About Big What
A company must consider many factors before making a decision, especially if that
decision affects more than monetary profits. Most commonly when dealing with large
corporations we find that there are two parties, shareholders and stakeholders, affected by any
major decision the company makes. Shareholders own parts of the company usually through
stock ownership and are typically solely concerned with the profitability of the company.
Stakeholders on the other hand have a varying set of interests seeing as they consist of a broader
set of parties including company employees, customers, suppliers, and in more recent definitions
the general public. These two parties, shareholders and stakeholders, can be likened in similarity
to the relationship that exists between a square and a rectangle being that all shareholders are
stakeholders while not all stakeholders are shareholders. Big Steel needs to decide whether it
should purchase and install state-of-the art pollution reducing equipment despite it not being a
legal requirement in the country where it is currently manufacturing its steel. Traditionally, Big
Steel if not required, would have no real motive to install the equipment as it likely would not
increase profits in effect favoring shareholders. Yet, be this the case, we must consider the effects
of any major decision on both parties before deciding what the optimal decision to implement
might be.
If Big Steel were to purchase and integrate state-of-the art pollution reducing equipment
the most immediate effect would likely fall on shareholders. The equipment would incur a major
expense considering its high cost effectively affecting profits. Since the cost would be higher
without a conceivable increase in sales the profitability of Big Steel would suffer. Being that
shareholders are owners of stock and hold equity in the company a loss of profits would hurt
their interests in Big Steel. The effect on stakeholders is variable depending on which
stakeholders are taken into consideration. For the sake of simplicity and practicality it is best to
consider the two groups of stakeholders, aside from shareholders, most directly affected by the
implementation of this equipment. The first of these to consider are the company employees
since they are paid from the money the company generates. After the implementation of this
equipment the company will have less money to pay employees with likely leading to a loss of
jobs or, if there are no minimum wage laws in said country, a decrease in wages. Although the
