Business Eithics (British Airways) Essay Example | Topics and Well Written Essays - 2000 words

Business Eithics (British Airways) - Essay Example This is because the directors and managers are charged with corporate governance by the owners of the entity and hence, one would expect them to be focused on meeting the best needs of the owners of the entity in question. The fundamental question is how do the people charged with corporate governance meet the best needs and expectations of the owners of an entity? There are two approaches to answering this question (Fernando, 2009). The first is the shareholder approach. Under the shareholder approach, a business has two fundamental objectives: to obey the law and to maximise shareholders wealth (Fernando, 2009). This approach suggests that managers need to put everything aside and only focus on profit maximisation. The second approach, which is known as the stakeholder approach states that the people charged with governance have a fundamental duty of maximising profits under the constraits of respecting the obligations owed to external stakeholders (Fernando, 2009). Freeman et al (2010) define stakeholders as â€Å"any group or individual that can affect or is affected by the achievement of a corporations purpose† (p86). This means that any entity that is within or outside an entity that is influenced or influences the activities of a company in its bid to meet its objectives is known as a stakeholder. In analysing the fundamentals of the key debates in this area, Mullerat identifies that the shareholder perspective is based on the short term vision of maximising returns on investment (2009). On the other hand, the stakeholder perspective supports a longer term theme of promoting sustainability in profit making and this is the best way to ensure that a business thrives into the future. British Airways is fundamentally operated as a company and thus, it has a profit motive which requires the management and those charged with governance to make