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Share vs Stakeholder Models (Share Holder (Profit lead with interests of…
Share vs Stakeholder Models
Share Holder
Profit lead with interests of shareholders at heart
Money should only be spent to generate shareholder return
An element of the theory suggest that share holder interests must be balanced with stake holder interests, however this is with guise of generating higher revenue for shareholders
Share price and dividend is main objective
Nonsharehodler views are seen as means to ends of profitabiltiy
Profit must be generated legally and without deception
Investment into morale and charity is agreeable so long as it generates the best capital scenario
Legally binding elements share holder value make it a priority
Directors as Enron operates in self interest and were paid huge fees, there actions ended up destroying the company, which is certainly not in the interest of shareholders
Are we too focused on production and consumption, when is there ever enough?
Development of economies of scale
Risk is only considered in financial terms (not in environment or culture)
What is valuable?
Stake holder
Ensure that the views of all stakeholders are considered when running business.
Often misunderstood, the continued existence of the firm is paramount
No way of adjudicating interests of all stakeholders
Change language of business,
maximising our company value, maximising our company's contribution to our economic system.
Executives should feel freer to change attitudes and behaviors.
Communication needs to be clearer regarding org intentions, so middle management make consistent decisions
Foundation
Born out of firm failures operating theory.
Enron, Nestle ect.
Firms should always operate within the law, but directors are driven to make questionable decisions in the interest of shareholder return.