Reference no: EM133053721

BestLee has informed its shareholders that the effort to eliminate child labor will be extremely costly. In fact, BestLee has estimated that changing to a new labor structure will double the company's costs and cut revenue in half, adversely affecting both the company's stock price as well as its dividend. BestLee has not implemented these changes yet, however, because none of its competitors are making the same changes. If BestLee is the only player in the industry who makes this change, it will be at a distinct competitive disadvantage.

A group of BestLee shareholders have begun lobbying the company to change its labor practices even if no other company will do so. At the same time, another group of BestLee shareholders is lobbying the company to maintain its current profitability--they claim that the company's only obligation is to maximize profits for the shareholders (and their retirement accounts and children's education accounts will be adversely affected if BestLee becomes unprofitable).

Is there any way that BestLee can reconcile the wishes of both these shareholder groups? Does the company only owe an obligation to the shareholders to maximize their return, or does it owe an obligation to improve the labor situation? Or can it find a way to do both? Where do you come down on this question, and why?