In: Finance
Explain why shareholder wealth as a singular, overarching goal is flawed.
There are other objectives which the company should focus as
focusing only on shareholder wealth is not sustainable and not long
term goal. The other objectives which company's should focus
are
1. Focusing on stakeholders: Social responsibility of the company
and focusing on stakeholders like the society, customers,
environment,etc cab help in sustainable growth of the government.
Moreover focusing on stakeholders helps build long term image and
brand equity for the company.
2. Focusing on employee:Focusing on employees , their compensation
and incentives would help in better quality products and service by
employees. This will indirectly increase share holder wealth by
focusing on the welfare of employees. A happy employee is important
for growth of a company.
3. Social Responsibility objective: Focusing on environment , eco
friendly and green products(products which are biodegradable and
very less impact to environment) help a company gain positive image
which helps in long term existence of a company.
Shareholder wealth maximization might be short term goal but all of
the above are long term goals.