Stockholders vs. Stakeholders: What's the Difference?

Background Information 

From the case, it is evident that the COO a United States citizen working for HotFeet, which is a Seattle-based Shoe Company. He has had the chance to work for the company for 20 years now with 15 years spent in Sri Lanka. For the last five years, he has been the AHF’s COO. Critically, it is essential to note that AHF is a Subsidiary of USHF on the Asian Continent. In this job, George Landon, who is the current president of the company, hired him. He continues to have a good relationship with him, as his loyalty to him has been valuable in the positive implications on his career at diverse critical points (Deresky, 2017). On the personal aspect, he is married to a local with extensive family; most of who have direct or indirect employment with AHF. 

He is in a happy marriage as a husband and father.  Moreover, he has three beautiful children making him more proud of his family lifestyle. He has had the chance to use the company’s presence to benefit greatly from the reinvestment and the local populace. In this aspect, he is a highly esteemed personality in the Sri Lankan society. The COO has substantial leeway in the management and running of the local operations. The USHF has the power to direct the reinvestment of the profits around the world, as well as Sri Lanka through my consultation on the local projects. For many years, AHF’s profit growth has been very high. Nonetheless, there is a crisis in Asia associated with consistent weakness in the Japanese economy (Deresky, 2017). In the recent years, AHF has depicted acceptable levels of profit but is experiencing challenges in meeting the goals set by USHF causing the request by the finance group so that the COO fly to the US with the intention of discussing specific changes. During the meeting, Landon highlights the influence of diverse factors causing USHF to consider closing the AHF facility or relocate it to another nation. This is because of the growth in the cost of capital, making the return on investment to be inadequate in the satisfaction of the goal of the company to satisfy the desired wealth for the stakeholders. In the meeting, he gets to know that he is likely to be the manager of the new facility while working with the finance and operation group (Deresky, 2017). 

Decision 1 

Part A:   

           Notably, I believe that this decision involves ethics, as well as business aspects. From an ethical perspective, I believe that closing or relocating AHF to another nation might jeopardize the grounds made by the firm in the development of the strong and mutually beneficial relationships with the Sri Lankan society. The firm has had the chance to liaise with the local populace and the Sri Lankan government in the development of valuable relationships, which might be beyond comprehension in terms of financial resources or dollars. These relationships prove to be valuable while it takes a lot of time to build. Moreover, I believe that there are frequent changes in the exchange rates and capital costs making it inappropriate for the firm to base its decisions on the short-term influences on closing or relocating AHF away from Sri Lanka. As part of the business society, AHF has had the chance to make substantial influences on the lives of various indigenous people. In this aspect, there has been an improvement in the education levels, as well as a substantial drop in the cases of child labor. The cases of impoverished families selling their children have been on the decrease. 

           Furthermore, there is the potentiality of the Asian economy to recover based on the possibilities of improvement in the Chinese and Japanese markets. The local economy depends majorly on the few large employers in the case of Sri Lanka. From Landon’s perspective, the decision is both ethical and business in equal measure. At one hand, as part of the COO’s development in career, Landon negotiates with the finance team to offer about six months in softening the potential blow to his ego, thus, the opportunity to try to turn things around concerning the operations in the case of Sri Lankan. He is also skeptical about the chances of things turning better in spite of offering the opportunity to turn things around. In this decision, various factors might be beyond the control of the COO, such as the overall wage rates, the conditions associated with the Asian market, the exchange rates, and interest rates, among others. Landon also has the knowledge that the COO is married to the local while most of the employees of the operations in this society depict relationship through this marriage. In this aspect, there is an empathic relationship with the COO creating room for the ethical perspective of the decision. 

           Alternatively, based on the view of the finance team, the case is a reflection of a business decision aimed at closing down the operations in the context of Sri Lanka and relocating the operations to another nation. The business decision relates to the inability of the operations in Sri Lanka to meet the set expectations in terms of profits to sustain the needs of the stakeholders. There are also conditions or factors associated with the market conditions, wage rates, interest costs, and exchange rates, which are unhealthy for the business entities in the case of the Asian market, thus, the need to consider closing down the operations or relocate AHF to another nation. 

           I believe that shareholder wealth goal should not be a paramount feature, thus, the need for President Landon to focus on considering convincing the board of directors on the potential negative implications of the closure of the Sri Lanka operations on the reputation and image of the company. Sri Lanka operations have positive record making it inappropriate for the company to hurry its decisions in closing the operations or relocating to another nation. In case of the challenges in convincing the board of directors on the implications of the closure on the image and reputation, Landon should have the chance to act ethically in negotiating a positive severance package, particularly to the affected workers associated with the Sri Lanka operations. The plan should also aim at enabling these employees to have the chance to reskill, as well as find alternative employment opportunities to sustain the growing societal expectations and stress of the economy. 

Part B:  

           Since the decision is up to me, I would go with the first option, which is “continue operations and try to cut costs within six months.” I am in a considerable dilemma from an ethical perspective. Every decision I make, I will have to cause great pain to me, as well as my relatives in the social and professional context because of the very low propensity of turning around the operations in the case of Sri Lanka. I have the choice now to make a decision. Based on this, I would consider sacrificing my professional interests in the course of minimizing the pains related to human rights (Goodpaster, Maines, & Rovang, 2017). I have had the opportunity to be in Sri Lanka for a very long time. I have the chance and prowess to rebuild my professional career in the later stages. From this perspective, I find it appropriate to consider using the six months’ additional time to enable employees to have adequate time in looking for the alternative employment opportunities and reskilling their attributes and personalities to secure other employment. 

           In spite of the cordial relations with Landon, I will not regret separating from the company as it is clear that the firm has narrow priorities associated with the wealth interests of the shareholders. I have chosen this opportunity to reflect on the implications of the decision. By choosing the first option, I have the chance to gain more rather than lose. For example, if I choose the option and success, I can take it all as an initiative and brave approach to address the ethical dilemma in dealing with the decision at hand concerning the interests of the people of Sri Lanka (Martínez, Fernández, & Fernández, 2016). I will have the chance to keep my reputation in the family, the company, and the society based on the valuable decisions and relationships I have developed through the Sri Lankan operations. 

           Conversely, if I fail with the decision, I cannot take it all. I will have to suffer the implication on experiencing suffering on the career reputation with the company, as well as the potentiality of losing my job. I will not go with the second option because I will have to lose my reputation in the family, Sri Lanka, and shoulder all the blame for the implications and suffering emanating from the decisions to close down or relocate AHF to another nation. I will use the chance to preserve the image and reputation emanating from the relationships developed by the AHF practices in the case of Sri Lanka. 

References

Deresky, H. (2017). International Management: Managing Across Borders and Cultures , Text and Cases, 9th Edition, ISBN-13: 9780134376042.

Goodpaster, K. E., Maines, T. D., & Rovang, M. D. (2017). Stakeholder thinking: beyond paradox to practicality. In Unfolding Stakeholder Thinking (pp. 43-63). Routledge.

Martínez, J. B., Fernández, M. L., & Fernández, P. M. R. (2016). Corporate social responsibility: Evolution through institutional and stakeholder perspectives. European Journal of Management and Business Economics , 25 (1), 8-14.