Until now, the discussion between shareholder value perspective and stakeholder perspective has still been argued critically. Some people think that stakeholder interest should be superior over shareholder wealth maximization, but others argue that shareholder wealth maximization should be the prime concern. However, it is obvious to realize that shareholder wealth maximization is the objective of a firm and shareholder wealth maximization should be superior over stakeholder interest in the concern of the both shareholder interest and stakeholder interest. Firstly, it is necessary to understand some definitions of shareholder, stakeholder and the theory of shareholder and theory of stakeholder. Why there has been many debates between two theories ? Shareholder is an individual or corporation owning stock in a public or private company. Shareholder decides the membership of the board of directors by making a vote. Maximizing shareholder wealth means maximizing the flow of dividends to shareholders through time – there Continue reading
Strategic Management
Strategic management is the art and science of formulating, implementing and evaluating cross-functional decisions that will enable an organization to achieve its objectives. It involves the systematic identification of specifying the firm’s objectives, nurturing policies and strategies to achieve these objectives, and acquiring and making available these resources to implement the policies and strategies to achieve the firm’s objectives. Strategic management, therefore, integrates the activities of the various functional sectors of a business, such as marketing, sales, production etc. , to achieve organizational goals. It is generally the highest level of managerial activity, usually initiate by the board of directors and executed by the firm’s Chief Executive Officer (CEO) and executive team.
Intuition and Analysis in Strategic Decision Making
In the global marketplace, intuition and rational process both play a crucial role in effective strategic decision making. In various firms, intuitive process is used under the strategic management to develop effective decisions for attaining organizational goals and objectives. Intuition indicates to solve the problem with the help of using sensing and without using rational process. It can be discussed as a process to reach at the conclusion with the help of fewer information those are required for taking appropriate decisions. It is a built-in capacity that is used by the individuals to reach at the solution of the problem effectively. At the same time, it is negatively related with the stable competitive environment. Intuition is used as a business tool in many organizations to conduct and run the business successfully. Intuition is a psychological function supports to individuals for using her/his experiences and knowledge to isolate and integrate the Continue reading
Role and Functions of Organization Culture in an Organization
The organizational culture is the general term for organizations of all members of the commonly accepted values, codes of conduct, team spirit, way of thinking, work style, psychological expectations and feelings of belonging sense of community. The corporate culture is the traditional atmosphere of a company culture, it means that the company values, such as aggressive, defensive or flexible – these values constitute of company employees vitality, opinions and behavior norms. Managers personally, these norms and instill in employees from generation to generation. Also the corporate culture is a mix of economic significance and cultural significance, refers to the formation of values in the corporate world, the code of conduct in the crowd and community cultural influences. It does not refer to the cultivation of knowledge, but rather refers to the attitude of the people of knowledge; than profit, but profit mental; than interpersonal relationships, but interpersonal life skills embodied Continue reading
Prescriptive and Emergent Approaches to Corporate Strategy
The concept of corporate strategy battles with the perennial issue of determining the overall purpose and scope of an organisation. From a contemporary perspective, it involves the specification of long-term goals and objectives that will add value to the business and cope with the uncertainty of modern times. As a practice, it consists of adopting courses of action and allocating resources in ways necessary for carrying out the overall objectives. Widely recognized as the most principal theories for strategy development, the prescriptive and emergent approaches must be examined within the context of an increasingly dynamic, highly competitive and global business environment. Powerful external forces are driving organisations to reduce costs, enhance processes and identify new opportunities for growth. Many businesses are compelled to make dramatic improvements not only to compete and prosper but also merely to survive. This brings to the fore the importance of determining how effectively the prescriptive Continue reading
Evolution of Corporate Governance in India
The focus has shifted to Corporate Governance (CG) time and again on account of repeat emergence of financial crises across the global, as well as frequent instances of financial reporting failures. In competitive markets, Corporate Governance is a reflection of market disciplines, and forms the cornerstone for efficient allocation of resources. CG enables managements to take decisions, while at the same time being accountable for the decisions taken. Securities and Exchange Board of India (SEBI) appointed the Committee on Corporate Governance in May, 1999 under the Chairmanship of Kumar Mangalam Birla, to promote and raise the standards of Corporate Governance, in the particular context of companies of the Committee included (i) to suggest measures to improve Corporate Governance in the listed companies, in areas such as continuous disclosure of material information, both financial and non financial, manner and frequency of such disclosures, and the responsibilities of independent Continue reading
Multidivisional Organizational Structure
In Multidivisional Organizational Structure, each business unit is placed in a self-contained division and supplied with all support functions. Thus each part essentially operates separately from the other parts of the company. The office of corporate headquarters is created to control and oversee the divisions. Headquarters also provides corporate support functions, such as finance and R&D. Divisional managers have operating responsibility; corporate managers have strategic responsibility. Each division is treated as a profit center and can adopt the structure and control systems that best serve its strategy. A multidivisional structure has several advantages. Enhanced corporate financial control is one advantage of the multidivisional structure. The profitability of the different divisions is very clear, allowing the corporate staff to readily determine the best resource allocation scheme. Enhanced strategic control is another benefit, because corporate staffs are freed from operating responsibilities, and can concentrate on corporate strategy. The structure overcomes limits to Continue reading