Stakeholder Theory

2Stakeholder Theory

Stakeholder Theory

Stakeholder Theory

Stakeholder’s theory is a tool in business management that is used to address both the morals and ethical values in the running of an organization. Companies tend to apply this tool due to the high number of interested parties in the daily activities of the firm. Balancing the needs of all the stakeholders is quite difficult due to the different nature of the various expectations of the stakeholders. Companies and other large institutions tend to focus on the external stakeholders, especially the important stakeholders due to the influence they have over the profitability of the enterprise (Friedman &Miles 2006).

Based on the stakeholder’s theory, National Australia Bank should not take care of the small business due to the low size of the influence in which they possess when it comes to the profitability and running of the bank. However, small and medium enterprises are slowly becoming the economic drivers of the world. As a single entity, the small business does not have any substantial control over the market forces that affect the banking industry. However, a combination of the small business forms a large body which has significant influence over the market making the theory of stakeholders irrelevant (Friedman &Miles 2006).

National Australia Bank should cater for the small business since they form part of the livelihood of some individuals in the country. The disadvantages of the stakeholder’s theory are well challenged by the lack of proper handling of the National Australia Bank on its small business customers. Improper management of the segment caused poor performance for both the bank and the clients of the bank to a great extent. National Australia Bank should ignore the stakeholder’s theory and implement on better services to the banking segment (Friedman &Miles 2006).

Reference List

Friedman, A.L. and Miles, S., 2006. Stakeholders: Theory and practice. Oxford University Press on Demand.