Effects of Private Control of Business
Effects of Private Control of Business
Effects of Private Control of Business
Growth versus profit: for example, achieving higher sales in the short term (e.g. by cutting prices) will reduce short-term profit. Short-term versus long-term: for example, a business may decide to accept lower cash flows in the short-term whilst it invests heavily in new products or plant and equipment.
Large investors in the Stock Exchange are often accused of looking too much at short-term objectives and company performance rather than investing in a business for the long-term.
Alternative Aims and Objectives Not all businesses seek profit or growth. Some organisations have alternative objectives. Examples of other objectives: Ethical and socially responsible objectives organisations like the Co-op or the Body Shop have objectives which are based on their beliefs on how one should treat the environment and people who are less fortunate. Public sector corporations are run to not only generate a profit but provide a service to the public. This service will need to meet the needs of the less well off in society or help improve the ability of the economy to function: e.g. cheap and accessible transport service. Public sector organisations that monitor or control private sector activities have objectives that are to ensure that the business they are monitoring comply with the laws laid down. Health care and education establishments their objectives are to provide a service most private schools for instance have charitable status. Their aim is the enhancement of their pupils through education. Charities and voluntary organisations their aims and objectives are led by the beliefs they stand for.
Changing Objectives A business may change its objectives over time due to the following reasons: A business may achieve an objective and will need to move onto another one (e.g. survival in the first year may lead to an objective of increasing profit in the second year). The competitive environment might change, with the launch of new products from competitors. Technology might change product designs, so sales and production targets might need to change.
Let us consider the set goals of the following organizations. 1. Government - To promote peace, instead of war.
- To make policies beneficial to all, instead of just a few already rich elite.
- To work towards protecting its citizens by promoting safer and healthier workplaces, a living wage, and accountability from CEOs who use their companies for greedy and nefarious purposes. - To be open to scrutiny and expect its actions to be monitored by its citizens. - To that assists the needy, without question, at home and abroad. - To ensure a cleaner environment, promote renewable and efficient energy sources, and punish companies that pollute the environment. - To uphold the rule of law, and strive to protect the Constitution and Bill of Rights. 2. Political Parties
The primary goals of major political parties are: - To nominate candidates for office -To raise money so candidates can get elected campaign on behalf of their candidate -To get people to vote for candidate -To create a unified policy and make policies through party in government 3. Lecturers and Professors
Incorporate the use of technology in classrooms to enhance understanding of students. Spend some time on alternate days in a week to improve vocabulary and general awareness of students. Motivate students to read books by conducting 'reading sessions' in classroom, at least once or twice a week. Build stronger professional relationships with other teaching staff. Plan teaching work based on every week basis. Continue learning by keeping oneself updated about latest developments in the interest area. Help first year teachers in work and solve students queries regarding suitable career path.
Instil confidence in special children by giving them focused and goal - directed instruction. Read some popular books about teaching and try to bridge the parent - teacher - student communication gap. Manage time effectively to balance work and personal life. Plan ahead of the day regarding tasks and duties to be carried out that specific day. Organize desk and children files for recording information properly.
QUESTION 2
Significance The concept of limited liability plays a significant role in commerce. Absent the concept of limited liability, individuals would shy away from investing in businesses of any type. The vast majority of individuals would not want to put their personal property at risk by becoming involved in a business enterprise. Features The concept of limited liability restricts the amount of money a person risks to what she invests in a business enterprise, according to "Commentaries and Cases on the Law of Business Organization" by William T. Allen. Exception Protections normally associated with the concept of limited liability can be set aside in certain situations. For example, if a business owner co-mingles personal and business assets -- in a common bank account, for example -- an individual with a claim against the business likely can seek compensation from some, if not all, of the business owner's personal assets. Expert Assistance A business owner facing a situation in which another individual or business makes a claim against the business should seek legal assistance. A qualified attorney not only protects the interests of the business but works to ensure that the owner's personal assets do not end up in jeopardy. The American Bar Association maintains resources to assist in finding an experienced lawyer.
QUESTION 3
result, it might value the controlling block less. At the same time, a fledgling company might inflict a loss in reputation to the controlling party and, in some extreme cases, even some legal liabilities. For this reason we do not necessarily expect all our estimates to be always positive. In particular, we expect a higher frequency of negative value of control for financially distressed companies (see also Barclay and Holderness, 1989). Note that the existence of private business control is not necessarily inefficient. First of all, private benefits might be the most efficient way for the company to capture some of the value created. Imagine, for instance, that a corporate executive acquires valuable information about investment opportunities in other lines of businesses, which the company cannot or does not want to pursue. The executive could sell this information in the interest of shareholders. But the price she will be able to fetch is probably very low. Thus, it might be efficient that the executive exploits this opportunity on her own. Second, even if the extraction of private benefits generate some inefficiency, their existence might be socially beneficial, because their presence makes value-enhancing takeovers possible (Grossman and Hart (1980)). Given the difficulties in distinguishing whether private benefits are socially costly, consistently in this analysis we will shy away from any welfare consideration. Even the implications of the effects of private benefits on the development of security markets should be interpreted as a positive statement, not a normative one. In fact, in at least one of the models from where these implications are derived (Zingales, 1995b), the level of private benefits has no efficiency consequences, but only distributional ones.
REFERENCES
1. www.google.com 2. www.wikipedia.org 3. www.smallbusiness.chron.com 4. www.research.chicagobooth.edu