For any firm Contribution of shareholder can’t be put aside, as they take biggest risks than any other group of people by providing fundamental and basic inputs in building and running of any firm. But only increasing shareholder value will be a myopic idea as the incremental value may come at the cost of the other entities.
For example avoiding environmental regulations might give shareholders better return by the way of increased profits. Similarly just to enhance production labor laws can’t be neglected. But these practices can’t be blindly supported by other stakeholders like society and Government. Instead of shareholders, taking stakeholders interests in to the strategy perspective will give us better results. The stakeholder group consists of not only shareholders but also all people directly and indirectly getting affected by the firm’s operations e.g. Buyers, partners, consumers, dealers, vendors, labor, society, Government etc.
Taking long term view of stakeholder’s interest will automatically increase shareholders value.
The goal of strategy is to create sustainable competitive advantage. The management of internal operations, though, involves leadership. What’s the target? Is profitability enough? Or is industry position, such as being the industry leader, the best goal?
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Target may be explained as certain desirable or wanted number for measurable outcomes. Making target and aspiring to achieve the same increases our focus on the task undertaken.
Profitability is one of the most basis goal without which any business can’t sustain. Sometime profitability is compromised for gaining market share or for maintaining the leadership status. This is especially true for any new venture or for a new product or service line, as the company in question has to win customer’s trust and establish its name in the market. This strategy often helps in demotivating oppositions or for acting as barrier for the new entrants.
But the trade-off between profitability and industry position has time frame attached to it, meaning that without maintain profit a company can’t afford to last for long time. Sooner or later lenders, investors or shareholders will start asking for better returns and then company will be compelled to compromise on its industry status.
So, we can say that the company has to maintain a fine balance between these two.
The goal of strategy is to create sustainable competitive advantage. The management of internal operations, though, involves leadership. What do managers do? What is the goal of management?
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Managers basically manage the resources for the fulfillment of the company goal in accordance with the set procedures and norms. They act as the main accountable entity for the operation and for achievement of the set target of any company.
The resources are always limited and there proper conversion for the profitability of any company is required. In this activity a manger performs the job of scheduling and planning the activity for achievement of the goal. They have to take care of interest of every group of stakeholders.
The goal of management involves devising best possible way to channelize the valuable resources like capital, HR, machinery and equipments and supply channel to extract profitable proposition to all stakeholders. In this endeavor they are ably supported by the Board of directors and shareholders. By their technical and human skill management team has to plan and it is primarily directly responsible for the long term and short term sustainability.
