Business has three stakeholders :
1. Shareholder – who provided money
2. Employee / resources – who convert money into something
3. Customer – who converts that somethinginto money, which is distributed to first two.
Most businesses are driven to maximize benefits for shareholders.
- Take care of employee, so that he/she can generate more $$ for the shareholder
- Make customer happy, if he pays higher $$ which goes to shareholders.
All three players are inter-related. You cannot isolate any one. In general terms, it is better to have all three happy. But then that is just a optimum solution.
All businesses are driven to maximize shareholder value. This comes from capitalist thinking,
- people are freely available, money(capital) is scarce
- bigger is better for efficiencies (factories, mass products, walmart…)
- Money is the best catalyst
Other 2 models
Artists Solo business person can have a different model. They can maximize for the resource – themselves – and money be a secondary goal.
Social service have the third model. They maximize for the customer.
If you are working for an organization(job), your objective is to maximize for your boss (not just your immediate boss, but all the bosses till the shareholder).
What if there are no bosses – employees own the company equally, employee and shareholders are same. One such model only exists in cottage industry, say a tailor, a barber – one person or few people business. Western world got prosperity by moving into factory model, which killed one person businesses.