In this paper, I will discuss alternative goals for the maximization of wealth. I will also compare a firm in the international market and the different goals and strategies practice in other countries versus the United States. I will conclude with contrasting the difference between stakeholders focus goals and shareholders focus goals and possible problems that may arise between the two.
Alternative Goals for Shareholder Wealth Maximization
The financial management objective is to earn the maximum profit for an organization. In exploring ways to maximize profit, the financial manager must realize the importance ...view middle of the document...
In 2007, TESCO launched their first food stores in the U.S. under the name of Fast & Easy (F & E). Due to cultural nuances practiced by the American people TESCO had to change their strategy after their failed attempt at the original launching of the F & E stores in the U.S. TESCO goals were to transfer the same customs practiced in other countries to the United States F & E stores. Even though, TESCO conducted research prior to launching the stores, they still failed to comprehend the practices of the American people. For example,
* Fast & Easy stores were 75% smaller than the typical American supermarkets and did not offer bulk shopping. In addition, the floors were cemented with no creativity to the décor. This was not a factor for the UK stores
* The TESCO executives lacked “car culture” knowledge. Americans normal practice is to buy at least a week’s worth of groceries unlike other countries in the TESCO market that practice a daily run to the grocery store
* When TESCO entered the U.S. it did not form a joint venture like it had in other countries; something that would have given it a leg up in understanding the US market. They also did not incorporate their loyalty cards the way they had done in the U.K. and abroad (TESCO PLC, n.d.).
Fast & Easy failed to make a profit in the U.S.; however they sought to keep a footprint in the U.S. market. Fast & Easy changed their goals & strategies to market directly to the American people by adding décor appealing to the people, listening to the customers, gearing their advertising and specials to the American people, and reassessing their presentation. F&E is still struggling in the American market by competition with larger stores; therefore, only time will tell if they will succeed.
Stakeholder Focus Goals versus Shareholder Focus Goals
As defined by Adams (2008), “a stakeholder is an individual or group that has some interest in the way an organization is structured, managed, and behaves”. In some organizations, there may be different levels of stakeholders, such as internal and external stakeholders. Internal stakeholders, such as management, focus on its people and value its people. Motivating people and involving people lead to enhanced efficiency. Improved efficiency leads to increase in profits, decrease in costs, and increase in sales.
Internal stakeholders may be in position to exert authority over their people. However, external stakeholders may not be effective in that area. For example, a hospital patient may have a great interest in their treatment...