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
In this assignment I will discuss about key stakeholders who influence the purposes of two business, the business I have chosen are Tesco and Oxfam. Also, I will be talking about interest owners, customers, suppliers, employees, trade unions and employer associations have in the business. Another point I will be talking about is why business must consider local communities and pressure groups when operating their business.
The overall idea that Nadar, Green and Seligman present is that we need to allow the board to play its original role and to remove the excessive amounts of power that are current held by the highest company executives. Their goal is to make companies democratic just like the American system government and to make all who participate accountable for the actions they take.
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...
Bibliography: Turnbull, S. (1997). Corporate governance: its scope, concerns and theories. Corporate Governance: An International Review, 5 (4), pp. 180--205.
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.
For every company employees group is the most important stakeholder group. If a company has happy employees their customers will be doubly pleased.
Hence, the stakeholders which are described as those who are affected by the organisation performance ,actions and duties and those actions includes employees, clients, local community and investors as well. The theory of stakeholders also suggests that it is the responsibility of firm to make sure no rights of stakeholders are dishonoured and make decisions in the interest of stakeholders which is also the purpose of stakeholder theory to make more profit and balancing it while considering its stakeholders (Freeman 2008 pp. 162-165). In the other words organisation must also operates in a more socially accountable approach by carrying out corporate social responsibility as (CSR) activities.
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.
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.
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.
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.
staff, clients, vendors and superiors are critical. It also has an impact on a company’s overall
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.
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.