Globale Economy Essay 2 Example | Topics and Well Written Essays - 500 words

Globale Economy 2 - Essay Example olders are the real or true owners of the company and they have invested in the organization therefore researchers and economists encourage the idea to maximize the investment made by the shareholders. The second approach is stakeholder capitalism in which all parties that have their stake in the organization should be given importance and not just the shareholders. All parties that could be influenced by the actions of the organization or their actions could influence the organization are referred to as stakeholders. Because in generating profits, there are other parties involved besides the shareholders such as employees and management of the organization, distributors, suppliers and people in the society and government, therefore the concept of stakeholder capitalism encourages maximizing the value of stakeholders rather than just investors. The approach of state ownership is also known as the government ownership as in this approach the government has the decision making authority. The concept behind state ownership approach is that the government would make decisions according to the benefit of the overall economic condition of the country and strategies would be formulated to meet the needs of the society (Clarke and Kohler, 40). Also this would discourage the idea of encouraging private firms to charge high prices and earn more profits. Stakeholder capitalism is the best approach to maximize the long run economic performance of the firm because in this approach, not only the shareholders of the firms are considered but every party that has something at stake with the organization would be given importance. Because an organization does not operate in isolation and different parties are affected by its actions therefore the approach of stakeholder capitalism should be encouraged. Employees are the ones who help the organization to grow and earn profits therefore it is important that they should be involved in the board of directors regardless of what