Al Dunlap At Sunbeam

1750 Words4 Pages

Al Dunlap At Sunbeam Does the maximaization of shareholder value reward socially destructive actions by corporations?Certainly not.A company is not an instrument of shareholders, but a coalition between various resource suppliers, with the intention of increasing their common wealth and hence is contradictory to Mr Al Dunlaps view of share holder primancy. Through out his tenure at Sunbeam,Al Dunlap’s advocated profit by firing many employees and shutting down many factories.If we look at it in the short term ,this approach seems very attractive as it brings in quick short term gains.In the long term ,however, such a decision would not ensure the sustainability of the company. Profitability and responsibility can and should be combined in an ideal world, however it is clear that they are at least partially contradictory. Shareholder pressure should not force a company to make short-term decisions that might be detrimental to the long-term profitability of the company. On one hand, businesses must be profitable to survive and corporations must earn a higher return on the shareholders equity than would be realized if the money were deposited on a no-risk bank account. The profits that are made create trust from investors and are usually reflected in higher stock-prices, which makes it easier to grow the company further towards its goals. The profits are not only a result, but also a source of corporate competitive health and wealth. On the other hand, companies are networks of parties and people working together towards a shared goal and not merely 'economic machines'. ... ... middle of paper ... ...ncial situation of the company in the board meeting. Hence, board made the right decision in firing Albert Dunlap as the CEO of Sunbeam. This is actually an example of mixed corporate governance. There are independent board members in order to make sure that the operational and financial health of the company can gauged accurately from time to time. Peter Langerman did an in depth enquiry into the financial matters just because Dunlap had offered to resign in response to a trivial question. The board should have kept a watch on the firm’s financial health from the beginning. But after realising the gravity of situation, board was prompt and unanimous in firing Albert Dunlap which shows good corporate governance.

Show More
Related

  • ASIC V. Rich 2009: NSWSC 1229

    1000 Words  | 2 Pages

    This decision was made in good faith and cannot be conspicuously construed to have self-interests veiled in them. Further, the executive directors made an informed decision to refrain from passing this information to the board and they did believe that this would be in the best interests of the company as disclosure would have brought an end to the company’s existence much before the actual downfall. Thus this judgment met all the requisites prescribed under the provisions of Section 180 (2) of the Corporations Act, 2001 (Rawhouser, Cummings and Crane 2015). This case was the first to comprehensively lay down the business judgment defense and apply it to the facts and circumstances of a case. This defense would negate the apparent breach of the duties of the directors as prescribed by the statute and under common

    Read More

  • Greed And Incentives Essay

    938 Words  | 2 Pages

    Without incentives of profit, innovation would not matter. Profits foster the pursuit of new opportunities. They encourage people to undertake the risk necessary to come up with new products, new ideas, and new businesses. Every new idea and new business is a risky undertaking, and humankind would still be stuck in the Stone Age if we did not have the incentives provided by profits. Losses, by contrast, encourage hesitance. They counter the incentive for profit seeking and discourage excessive risk taking. This works as an incentive for people to make smart economic decisions. Profits and losses are

    Read More

  • Robber Barons and the Captains of Industry Made America's Economy of Today

    864 Words  | 2 Pages

    Money makes the world go around so that people could either become rich or poor. The whole issue with businesses came up in the 18th-19th century and was created by two factions in US history, the Robber Barons and the Captains of Industry. These two are what made the way America’s economy it is today. The Robber Barons and the Captains of industry were both very similar but completely different with how they operated in the economic world. Robber Barons made wealth in a variety of ways but still maintained the sense of thieves from the way they attained their wealth and treated their people hence forth their name. The Robber Barons were considered a unlikable form of business because of the effect they had a negative effect on the community. The Robber Barons whole idea and purpose was to make money for themselves by means of which is immoral to society. Most of the money collected by Robber Barons were taken from the people and their community further proving that they had gained a lot if not most of their wealth from the people without giving back to their town. The Robber Barons would also have their workers working in extremely harsh conditions that were harmful to their health and mental state, only to be made worse by the wages they were getting paid. These businesses refused to see their workers as people; instead they saw their workers as parts of a machine that can always be replaced. This was partially the fault of 'Social Darwinism'. This meant that the most fit would succeed to become rich while others would not. This idea was created by Andrew Carnegie, a businessman of the steel industry, although the first intention was to make sure that government would stay out of the affairs of big businesses. Carnegie, a Capta...

    Read More

  • 1

    677 Words  | 2 Pages

    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).

    Read More

  • albertsons

    752 Words  | 2 Pages

    From the employee reviews it is obvious that most of the employees are not satisfied with the company. Only 40% of employees are willing to recommend the company to their friends and 52% approve of the CEO, Bob Miller.

    Read More

  • Review of Bratton & Wachter's Position on Shareholder Primacy's Corporatist Origins

    678 Words  | 2 Pages

    The thesis of the aforementioned article regarding corporate law theories is that "...shareholder primacy prevails today as the dominant view, with management discretion advocates in the minority, and with advocates of corporate social responsibility (CSR) as a rearguard" (pg. 100). Bratton & Wachter discuss the three views throughout the article and clarifies errors in early interpretations of Adolf A. Berle, Jr. and E. Merrick Dodd's debate of the 1930's. Bratton & Wachter cite the early interpretations were of Berle as the grandfather of shareholder primacy and Dodd as the grandfather of CSR whereas "neither was supporting either position. Both were speaking to the politics of their day, defending different visions of the emerging corporatist state, Berle's on the left and Dodd's on the right (pg. 135)." The misunderstanding reportedly is fueled by the overlapping publishment of arguments as well as Berle's initial response to Dodd's countering views being difficult to decipher.

    Read More

  • Aron Solomon Case Study

    1163 Words  | 3 Pages

    A company is separate from its employees, shareholders or members in that the connection between them is usually a mere contract of employment which may be terminated leaving both parties to go their own ways. The same generally applies however to those businesses which are not companies. There is also more importantly usually a separation between the company and its owners.

    Read More

  • Milton Friedman's Essay Analysis of The Social Responsibility to Increase Profit

    720 Words  | 2 Pages

    We probably all agree that the primary objective of any business is to achieve revenue and attain a certain profit. But then here is the question that we might ask, is profit the only element that should be considered when making business decisions? In my point of view the answer is no as I will try to demonstrate throughout this paper. One quick alternative of what should be the first top priority of a business is creating a customer as Dr.Peter Drucker said. According to him “The customer is the foundation of a business and keeps it in existence. He alone gives employment. To supply the wants and needs of a consumer, society entrusts wealth-producing resources to the business enterprise.” (Santayana, George. Is The Tyranny Of Shareholder Value Finally Ending? )

    Read More

  • American Red Cross Ethical Issues

    829 Words  | 2 Pages

    The key facts and critical issues presented in this case are many. Organizational and leadership turmoil are at the top. There has been a high turnover of top executives. The oversized board of directors is blamed.

    Read More

  • Ace Electronics: Lack Of Controls

    445 Words  | 1 Pages

    As the owner of the company, Al main concerns could be taking care of his business, and making sure they thrive. Since the beginning of the company, Al’s has been profiting in his business. So, his main concern could be to keep his cost down and his profits up. As for Al’s employees, seeing in the course of six years he has done nothing to fix issues within the company. His employees could assume Al could care less about the status and morale within the company. Therefore, they could believe their actions is not effecting the company’s in a negative way. Along with, the fact his supervisor was not providing adequate information about his employees to Al and vice versa. He failed to follow the chain of command, dealing with employees whom, were lacking in their duties within the company. As a result, Al lacked in the communication with his team. Thus, his supervisor and employee lacked respect for his

    Read More

  • Company Law

    2007 Words  | 5 Pages

    As a consequence of the separate legal entity and limited liability doctrines within the UK’s unitary based system, company law had to develop responses to the ‘agency costs’ that arose. The central response is directors’ duties; these are owed by the directors to the company and operate as a counterbalance to the vast scope of powers given to the board. The benefit of the unitary board system is reflected in the efficiency gains it brings, however the disadvantage is clear, the directors may act to further their own interests to the detriment of the company. It is evident within executive remuneration that directors are placed in a stark conflict of interest position in that they may disproportionately reward themselves. The counterbalance to this concern is S175 Companies Act 2006 (CA 2006) this acts to prevent certain conflicts arising and punishes directors who find themselves in this position. Furthermore, there are specific provisions within the CA 2006 that empower third parties such as shareholders to influence directors’ remuneration.

    Read More

  • Analysis of the Mission and Vision Statements of JPMorgan Chase

    2211 Words  | 5 Pages

    Lazonick, W., & O'Sullivan, M. (2000). Maximizing shareholder value: a new ideology for corporate governance. Economy and Society, 29(1), 13-35. Retrieved from http://www.uml.edu/centers/cic/Research/Lazonick_Research/Older_Research/Business_Institutions/maximizing shareholder value.pdf

    Read More

  • Business and Social Responsibility

    1512 Words  | 4 Pages

    ...the agents to be the gatekeepers for keeping the corporation alive. While some of Dr. Friedman’s opinions came across bold and harsh, ultimately I feel that he presents a strong case for developing a profit-motivated company that does not treat its stockholders inappropriately.

    Read More

  • The History of the Stock Market

    1065 Words  | 3 Pages

    Once there was a time when “shares in business corporations were rarely bought and sold because few companies were considered promising financial profits” (Blume 21). That is hard to believe considering almost everybody has invested in some stock today. The stock market went through some distinct changes since its inception, and has evolved into a shaping force in the world today. There is one idea that sparked the fire which produced the stock market: capitalism. Everything the stock market is, and was, rooted in the basic idea of capitalism. Without that idea, stocks and bonds would never have come to be.

    Read More

  • Analysis of the Movie, The Insider

    1442 Words  | 3 Pages

    It seems obvious that large corporations have a tendency to ignore the negative effects of their actions in favor of profit. This example, although sensationalized, still says to me that with power comes responsibility. It affirmed my belief that a corporation’s goal cannot be just to provide profit to shareholders, but there must also be an element of social responsibility.

    Read More

More about Al Dunlap At Sunbeam

Open Document