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Different stakeholders want different things from a business. Customers want a cheap but quality product, but shareholders want a high profit margin. Employees may want higher wages, but shareholders want to cost minimise meaning a reduction of wages The community may want a more environmentally friendly production process.
But if customers want a cheap product, yet a more environmentally friendly production process may increase production costs thus increasing retail price. Shareholders conflict with each other. Some have short term incentives. They want high dividends and no long term expensive investments. However a long term incentive shareholders will be prepared for no dividend if it means their investment will make a high profit later on. Companies need shareholders because the shareholders contribute funds to the company in exchange for their share of ownership.
These funds finance various assets needed by the business to survive and grow. The funds may be used to build production plants, fund inventories, or buy other companies. Log in. Business and Industry.
See Answer. Best Answer. Study guides. Q: What do shareholders want from organization? Write your answer Related questions. Is it ethical for a person on an organization board of directors to also be a shareholder of that organization? Which type of business organization has shareholders? What are the essentials of management of an organization?
What are criteria for effective organization structure? What are the importance of maximization of shareholders wealth? What are the tactical goals of an organization? What is private enterprises?
What is internal stakeholder? Why are shareholders interested in financial information? Financial and management accounting? How do you account for shareholders profit sharing? Examples of stakeholders? Many are also motivated by regular dividend payments that compensate them for maintaining their investment in the firm. The objective of many shareholders is to influence the governance of the firm to meet their individual objectives and goals.
Depending on the percentage of ownership she holds, a shareholder can significantly influence the business's strategic decisions. In privately held firms, shareholders have greater influence than stockholders do in public corporations. Majority shareholders can make major decisions without input from other parties, although minority shareholders have a right to be notified and consulted about such moves.
When making an investment, a shareholder is often able to negotiate his level of influence in the firm. All shareholders share the objective of minimizing the risk of their investment. Shareholders seek out investments that have the lowest potential for financial loss and do what's necessary to prevent the loss of their principal. If shareholders lose confidence in a firm's ability to lower risk and ensure shareholder profits, they will quickly divest themselves from the firm. What does a shareholder do?
A shareholder, also known as a stockholder, participates in the management of a company. Since shareholders are also the owners, they get the benefits of the company profits when the stock value increases. If a business performs poorly, shareholders lose money when the stock falls in price. Unlike owners of partnerships or sole proprietorships, shareholders cannot be held liable for obligations or business debts that the company incurs.
This means that if a business fails, creditors cannot demand that shareholders pay the debts personally. Unlike the leadership of other legal entities, companies that have shareholders use officers and a board of directors to manage company affairs.
Moreover, shareholders usually have little say in how the business is managed daily. Many businesses choose to issue two stock classes: preferred and common. Common is cheaper and more readily available than preferred stock. Most shareholders own common stock, can vote on company affairs, and receive compensation in the form of dividends.
However, the board of directors may only deem dividends necessary when it is appropriate to issue dividends. In terms of voting, common shareholders do not get the same rights as preferred stockholders, and preferred shareholders receive larger dividend shares.
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