shareholder 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 to the web of the 1980s. These were unprecedented times in corporate management. Considering that there are new challenges that were cropping up every day. This 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 motif. 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 both a descriptive, and prescriptive point of view.
This paper will inquire shareholder value maximization. As far as Friedman’s take on stakeholder value maximization is concerned, shareholder wealth maximization would suggest that the Australian beef company should focus completely on cutting costs, and continuing with diverse efforts to create one for pasture. This would increase the margins for the company and lower the selling price of their beef, consequently, increasing the company’s profits. The profit is actually routed directly to the growth of the shareholder. Stakeholder value maximization on the other hand, focuses mostly on finding a balance between the conflicting interests of stakeholders to the community. In so doing, the company to find a dynamic balance, as opposed to a prescriptive approach to 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 hearken to the needs of such any of such a situation will find itself obsolete. In terms of shareholder welfare maximization, one would find it prudent to ensure that the welfare of the shareholders prevails. However, terms of welfare maximization for the shareholders refers to not only the growth of their wealth, but also the sustainability of the investment in the long run. For purposes of taking care of this stick. In practice, therefore, these may run counter currents, to the shareholder wealth maximization in the law in the short run. Satisficing. On the other hand, refers to a situation where the firm tries to attain as optimal objective as possible. This 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 deforesters 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 specifically 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. To this end, it would be foolhardy to run a company that is essentially running on the back of the destruction of the ecosystem, only to realize maximization of the wealth of the shareholders shareholder value maximization.
In conclusion, the growth of shareholder value transcends from the growth of stockholder wealth to the growth of the 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, as well as positive customer image for him to change his approach and look for innovative ways of producing. That will increase its value. Increase the shareholders value, as well as increasing domestic violence value.