Corporate Assignment Abdisamad Essay

Shareholder value revolution is a notion described in the book “Liquidated: An Ethnography of Wall Street” by Karen Ho. Shareholder value revolution is a shift of focus of corporations’ managers away from serving the interests of all the constituents of the corporation towards serving the interests solely of a shareholder class. As it was described by Karen Ho, shareholder value revolution came about as a result of the inefficiencies created by the conglomerate wave in the 1960s. These inefficiencies caused the takeover movement in the 1980s that in turn reinforced the interests of shareholders. According to Ho (2009), “In this worldview, corporation exist for the sole benefit of shareholders, and any attempt to separate shareholder interests from those of the corporation was selfish and nonsensical.” (p.

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Kristof proclaims “increasingly, a company that ignores social values loses shareholder value.” Kristof depicts another beneficial reason to help others with this argument, he reaches the more greedy persona in this

Phoenix Advertising as a whole has always put our clients first and is well known for our excellent work. As you know, the Roanoke branch had been experiencing difficulties since January of 2015 with regards to overworked and underpaid employees and a loss of clients. Productivity had declined by 20 percent over the course of the past few months, and we lost a few key members of our team. In response to our current crisis, I have developed a proposal in order to return Phoenix Advertising to the standard of excellence we

Although Carnegie’s model does not address businessmen directly, it does promote the distribution of wealth by people who have more power to direct change. This falls in line with Maslow’s hierarchy of needs because people who may be struggling to make ends meet are not expected to bear all of the weight of social responsibility. By placing this responsibility on businessmen, it ensures that those who are investing are not suffering for their

Does the maximaization of shareholder value reward socially destructive actions by corporations?Certainly not.A company is not an instrument of shareholders, but a coalition between various resource suppliers, with the intention of increasing their common wealth and hence is contradictory to Mr Al Dunlaps view of share holder primancy.

Brenda Franklin had been serving Allied Tech for the past 8 years. As any other organisations, Brenda used to be a part of the lunch hour conversations with her colleagues. One day when her colleagues were discussing about corruption and politics, something occurred to her. As a result she prepared a list called “Ethically Dubious Conduct” and pasted it on the common notice board. Her colleagues were taken by surprise. Brenda was now anticipating the next lunch where she was expecting her list to be analysed among her colleagues.

Because corporations are established to profit and shareholders invest money with expectations of a greater return, managers cannot be given a directive to be “socially responsible” without providing specific criteria of checks and balances to which needs to adhere. Therefore, it is imperative to the success of a corporation for managers to not act solely but rather to act within the policies of the shareholders.

This paper will have a detailed discussion on the shareholder theory of Milton Friedman and the stakeholder theory of Edward Freeman. Friedman argued that “neo-classical economic theory suggests that the purpose of the organisations is to make profits in their accountability to themselves and their shareholders and that only by doing so can business contribute to wealth for itself and society at large”. On the other hand, the theory of stakeholder suggests that the managers of an organisation do not only have the duty towards the firm’s shareholders; rather towards the individuals and constituencies who contribute to the company’s wealth, capacity and activities. These individuals or constituencies can be the shareholders, employees,

The idea that a corporate executive has a social responsibility in his capacity as businessman is contradictory to the goals of the firm. The concept of social responsibility implies that executives are to act in some way that is not in the interest of his employers. Friedman (1970) uses the examples of refraining from increasing the price of the product in order to contribute to the social objective of preventing inflation, even though a price increase would be in the best interests of the corporation; making expenditures on reducing pollution beyond the amount that is in the best interests of the corporation or that is required by law in order to contribute to the social objective of improving the environment; and, at the expense of corporate profits, hiring the chronically

Social responsibility makes a company more competitive and reduces the risk of sudden damage to the company’s reputation and sales.

Some business leaders are taking good moral decisions and the reason behind that idea is that the core part of their business strategy is to create mutual benefit for both wider society and business as well. The growing desire of top management is to find out ways to create mutual benefit for both the organizations and the stake holders but the public still believes that companies are greedy entities which make decisions only in their self-interest, even at the cost of greater public welfare. It is the utmost obligation of the companies to discern the social issues while making the decisions (Yashiro, Yoshida and Suzuki, no date; Godwin, 2006; Schwab, 1996; Godwin, 2008; Werhane, 1998; Werhane, 2002; Heath, 2008; Mehalik and Gorman, 2006).

The world of business has undergone radical and dramatic changes in the last decade changes that present extraordinary challenges for the contemporary manager. A manager is an organizational member who is responsible for planning, organizing, leading, and controlling the activities of the organization so that the goals can be achieved. According to a widely referenced study by Henry Mintzberg, managers serve three primary roles: interpersonal, informational, and decision-making. Management is process of administrating and coordinating resources effectively and efficiently in an effort to achieve the goals of the organization.

Milton Friedman’s shareholder theory of management says that the purpose of a business is to make money for the owner or the stockholders of the business. Friedman says that there is only one social responsibility for the business: to use its resources in order to increase

“Corporate finance theory, teaching and the typically recommended practice at least in the US are all built on the premise that the primary goal of a corporation should be the maximization of shareholder value.”