Stakeholder Theory: Applied To The GM Ignition Switch Case

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These costs and benefits from staying or leaving the market can be examined with the three elements of stakeholder theory: rights, justice, and utilitarianism. The rights component would analyze the effect of the glue business on the population. Since the glue is deteriorating the health conditions of the children on the streets; it is taking away the basic right of health for the kids. Conversely, H.B. Fuller’s presences gives the local people jobs and provides them with an inflow of money. This gives them the non-basic right to income and job security. Since basic rights are greater in stature than non-basic rights, the betrayal of basic rights should be taken with a greater sense of importance. Further applying the stakeholder …show more content…
Fuller case as an example application, the stakeholder framework will now be applied to the GM Ignition switch case. The stakeholders of GM include the shareholders, employees, customers, government agencies, first-responders, hospitals, and other drivers on the road. The shareholders of GM partially own the company and are invested in the economic success of each business decisions. Also dependent on the company’s financial success is the employees of GM who are provided with a job as long as the company experiences stability or growth. Customers are affected by the business decisions of GM as well because they are the users of each vehicle. Government agencies are the ones who regulate the safety and reliability of vehicles on the road today, so they are affected by the decisions that GM decides to make. Along with the government agencies, there are the first responders and hospitals who must react in the event of an accident. If there was an accident, other drivers and pedestrians on the road have the ability to be affected by a business decision of GM …show more content…
The rights element of stakeholder theory refers to the basic right to life for each customer. This points GM to a decision that places safety at the forefront for each customer. In the long-term, this creates increased shareholder value as GM becomes a company focused on safety and reliability with a positive reputation. To achieve this position, it is important for GM to recall all affected vehicles when a safety issue, like the ignition switch, is first uncovered. This also relies on the accountability of each employee to speak up when they notice something unethical. If the accountability is increased within the company, a blatant safety issue will not get through and affect customers. Overall, GM, as a customer facing company, should place the safety of their customers first which also transcends to long-term positive gains for the shareholders.

In contrast to this recommended path, GM decided to wait to recall their vehicles until 124 people died in relation to their ignition switch decision. This damaged the credibility of the company and turned away lifetime customers. The decision can have long-term effects on the economic status of the company. Therefore, there is economic loss for shareholders and potential for future layoffs of employees. The decision that GM made has

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