UNIT 7A ( BUSINESS OWNERSHIP + SHORT TERMISM)INTERNAL INFLEUNCES ON CORP OBJ/DESCISION Flashcards
privatley owned companies (private/publci companies) under pressure to deliver …
high levels of SH returns
as priv companies under pressure to dleiver high levels of SH return tehy may set corp obj that
intended to gen high levels of profits for SH in form of
dividends
driving up share price
if corp obj related to hih level sh returns are achieved likly to be a
attractive option for potential and exisitng SH
esp if seeking ST gains
SHAREHOLDER RETURNS are
financial beenfits derived by SH from buying companies shares
sh returns are a combo of
appreciating share price
dividends paid
how might senior managers be encouraged to set up corp obj and make strategic descisions inteded to drive up company share price
form of financial motivation under a share option scheme
why does share option scheme encourage senior managers to make startegic descison to drive up share price
if succesful can take option of buying shares or sell em and make profit immediatley
bs with diff ownership structures have diff
corp obj
in terms of strategic decisions in john lewis owned by all employeess purpose of partnership is happiness of all members . thers no external sh this means
JL can dow ahats best for partners and lt health of bs
no external sh means additionally
no conflict of interest between various parts of the bs
managers held to account across the company and common good is upheld
john lewis corp obj centre on
sustainable growth + delivering reasonable profit to its employees (partners)
john lewis corp obj centre on
sustainable growth + delivering reasonable profit to its employees (partners)
Small bs such as sole traders mutuals copr obj focus on
2 marks
providing excellent service
fulfilling social need e.g jobs in areas of high uneployment q
short termisim
pressure to deliver quick results to potential detriment of longer term development of a copmany
eg of Stermism
maxing profit in financial year at expense of LT interests
