Friedman And Freeman Study Guide

This assignment will address learning unit one and two from the module guide. It will cover the stakeholder and the stakeholder theory or approach, and an application of investor relations in organisations. The essay will be structured in a logical way and the topics of discussions will be placed under relevant headings. It will compare and discuss the opposing argument offered by Friedman and Freeman and will discuss the implication that the views of Friedman and Freeman hold for corporate social investment. Additionally, it will refer to the King III Report and argue whether social responsibility actually benefits society, or is it, as Friedman claims, merely a whitewashing exercise conducted by organisations to divert attention from their real motives of only serving their ‘bottom line’ or making profits for shareholders. In conclusion, this essay will use the arguments made to state what challenges and changes organisations face in terms of investor relations. Opposing argument offered by Friedman and Freeman According to The Business Dictionary, the stakeholder theory or approach is: “a conceptual framework of business ethics and organizational management which addresses moral and ethical values in the management of a business or other organization. The stakeholder theory was first proposed in the book Strategic Management: A Stakeholder Approach by R. Edward Freeman and outlines how management can satisfy the interests of stakeholders in a business.” (Stakeholder Theory, 2014) The stakeholder theory can be unpacked into a numerous stakeholder theories, each of these theories has a "normative core," and is linked to the way that organisations should be run and the way that managers should behave. A ‘normative core’ of a theory is a number of sentences that contains, among others, sentences like: (1) Corporations ought to be governed... (2) Managers ought to act to... where we need arguments or further narratives which include business and moral terms to complete them. (Freeman, 1994) Freeman supports the Stakeholder Theory. His stakeholder opinion of organisations states that: “Organisations have stakeholders. That is, there are groups and individuals who can affect, or are affected by, the achievement of an organisation’s mission”. (CORPORATE COMMUNICATION 2B (CCOM6212), …show more content…
These projects have a strong developmental approach and make use of company resources to benefit and improve communities and are not above all focussed as marketing strategies. These projects include health care, education and training, environmental education, etc.
Freeman and Friedman have two opposing views on Corporate Social Investment. As written above, Friedman has cautioned organisations against unprofitable Corporate Social Investment and believes that the only social investment an organisation has is to maximise profits and provide a return to its shareholders, yet so many organisations lean towards Freeman’s theory and participate in Corporate Social Investment. Freeman’s theory applies more to organisations today. Corporate Social Investment has become popular throughout the world and many organisations have included Corporate Social Investment in their business plan. Corporate Social Investment makes organisations more striking to existing and potential stakeholders. Nowadays, society hold organisations responsible for their actions and expect them to do more than just maximise their profit by participating in social investment. For organisations to exist in the long run, they need to show interest in their current and potential stakeholders and invest in matters which concern their interests. This type of participation in society gives the organisation a good