Case study Essay Example | Topics and Well Written Essays - 1500 words - 16

Case study - Essay Example On the other hand, the legitimacy theory studies the reactions of stakeholders in terms of their social obligations and requirements as imposed by the society and other forces. These two theories will provide insights into the reactions of BP following the oil spill. The stakeholder and legitimacy theories remain some of the most relied upon theories that explain the nature of reaction and approaches that companies, firms, and businesses undertake when faced with various perspectives (Friedman & Miles, 2006). These theories attempt to expose the driving motives and the determining interests that help companies to develop various choices and alternatives as understood together with the policy framework of the companies. The choice of an approach is often determined by the long-term and short-term objectives of the company. These objectives may relate to matters of performance, public image, brand protection, strategic considerations, and the costs involved. The long-term considerations of a company’s interests are largely conditioned by multiple factors that make it necessary for companies to adopt approaches that can safeguard them against the perils of the market and the unpredictable nature of the business environment (Solomon, 2011). The stakeholder theory spells out terms for the survival and the sustainability of any company. According to this theory, firms should seek to create, sustain, and increase value for all its stakeholders for the purposes of performance and survival (Philips, 2011; Philips, 2003). The theory begins from the point that the existence, performance, and progress of a firm is significantly dependent on the harmony that must exist among the stakeholders. Any adverse effect on one or some of the stakeholders will invariably spill over to the other stakeholders. As such, the work of the management is to harmonize, streamline, and regulate the actions, policies, strategies, and