Corporate Goverment
“Stakeholders! Every time I hear the word I ask ‘How much did they pay for their stake? There is only one constituency I am concerned about and that is the shareholders.” Do you agree or disagree with Dunlap’s view of shareholder primacy? Explain.
I agree that one of the main responsibilities of the CEO is to provide value to shareholders, but that is not the only responsibility. The job of the CEO is much broader and encompasses the needs of the employees, customers, investors, communities, and the law. CEOs should also strive to create a sustainable environment in order to achieve long-term profits. While all of the above relationships are valuable, none should be dominant over the others. The CEO should be accountable to set up a holistic strategy that captures the needs of corporate governance, which “emphasized a manager’s accountability to multiple constituencies besides the shareholders” (1). This will allow the organization to maximize its value in the long term. Companies are networks of parties and people working together towards a shared goal and not merely economic machines. It’s too narrow of a view to believe that a single area should have the CEO’s primary attention. Doing so will not bring long term success for the company.
Mr. Dunlap’s strategy was to reduce cost and increase shareholder value by firing employees, closing factories, reducing product lines, consolidating administration, moving operations to cheaper locations, increasing sales, and going global. His strategy focused on reduction of costs, but did not include steps to modernize and equip the company, which would’ve enabled it to compete in the market, double sales, and go global.
The acquisition of Coleman, First Alert, and Signature Brands, companies that were in financial trouble, and implementation of the marketing strategy called the “early buy”, showed that the products were sales, even though they had not been shipped or paid for. This made the company look more
I agree that one of the main responsibilities of the CEO is to provide value to shareholders, but that is not the only responsibility. The job of the CEO is much broader and encompasses the needs of the employees, customers, investors, communities, and the law. CEOs should also strive to create a sustainable environment in order to achieve long-term profits. While all of the above relationships are valuable, none should be dominant over the others. The CEO should be accountable to set up a holistic strategy that captures the needs of corporate governance, which “emphasized a manager’s accountability to multiple constituencies besides the shareholders” (1). This will allow the organization to maximize its value in the long term. Companies are networks of parties and people working together towards a shared goal and not merely economic machines. It’s too narrow of a view to believe that a single area should have the CEO’s primary attention. Doing so will not bring long term success for the company.
Mr. Dunlap’s strategy was to reduce cost and increase shareholder value by firing employees, closing factories, reducing product lines, consolidating administration, moving operations to cheaper locations, increasing sales, and going global. His strategy focused on reduction of costs, but did not include steps to modernize and equip the company, which would’ve enabled it to compete in the market, double sales, and go global.
The acquisition of Coleman, First Alert, and Signature Brands, companies that were in financial trouble, and implementation of the marketing strategy called the “early buy”, showed that the products were sales, even though they had not been shipped or paid for. This made the company look more