to prioritize the maximization of shareholder profits.

This perspective contrasts with stakeholder theory, which advocates for balancing the interests of all stakeholders, including employees, customers, and the community.