stakeholder value maximization
As far as stakeholder value maximization in the firm is concerned, according to Friedman, the development of a stakeholder approach enabled firms to navigate the web of the 1980s. These were unprecedented times in corporate management. It was considering that there are new challenges that were cropping up every day. This matter made business difficult and conventional models of the time, obsolete. As far as the firm was concerned, the maximization of profit for shareholders was the driving motive. As such, the only stakeholder, for whom the business cared was the shareholder. In response to this, Friedman came up with the stakeholder approach that encouraged businesses to look at stakeholders from a descriptive and prescriptive point of view.
This paper will inquire stakeholders’ value maximization. As far as Friedman’s take on stakeholder value maximization is concerned, shareholder wealth maximization in the context of the workshop would suggest that the Australian beef company should focus completely on cutting costs, and continuing with diverse efforts to create one for pasture. This action would increase the margins for the company and lower the selling price of their beef. Consequently, it would increase the company’s profits. The profit is routed directly to the growth of the shareholder. The idea of stakeholder value maximization focuses on finding a balance between conflicting interests of stakeholders on one hand and the community on the other. Value maximization ensures the company finds a dynamic balance, as opposed to a prescriptive approach. That resolve helps in addressing the needs of each stakeholder. The reason for this is that given the current changes in unmitigated and unprecedented occurrences, such as global warming. Only companies that are supposed to have to address the needs in such a way that they can easily and swiftly adapt their processes when needed, thus attain their objectives. Any institution that does not harken to stakeholders’ needs in such a situation will find itself obsolete.
In terms of shareholder welfare maximization, one would find it prudent to ensure that the shareholders’ wealth prevails. However, welfare maximization for the shareholders refers not only to the growth of wealth, but also the sustainability of investments in the long run. A dynamic approach is required. Therefore, value maximization may run counter-current to the shareholder wealth maximization. This phenomenon happens in the short run for purposes of taking care of all stakeholders in practice.
Satisficing. On the other hand, it refers to a situation where the firm tries to attain as optimal objective as possible. This action means that the firm tries to find points population at which the interests of stakeholders will be addressed with those, creating a clash between any of different stakeholders instead of sacrificing the ultimate growth of only one group of stakeholders.
Australia is the only developed country that has been ranked as one of the largest deforestation perpetrators on the planet. The situation in Queensland in Queensland is dire. Because of the rate at which deforestation is being carried out to create land for pasture. The World Wildlife Fund has stated that Australia needs to take care of its biodiversity and the environment. For the sake of the future, as well as to mitigate the effects of global warming. In addition, it would be foolhardy to run a company that is mostly running on the back of the destruction of the ecosystem, only to realize the maximization of the wealth of the shareholders without stakeholder value maximization.
In conclusion, the growth of shareholder value transcends the growth of stockholder wealth to the growth of consumer welfare. Any company that insists on having a systematic approach to management that allows its stakeholders to maximize their money, in the long run, will inevitably be a sustainable business. To this end, it would solve the Australian beef company. A lot of welfare and positive customer perception will implore the company to change his approach and look for innovative ways of producing. That will increase its value. Increase the stakeholders’ value, as well as increasing environmental sustainability.