Debate Essay Example | Topics and Well Written Essays - 1500 words

Debate - Essay Example Shareholders value refers to the wealth and profits of the shareholders. It is a part of business ethics that company should strive continuously for maximizing the shareholders value (Zairi, 1998). According to the Vermaelen (2008), Professor of Finance at INSEAD, in the consideration of capitalist economy it is assumed that management has the responsibility to maximize the shareholders value. The value maximization should be considered as an implicit contract and in his opinion it is an ethical responsibility of the managers. Hence, the policies of the company that are designed to reduce the application of this implicit contract must be considered as an unethical practice. Until, of course, the Company has clearly stated in the shareholders contract about the different objectives of using the profit for other purposes. For example, a company decided to start a corporate social responsibility practice in the society for the sake of humanity. The application of this practice will be d one by distributing five percent of the company’s profit among the social welfare institutions. ... fessor Vermaelen clearly indicates that the mangers are liable to maximize the shareholders value, if they do so then they are on a right track, and if not, then they are violating the conducts of business ethics. Sometimes it seems that the companies violate the conducts of social ethics in maximizing the shareholders value. Here the question arises, is that ethical to violate the conducts of social ethics to maximize the wealth of shareholders? The profit of shareholders is associated with company’s profit and it has a positive relationship with profit as well. In the consideration of raised question the business ethics are designed to protect the rights of employees, customers, shareholders and the society. And companies are liable to follow the conducts of business ethics. The implementation of business ethics creates the company’s image in the society. The example for violation of business ethics and social ethics is given to understand the importance of considerin g the business and social ethics in the company’s practices. The case of Nokia in china is the perfect example for understanding the consideration of social ethics in the maximization of shareholders value. Everyone is aware with the fact that the China has low labor wage rates when comparing it with wage rates of other countries. China is highly focused on achieving economies of scale and they are getting success in their vision. Nokia is in contract with few Chinese electronic factories for the supply of mobile parts and accessories. But the factories do not supply the finished products. The factory has a great number of female labors. When the survey was conducted in the factory and female labor are asked to give their reviews regarding the application of policy of business ethics then a