Critically compare and contrast the stakeholder model and the market capitalist model. Please illustrate your answer with examples and discuss the strengths and weaknesses of each.
I will address the following question by explaining what the stakeholder model and what the market capitalist model is. I will explain what they are and use arguments to compare and contrast what each of them are, bringing in both strengths and criticisms to argue my points.
Firstly, the stakeholder model is more centre right wing on the political spectrum, including two branches of the model, they are the primary and secondary stakeholders, the primary stakeholders are usually a small number of constituents, mainly communities, employees or stockholders. The secondary stakeholders are a broader range of constituents, who don’t engage in economic transactions in a direct manner, such as business support groups or activists.
This model with both primary and secondary stakeholders, will try to reorder the management priorities away from those ones involved in the market capitalist model, when removing this priority, it replaces it with an ethical theory of management, suggesting that the main purpose of a business is to create many values, typically all its stakeholders, trying to make them better off instead of swaying to the market capitalist model, the far-right wing on the political spectrum. This will give the idea of a contract existing socially between businesses and societies, aiming to gain better sustainability and profitability, so it can compete against other businesses.
However, on the other side many people argue and beg to differ that this model on the political spectrum will tend and try to ignore the balance between business and other stakeholders represented within it. This is due to the way it is set up is a very vague and an unclear guideline to substitute the actual measurement of profit a business will make, meaning it will belittle its social duties, maybe being environmental or societal.
Although, to the stakeholder model, people claim one of its benefits is that it is at the centre right side of numerous relationships involving both primary and secondary stakeholders, such as individuals, stockholders or business support groups, it also aims to give full representation of all its stakeholders, unlike the capitalist government who in this instance will always aim to treat and undermine stakeholders who are deemed as underrepresented in the society or within a business. this ill-treatment of stakeholders leads me to introduce my next point of argument to this question on the market capitalist model.
The market capitalist model is also defined as neo-liberalist and will sit on the right-wing side of the political spectrum, where it aims to create the ideology that free markets are efficient, which aim to maximise its maximum profit to compete at the highest level in society. It usually has less government intervention as it is deemed to be quite costly and less efficient, this is due in society it is up to the government to correct and change problems in the world today, for example environmental or societal problems. Therefore, allowing business using the market capitalist model to excel due to gaining higher profitability and growth and to be more efficient within today’s society.
However, with everything comes its criticisms are that it ignores the problems in the world today, and usually tend to ignore the deprived people in the world today or the ever-changing environmental problems such as global warming or pollution. Due to these businesses gaining higher profit and wealth, due to the government not intervening, many people believe they should assist governments by helping out, together to solve these world problems. It also will be more discriminative in its payment of employees, as it doesn’t have the same focus on employee rights but focuses more on the business to aspire and improve.
In conclusion, both models are similar in ways of how it wants to gain more wealth, profitability and sustainability, and also how they are both ineffective in tackling world problems, but the main difference is that the stakeholder model aims to give all employees proper and full representation while the market capitalist model ignores power inequalities.
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