Despite
its achievement in exploring the dissecting of the importance of the firm in
public, the stakeholder theory has had two significant drawbacks. Firstly, it is
heavily reliant on regulations as the compensatory system for the externalities
it produces (Williams, 2006).
On
a fair argument, it is right to say that at its current stage of development,
the stakeholder theory has not left its limits of economic worth maximisation.
Secondly, it is still fixed to the traditional view of the firm's definition that its primary purpose is the creation of economic value for its owners and itself (Simonetti, 2014).
Discussion
owning to the above demerits have arisen on how to alleviate these demerits by
proposing a solution which will create societal value.
For
this reason, this paper interrupts the advancement of the stakeholder theory to
propose a theoretical model generated from the examination of the most
excellent practices of prosperous companies. This is to be achieved by an
intention to redefine the firm's purpose. That is a purpose-driven by societal
goals and not solely by profit maximisation.
Relevant theoretical approaches to shareholder value.
Case
Study (a) Alternative Bank Schweiz
A survey was undertaken in Switzerland (1982) discovered an existing demand for a substitute for current banks. The stakeholders (mostly customers) who can do my coursework were inquiring for a remedy which would uphold societal values while ensuring banks discharge the sole motive of maximising profit. ABS’ authors, using an outside-in method, suggested a new kind of bank system as the remedy to the need. This entails a set of good practices which if well observed, would alleviate the issue.
Purposed
definition
This
involves defining the company's values and purpose. This is done on a consensus
basis amongst the firm's stakeholders. pay someone to do my
term paper The firm’s description should be more centred on pursing ethical
doctrines as opposed to profit maximisation (Jensen, 2000).
ABS looks at the larger picture to identify environmental, social and
governance insufficiencies in that context in bid to address societal needs.
Transparency
Since
ABS doesn’t solely purse profit motives, it had to request stakeholders
contribution inform of higher interest to customers and low returns to
shareholders in a bid to support the societal goals. In exchange, the most top
form of transparency affordable
term papers is to be maintained by informing stakeholders how the company's
products generate shared value. A good example is a publication created by ABS
called Moneta, which provides information on the loans offered by the bank. The
paper illustrates the shared value derived from the loans. Pay someone to do my
assignment for me
Limiting Shareholder Power
ABS approach established two safeguard mechanisms to deter power digression from its intended use. The first mechanism was to set a cap on share ownership. The cap was set at 3% but later increased to 5% in 2014. This is in bid to increase consensus amongst the shareholder's decisions.
The second safeguard mechanism
involved picking the right clientele of shareholders who would finance the
company (Johal, 2006). The company would only allow like-minded individuals,
i.e. individuals, corporations and public entities which were ready to support
the company's goals and ideals of promoting social welfare. It would inhibit
shareholders who would jeopardise their objectives from investing in the
company.
Case
study (b) Merkur Cooperative Bank
Merkur
established a significant demand for small and medium enterprises (SMEs) that
would generally fail to qualify for loans from mainstream banks. To respond to
this gap, Merkur was proposed as the remedy. It established private loans and
savings associations into cooperative bank gradually. According to Merkur, “a bank is a link
between people with ideas and people with money.” This branded Merkur as a bank
which enabled stakeholders to use their funds to promote a sustainable society
by issuing loans.
Just
like the ABS approach, Merkur’s methodology to describing its purpose varies
from the shareholder theory as it well diverges from the profit maximisation
objective to follow maximisation of societal welfare. More interestingly,
Merkur’s approach also acknowledged the significance of communicating with
shareholders. However, it developed a slightly different method from the one
adopted in ABS's plan, as illustrated below.
Communicating with Stakeholders
The
bank defined its drive into established core values offering its workers with an
outline to guide their undertakings. Just like ABS, those undertakings were required
to be transparent because the bank had its customers and cooperative members pay
higher interest rates and accept lower dividends to fund its commitments.
Merkur’s Write
Papers for Money.
approach developed a website letting its users view each venture the bank funded. It provided a short overview of the enterprise, the drive it served, its setting and other additional information that is where more information was required.
This
shared website not only acted as a control device as it allowed users to evaluate
the quality of the venture in contrast to the bank’s standards and speak out disquiets
if any to elicit an amendment but also served the principal purpose of
informing stakeholders.
ABS
approach feared the potentially harmful influence of shareholders on its
objectives (Stockhammer, 2005). Similarly, Merkur
approach was also on the lookout as it made attempts to inhibit such. However,
Merkur’s proposal Buy
Essay Online Cheap.
did
not use ownership caps but adopted a one man one vote system. This enables the
bank to raise more funds from the shareholders without necessarily increasing
their voting rights.
Conclusion
A
review of the two approaches proves a lot of ways to alleviate the downsides of
overhyped shareholders theory. The first approach entails a set of courses of
action to be followed, which are: redefining the company's purpose, enhancing
transparency and limiting shareholders voting powers Research Paper for
Sale
The second approach also limits shareholders voting rights by adopting a one man, one vote system. It is also focused on revitalising the communication between shareholders and the managers.
Thanks for Sharing such an amazing article. Keep working... Your Site is very nice, and it's very helping us.. this post is unique and interesting, thank you for sharing this awesome information
ReplyDeleteHimkosh HP Login Portal, Check eKosh, eSalary, eChallan, GPF Statement, Himkosh HP - Login, Salary Statement
Your blog is filled with unique good articles! I was impressed how well you express your thoughts.
ReplyDeleteOBC Netbanking Online | OBC Netbanking Login Registration