2. (800 Words for Question Two) John Bogle, in his article Democracy in corporate America, defines capitalism in two different ways, owner’s capitalism and manager’s capitalism. According to Bogle, owner’s capitalism is defined with the idea that purpose of a business or corporation is to make a profit. Manager’s capitalism, Bogle notes, is defined by William Pfaff with the idea that “the corporation came to be run to profit its managers, in complicity if not conspiracy with accountants and the managers of other corporations” (Bogle, p. 26). These two definitions of owner’s capitalism and manager’s capitalism provide great insight about today’s corporate America. The two previous descriptions that John Bogle provides of owners and managers …show more content…
There are many different factors that have led to the issues with corporate governance, but some of the most important to consider include the fact that corporate accounting has shifted toward the interest of protecting and providing for individuals in the company, investor protection rules have become too relaxed, and the fact that “too many corporate executives and directors have been placed in positions of great power and authority without an adequate understanding of their fiduciary duties” (Bogle, p. 31). Bogle provides multiple scenarios as to how to help with these issues, and some of them are essentially describing a movement back to traditional owners capitalism. First, he notes that the most major thing that needs to be reformed is stockholder rights, and policies that limit those. Regarding the stockholders, Bogle says that reforms should be made so to better allow stockholders to have a say-so in election of corporate board members, as well as have the rights to help in replacing one if needed. For example, instead of a company’s CEO appointing its board members, the stockholders should appoint them because as stockholders they reserve the right to have some input into the way the company in governed. Next, Bogle shows that the next thing to be reformed involves the idea that the stockholders of a company should be able to “place …show more content…
To do this, we can consider each of the groups of people mentioned earlier, as stakeholders, and how they affect the corporation individually. First, the suppliers of a corporation can be thought of as one of the most vital parts of the corporation as stakeholders, because without them, the corporation would not have the materials needed to provide their products and services. Customers, as stakeholders, are the driving force behind the corporation’s production, because the demand for the products is what supports the corporation, allowing it to continue business and grow. The employees of a corporation are also a vital group as stakeholders because without them, there would simply be no way to efficiently manage a corporation. The employees see the every day workings of the corporations, and often are the source of progress and improvement in the corporation as they see the inner workings of the business on a daily basis. The local community is also important to the corporation because it is often comprised of a combination of customers, employees, suppliers, and other related business people that have a part in the corporation. Lastly, the management plays possibly the most important role from a personnel standpoint in the sense that they are
Ralph Nader, Mark Green and Joel Seligman, in an excerpt from Taming the Giant Corporation (1976, found in Honest Work by Ciulla, Martin and Solomon), take the current role of the company board of directors and suggest changes that should be made to make the board to be efficient. They claim the current makeup of the board does not necessarily do justice to the company because “in nearly every large American business…there exists a management autocracy” (Nader, Green and Seligman, 1976, p.570). The main resolution they present is to make the board more democratic with the betterment of the company as its first priority. Currently the board no longer oversees operations, or elects top company executives and they are no longer involved in the business operations to the extent they should be. Nadar, Green and Seligman argue that that all of these things need to be changed. For a corporation so large to be successful there must be separation of powers just as there is in any current government system ( p.571). They claim this is the only and best way to success (Nader, Green and Seligman, 1976, p.570-571).
A corporate owner is an Individual or entity who owns a business entity to profit from the successful operations of the company. Generally, has decision making abilities and first right to
Capitalism, is among one of the most important concepts and mainframe of this application paper. According to the 2009 film “Capitalism a Love Story,” capitalism is considered as taking and giving, but mostly taking. Capitalism can also be defined as a mode of production that produces profit for the owners (Dillon, 72). It is based on, and ultimately measured by the inequality and competition between the capitalist owners and the wage workers. A major facet of capitalism is constantly making and designing new things then selling afterwards (Dillon, 34).Capitalism has emerged as far back as the middle ages but had fully flowered around the time o...
Max Weber, one of the leading analysts of the logic of modern history, distinguished that the birthplace of capitalism was the separation of business from the household. The household in modern terms refers to “the dense web of mutual rights and obligation sustained by village townships, communities, parishes or craftsmen guilds in which families and neighbourhoods had been tightly wrapped” (Bauman,Z 2001). It was by this separation that fuelled the business’ venture into their own no-man’s lands, free from all social standards and legal constraints. The business had found a new ground where it could be subordinate to its own behaviour. This intern led to a spectacular increase in the potential of industrial strength and the growth of economic strength.
This paper will have a detailed discussion on the shareholder theory of Milton Friedman and the stakeholder theory of Edward Freeman. Friedman argued that “neo-classical economic theory suggests that the purpose of the organisations is to make profits in their accountability to themselves and their shareholders and that only by doing so can business contribute to wealth for itself and society at large”. On the other hand, the theory of stakeholder suggests that the managers of an organisation do not only have the duty towards the firm’s shareholders; rather towards the individuals and constituencies who contribute to the company’s wealth, capacity and activities. These individuals or constituencies can be the shareholders, employees, customers, local community and the suppliers (Freeman 1984 pp. 409–421).
This report gives the brief overview of the concept of corporate governance, its evolution and its significance in the corporate sector. The report highlights various key issues and concerns that are faced by the organizations while effectively implementing and promoting Corporate Governance.
Regarding to organizational stakeholders, there are three main groups of stakeholders: customers, employees and investors. The company attempts to link stakeholders’ needs and expectations to the company’s goals. For customers, the company must treat them fairly and honestly. For employees, the company needs to treat them fairly, make them a part of the company and respect their needs. For investor, managers should comply with the accounting procedure, do not manip...
The executive has a direct responsibility to his employers… which is to conduct the business in accordance with their desires, which generally will be to make as much money as possible while conforming to the basic rules of society, both those embodied by law and ethical custom” (p. 34). Moreover, the Shareholder Theory asserts that shareholders are the ones who spend their money to employ the corporate executives, who are in return supposed to spend corporate funds only in ways that have been authorized by the shareholders. Primarily, this argument is based on the notion that corporations are only “artificial persons” and cannot have responsibilities like “natural persons” (p. 34). Instead, the argument is based on the basic principles of ownership and employment. In essence, the shareholders are the owners of the firm, and the corporate executives are those whom they employ.
Bibliography: Turnbull, S. (1997). Corporate governance: its scope, concerns and theories. Corporate Governance: An International Review, 5 (4), pp. 180--205.
For every company employees group is the most important stakeholder group. If a company has happy employees their customers will be doubly pleased.
Stakeholders are those groups or individual in society that have a direct interest in the performance and activities of business. The main stakeholders are employees, shareholders, customers, suppliers, financiers and the local community. Stakeholders may not hold any formal authority over the organization, but theorists such as Professor Charles Handy believe that a firm’s best long-term interests are served by paying close attention to the needs of each of these stakeholders. The modern view is that a firm has responsibilities to all its stakeholders i.e. everyone with a legitimate interest in the company. These include shareholders, competitors, government, employees, directors, distributors, customers, sub-contractors, pressure groups and local community. Although a company’s directors owes a legal duty to the shareholders, they also have moral responsibilities to other stakeholder group’s objectives in their entirely. As a firm can’t meet all stakeholders’ objectives in their entirety, they have to compromise. A company should try to serve the needs of these groups or individuals, but whilst some needs are common, other needs conflict. By the development of this second runway, the public and stakeholders are affected in one or other way and it can be positive and negative.
Nottingham Trent University. (2013). Lecture 1 - An Introduction to Corporate Governance. Available: https://now.ntu.ac.uk/d2l/le/content/248250/viewContent/1053845/View. Last accessed 16th Dec 2013.
staff, clients, vendors and superiors are critical. It also has an impact on a company’s overall
Stakeholders refer to individuals or groups of people that have an interest in a business. Management argues that as long as there is wealth for shareholders, then anything is done in a responsible manner and things should be done to promote the interest of other stakeholders.
Corporate governance is the medium or system through which companies are directed or controlled. The Cadbury Committee. (1992) corporate governance issues have been vigorously debated by academics, practitioners and policy makers for the last two decades. Corporate governance is the process of managing and controlling the activity, direction and performance of companies and, by extension, other institutions. The scope of governance is a contested area; some commentators interpret it narrowly as referring to the maximization of shareholder wealth, whereas, for others, governance has evolved to include corporate accountability, corporate social responsibility, risk management and the protection of interests of other stakeholders.