A tobacco company established influential advertisements targeting youth and young adults to consume its products. The...

A tobacco company established influential advertisements targeting youth and young adults to consume its products. The firm’s profit after these advertisements release was increased by almost 100%. The public and media are outraged with this company’s decision. Please identify who are the non-investing stakeholder and discuss the business ethics aspect of this company’s decision to engage in targeted advertisements to boost its revenues and profit.

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Expert Solution

Targeting consumers to consume the product by tobacco company in order to increase the sales has outraged the public, Aaj this is against the interest of society but it is in line with their financial goal because they are working for maximization of the overall value of the company as financial maximization of value is relating to value maximization of the shareholders as they are the primary owners of the company so the company is going to increase the sales in order to increase its profits and the company is trying to maximize the overall profits which will lead to increase in the overall share prices and which will be leading to increase in Dividend and capital appreciation for the shareholders.

When we are evaluating from non investing stakeholders perspective than it is not an ethical practice in order to target customers to consume more of the tobacco because it is leading to to social distress and it is leading to exploitation of the younger persons and against the social goals of the company so company should be maintaining ethical standard as per the interest of its non investing stakeholders because society is an important stakeholder which will play an important role in value maximization in long-term perspective and hence the company is not trying to to protect the interest of its non investing stakeholders as it is trying to increase the overall profits and it is not considering the ethical part and interest of society as a whole so so it can be seen that the company is more strived towards achievement of the financial goals rather than value maximization so company is just working for achieving the objective of the investing shareholder and ignoring the objective of non investing share holders.

jeff jeffy answered 1 year ago

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