Human environmental hazards Essay Example | Topics and Well Written Essays - 500 words

Human environmental hazards - Essay Example Chemical hazards are considered to be the most common of human environmental hazards because there are numerous types and the majority of them are quite simple for a human to obtain. The majority of people are unaware that they are even being subjected to the many chemicals in the environment until their health becomes compromised. The physical hazards category consists of natural disasters, which are events that human beings have no control over. The greatest danger about physical hazards, besides not being able to control or prevent them, is that they can occur without warning.These events have the ability to harm human life, as well as plant and animal life, and property. Cultural hazards consist of hazards that can often be foreseen, but tend to go unnoticed until it is too late. Cultural hazards come as a result of where we live, our occupation, behavioral choices, and our socioeconomic status.People have the ability to control the majority of cultural hazards, such as taking better care of themselves or living in safe environments, but many people are unaware of the damage that can happen. Biological hazards come about from ecological interaction primarily between human beings, but there are times when other organisms can get involved, such as animals. Biological hazards can be prevented when people are more attentive to their health, cleanliness, and how they interact with other people.

Establishing an Illegal Business Essay Example | Topics and Well Written Essays - 1000 words

Establishing an Illegal Business - Essay Example Establishing an Illegal This paper shows how to establish a lucrative ecstasy-manufacturing firm in the country The medical department refers to ecstasy to be illegal since there is drug has no medicinal value. They argue that the drug has effects on the human brain with effects such as hallucination. Despite the medical reasons, the drug still attracts a large market demand. At this point, the first steps of starting a business are in place. The beginning tasks such as the product type and the size of business is already in place. The second step involves being aware of the customers’ needs. The main customers of the product would target the young generation. The young generation holds the largest demand for the ecstasy drug. There should be enough information concerning the manufacture and distribution of the drug. To have a proper network that would coordinate the flow of the drug; the firm would work closely with other distributors and study how the drug rotates. Next is to identify the area that would best fit the establishment of the company. The area should be one that does not attract any suspicion to the authorities. The best way would be to establish a camouflage firm that would cover the identity of the drug. Identification of financial, natural, man-made and human resources for the firm should be available freely. A business plan would assist with the planning and calculation of the requirements. This is the trickiest part before the actual running of the operation. At this point, it would be difficult to trust the operators for information. In addition, the government has spies from top agencies that are out to fight the production and distribution of drugs. Therefore, as the planning occurs, the company would import the products from outside countries to test the market (Koellhoffer 24). Importation would need the firm to seek creative methods that would challenge the border security. The government concentrates on cracking down on drug traffickers along the Mexic an border and major airports. The security is tight in those areas because Mexico is a major drug trafficking country. The government has produced information that links drug trafficking to the Islamic terrorist groups. Associating with the terrorist groups openly, would link the firm to drug trafficking, thereby, blowing its cover (Brott 48). There would be need to establish connections along the customs officials that would assist in importing the products. After making the order from the outside country, the firm would claim to be importing materials to set up a local pharmaceutical firm. In the process of importing the materials, the firm would smuggle some quantities of ecstasy to try into the market. The operations at the customs would require the influence of powerful individuals in the country to see to it that the drugs come in. As mentioned above, drug business is a billion dollar enterprise headed by powerful people in the country. Many of the firm’s expenses would include paying off powerful individuals who influence the drug trade in the market (Harvard Business School 67). Ones the drug is in the market, the firm would begin by first having agents who distribute at parties. Through this, the agent would interact with other drug agents from other countries. Soon the drug distribution system will be in place, enough for the firm to supply to the other agents from different drug cartels. Once the firm establishes the proper networks necessary to meet the requirements for profitable

STRATEGIC CHANGE MANAGEMENT Assignment Example | Topics and Well Written Essays - 3000 words

STRATEGIC CHANGE MANAGEMENT - Assignment Example Hard elements are easily identified and defined, and management can influence them directly. These elements include strategy, structure as well as systems. On the other hand, soft elements are skills, shared values, and staff. In addition, soft elements are more intricate to describe, less tangible as well as influenced by culture more. Nevertheless, these soft elements are as essential as the hard elements of an organisation to be successful (Smillie & Hailey 2001). Burke & Litwin Causal Model of Organizational Performance and Change propose linkages that theorize the way performance is determined by external and internal factors. It offers a framework to evaluate organizational together with environmental aspects that are successful change keys and it illustrates how these dimensions must be causally linked to attaining a change in performance. Kurt Lewin came up with a change model with three steps: unfreezing, changing as well as refreezing. The model symbolises a quite simple but practical model for getting to understand the change process. These steps are: Unfreezing that entails decreasing those forces that drive behaviour currently, acknowledgment of the need for change and occurrence of improvement. Changing, that is, development of new behaviour or attitudes and the change implementation. The third stage is refreezing that entails stabilising and reinforcing change at the new level (Smillie & Hailey 2001). The 7-S model bases on hypothesis that, for a company to perform well, the seven elements must be aligned as well as mutually reinforced. Thus, the model can be utilized to assist to find out the needs to be realigned to enhance performance or to sustain alignment, as well as performance all through other forms of change. Whatsoever the kind of change e.g. restructuring, organizational merger, new processes, new systems, leadership

Use of IT in supply chain management Essay Example | Topics and Well Written Essays - 500 words

Use of IT in supply chain management - Essay Example Planning for the overtime labor was also irregular, since the organization did not have an effective information gathering system that would predict the demand and the supply changes effectively. The initial spreadsheet system that was paper-based had proven to be ineffective in supplying such information. The problems that Sunsweet Growers encounter due to these constraints included the fact that its operational costs were high, since the company had to hire overtime labor on irregular basis so as to meet the demand processing needs. Secondly, following the initial use of a paper-based spreadsheet system by the organization as its information source, the organization relied on outdated data since this system could not process information in good time. The use of the paper-based spread sheet system also limited the collaboration between different departments of the organizations, while the time spent to process simple information such as demand or supply forecast would take too much time. The adoption of the S&OP software helped the organization to manage its supply chain better, through making it possible for different departments of the organization to come to the monthly meeting with collaborative information, which made it easier to identify the relevant areas of problem for departments and enhanced efficient projections for the future demand and supply changes. This made it possible for the different departments to cooperate and streamline their goals, so that they reflected the overall organizational objective. The software also helped the organization to produce demand plans routinely, which in turn ensured that the organization was now able to balance its demand forecasts with operational plans. Therefore, the cost of overtime labor was markedly reduced, while the time taken to generate important market forecast and supply projection information also declined. The inventory management of the organization also benefited through the

Implementation of Materials Requirements Planning Case Study

Implementation of Materials Requirements Planning - Case Study Example There was a delay in ordering and forecasting due to jumbling of trucks. Vice president recommended that for the software to work, it needed at least 25 Premio employees and managers to adjust their jobs. The minor problem was only lack of adequate parking space for the customers or visitors due to the parking of delivering trucks. Gmunder insisted that the system would overhaul production, procurement, and shipping as well as imposing the required discipline, which Cinque, the company’s CEO wavered. Gmunder estimated the system would raise the annual money flow by $500000 and an annual savings of $150000 through the reduction of wasted material. Cinque still questioned about the system claiming that the numbers were worth pursuing, but with no sales yet. Cinque elaborated that the system affects every operation of Premio Foods Company. Employees started complaining about because some of them would be laid-off from a job (Barrett, 2010). The system was also doubted by one of the veterans and also a director of technical services, suggesting that the company would end up getting solid sales forecasts. The veteran viewed it as a big corporate BS. He also feared to undergo from the shortage of raw materials especially during the holiday. Mark Renna, who is the director of logistics and aged eight years, warned Cinque about an eruption of a similar case of installation of MRP system. He elaborated that customers were not getting their orders, and most of the trucks left the firm half full, which might happen to the company. It seems MRP system is based on the assumption of the deterministic region. Leads and demand times are the most assumed determinists. In a manufacturing environment, however, the assumptions are invariably violated. There exists a conflict between reality and assumptions in the execution of MRP system.

Time for a Change Essay Example for Free

Time for a Change Essay Part of running a major business involves periodically examining what’s working and what can get better (Hogg, 2010). As everyone knows, just as every other company needs to work to remain relevant, we have to keep up with our primary competitors including Allstate, Farmers, Geico and Progressive. We need to do work better to perform processes uniformly across the state and the only way to do so is go from four regional offices in California, to one regional office. We first will need to create a transition committee that will have supervisors from each offices, section and division managers as well communication with other zones that have gone through similar transitional change. With this transition, we will also need to take into consideration how much this will cost the company and also how much will be saved as a result in the conclusion of the process. Which office will be the first to close, which will come second which will close last and finally which will remain open? There will also need to be a plan for the increase of work load when we close the offices and how we will keep the work load down and manageable by adding specialty teams that focus on certain areas of the work instead of handling it all. Additionally, we will also need to review how this will affect the potential impacted communities, and how we will handle the internal and external communication plans. When creating a transitional committee we need to select the right members for this committee. We understand that some may not be making the move but their assistants will be beneficial to everyone. Within this committee we need to select who will handle what roles each person will be in charge of. We will have groups in charge of different areas. Such as people count, communication, timelines, training and expenses. For the people count, this group will be in charge of finding out how many people will be moving and how many will be leaving. With this information they ill be required to determine the amount of new associates that need to be hired and how many hiring waves. The group that will handle communication will be the ones who will communicate to associates the time line of transition as well as information on the specialty teams that will be formed. This group of individuals will be required to travel to all offices to a job fair for associates so that they can see how their department is changing and what the new roles will look like. It will give them an opportunity to find out if they would be interested in a certain specialty team. For the training group, their job is to determine how many trainers will be needed and if temporary trainers will need to be pulled to help train new associates as well as set up refresher courses for existing associates. The expense committee will not only be covering the transition expenses, but also travel expenses and hiring expenses. Why is it necessary to transition from 4 regional offices to one? First, with the recent move of our payment plan department and our Life/Health department to other states all four regional offices now have less than 60 percent occupancy. One of our offices is even at 40 percent and the building itself needs some costly upgrades to minimally keep it as a viable work location. Another reason why we need to close these offices is due to the fact that each office seems to do work their own way in lieu of processing work items in the same manner as intended and designed by the corporate office. By combining everything into one singular location, we can ensure that processing consistency is achieved while also aiming to treat every policyholder in the state exactly the same way with consistent high quality service. Doing so would enable our Zone to achieve and retain the Remarkable expectations set forth by policyholders. Another reason why it would be highly beneficial to transition from 4 regional offices to 1 is the day to day expense. The current cost per average month to simply cover electrical utility expenses is one hundred thousand dollars in a single office with gas expenses around fifteen thousand and forty thousand in public water fees. Since we are not a company regulated by stakeholders but a company literally managed by our policyholders also referred to as a mutual company, it is our policyholders who are paying for all the utilities on 4 offices that are not being used at full capacity. In transitioning to a single office we will be saving our policyholders an estimated 5. 6 million ollars annually which can be reinvested into the organization by way of rate reductions and directly benefit customers. We need to determine which office will remain open. Since a separate entity of the company manages facilities and all are owned the decision really comes down to a few details. Which facility can house a majority of the associates, can new talent be recruited in that community to sustain the growth, which facility is the most energy efficient, which facility needs the least amount of necessary upgrades, and where would a majority of our associates be willing to relocate to? This decision was relatively simple as the Central California office location was the newest facility and the only that was not a single level structure, is in a growing city that has an established university and the ability to add much more housing that will be required. An added benefit is that water expenses are minimized as the grounds are all hydrated with reclaimed well water. As a result of that decision the next decision is determining which office to close first. We will first close our West Lake and Costa Mesa offices as each is very costly to keep open and sit on prime freeway real-estate. When any transition involving associates is being planned, one must realize that there are numerous impacts both positive and negative. While the realization is there that we will lose very loyal, experienced, tenured associates we must also realize that we will also shed a significant expense. Employee compensation is our largest investment in the organization. With the loss of those associates and backfill with newer associates there will naturally be a savings component in conjunctions with that realization and change. Newer associates will have a lower base salary, fewer vacation benefits resulting in increased days producing at the office, and potentially an improved work ethic as they are very happy, not for a new job but the potential for a new career. Combined occupancy of the southern office locations were at a total of 70 percent capacity. For those associates there will be a few options. We will offer early retirement packages for those who are at retirement age. We will offer a relocation package to all employees who are willing to relocate and we will provide them with a weekend tour of the new facility and community to assist them with their decision. This package also includes a bonus if they were able to sale their house prior to the move. If not, State Farm will buy their house and sell it for them. The last office that will close will be our Northern California office. That will not happen for at least 3 years after the first two offices close in an effort to minimize work flow disruption and well as mitigate the loss of tenured employee capital. With the closing of the two offices, we will need to learn the number of employees that will be part of the transition and how many employees that will take the early retirement package and how many will quit State Farm all together. We will need to determine the work flow as well as how many new associates that need to be hired in the final location. Also being incorporated into the transition process is a new workflow distribution system along with a new specialized team concept approach to facilitate with training new associates to make each job responsibility less than what it currently is. Different associates are strong in certain areas and weaker in others so the thought is to capitalize on each of the strengths. The teams that we need to create should be the following. For example in our Auto Department, they will be going to the following. New business application issuance team consisting of both underwriters and assistants, added car application issuance teams, three processing/production teams, one rating/accounting team, three call center teams finally one training team and one quality review/improvement team. Our Personal Lines Fire team will be doing something very similar as well as our Business Lines Department. Our claims department will also go into smaller specialized teams. With these specialty teams in place it will help with the work flow as well as ensure that the work gets processed correctly an efficiently. Additionally, since our current underwriting assistant training program last a surprising three years due to the complexity of the job. With the specialty teams that will be in place the training will not need to be as long as the focus of each role will evolve to its new state. The new training program will last up to 15 to 18 months to get fully proficient with continuing development to refine complex skill sets in their respective specialty areas. The first year training will be focused on the basics and once the trainers get a feel for what the trainees strengths are after that year, the next 8 months will be focused on their area of specialization. By doing this, we will provide better and more accurate service to our policyholders and more time will be spent doing the work. When we get to the point of communicating to our employees we will be earing different remarks from them such as why us, why not the other office, what am I going to do and so on and so on. They’ll need information to make decisions about their and their family’s future (Van Camp, 2012). When we determine when we are going to tell them employees there are five key concepts that we need to remember when we are communicating to all employees. The news we will be providin g will be life changing for numerous amount of people and we will need to be prepared to handle a large amount of questions and backlash and personal feelings. What we need to do and focus on is providing regular, weekly e-mail blasts from leadership describing the changing events. Let employees know when major decisions are expected to be made; for example, communicate when benefit and personnel information will be released. Encourage dialogue between managers and their teams. If needed, have leadership step in and directly communicate with employees through town hall-style meetings and discussions. Create a channel for two-way open communication. For example, create a virtual suggestion box or a forum for discussion between employees and leadership. Posts can remain anonymous for employees at every level through the organization. If there is no information available or something has yet to be decided, let employees know that, but don’t keep them guessing. Employees who have to wonder about their futures are not engages in their jobs, and productivity and loyalty will be affected (Van Camp, 2012). When we go to the public with this information we will need to provide our plans in writing so that the media does not misconstrue any of our information. We do not want false information being provided and pushed out to the public. We already know that we are changing the lives of our employees but we will also be changing the communities. We also need to be prepared for questions such as what will this do to smaller area’s that depend on the business from State Farm associates, impact to the local housing market and loss of existing talent. For associates not wanting to continue with the company we will assist them with their resumes and interviewing skills in an effort to minimize their personal impacts of the transition. There will be numerous classes to assist with resumes and interviews as well as letter of recommendation from their supervisor to help them get another job. Finally we will have our operations managers from each office deliver the message of the closing of the offices. No one looks forward to addressing an angry audience, but you do have one major factor working in your favor: People definitely care about your message. As with an apprehensive audience, treat their emotions with respect and avoid humor. Prepare thoroughly so you can provide complete information in a calm, rational manner. Consider using the indirect approach to build support for your message while addressing points of concern along the way. Remain calm and don’t engage in emotional exchanges with the audience (Bovee Thill, 2012, p. 477). Our operations managers would be the perfect candidates that will be able to deliver this message so that they will be able to hear the compassion in their voice and to understand that this is not an easy move on anyone. We want to remain ahead of our competitors. We want to ensure that we are not one of those companies that will start having massive layoffs due to the decline of the business. State Farm has been around for 90 years and we want to be around for even more. By having a transitional committee, we will be able to affectively shut down 3 offices and move the work load and employees to one. We will be able to have specialized teams within all of the departments. We will drastically reduce cost which will allow our policyholders to have more rate decreases on their auto and homeowners policies. We will show compassion when delivering speaking to our associates and to the media. Last but not least we will keep everyone in the loop through emails and meetings with management so no one is left in the dark.

Strategies to Maximise Shareholder Value

Strategies to Maximise Shareholder Value Introduction Firms may have different objectives to achieve. However in theory, a firm should set its objectives to increase its value for its owners. Shareholders are the owners of a firm. Therefore according to theory maximising shareholders wealth is the fundamental objective of a firm. (Watson Head –Corporate Finance principles and practice 2007) Investors generally expect to earn satisfactory returns on their investments as they require increasing the value of their investments as much as possible. This is usually determined by dividend payout and or capital gains by increasing the market value of the share price. The managers of the company act on behalf of the investors, such as operating day to day activities and making decisions within the business. In another way they do have the control of the business entity. However, firms may have other objectives to achieve such as maximising of profits, growth and increasing its markets share. When achieving these objectives of a firm, conflicts may arise as a result of ownership and control. Managers may make their decisions on their own interests rather than achieving investors wealth. Discussing the investor related goals as described earlier, in theory behaviour of management should be consistent towards maximising shareholders wealth, enhancing the value of the business (Basely Brigham- Essentials of Managerial Finance).Value of the business is measured by valuing firms price of shares. Its essential to consider maximising of stock prices, and its impact to the investors and the economy as a whole simultaneously. Maximising profits is also an objective of a firm. It is determined by maximising the firms net profits. It is also can be described as a short term objective whilst maximising the value of the company is a long term objective for a firm (Financial Management –Kaplan Publishers 2009). Therefore it is not necessary, maximising profits as maximising shareholders wealth because there are number of potential problems can be occurred adapting to an objective of profit maximisation. It will be discussed in the latter part of the report. Earnings per share (EPS) is one of the main indicators of the firms profitability and it is a broadly used method measuring firms success, as it is determined return to equity in theory(Financial Management – Kaplan Publishers 2009).However, EPS doesnt expose the firms wealth since it is determined by using firms net profits. Therefore EPS is also exist the same criticism as profit maximisation above which will be discussing in the later part of the report. During the past ten years have seen a much greater emphasis on investor related goals. The conflict of ownership and control can be recognised as one of the significant causes which were affected investors and the world economy in the past ten years. The corporate scandals such as Enron, Maxwell and World com which occurred recent past had been lost investors confidence towards capital markets. Therefore its essential to consider the ethical behaviour and social responsibilities towards shareholder wealth maximisation simultaneously. It can also be said the institutional investors such as insurance companies and pension funds had also made a significant influence on investor related goals in the recent past. Review of Literature OBJECTIVE OF PROFIT MAXIMISATION According to Watson and Head 2007, whilst individuals manage their own cash flows, the financial manager involves in managing cash flows on behalf of the company, and its owners. In a firm financial management is concerned with taking decisions in three key areas which are financing, investing and dividend policy. Watson and Head also mentioned, shareholders wealth maximisation as the primary objective of the firm and at the same time the existence of other stakeholder groups such as creditors, employees, customers and community are also affected when adapting to a corporate goal. â€Å"However the firm may adopt one or several objectives in short term whilst its pursued the objective of shareholders wealth maximisation in long term†(Basely and Brigham; Essentials of Managerial Finance). Therefore it is essential to be considered the other possible objectives in short term as well as long term simultaneously. Reviewing one of the main objectives of profit maximisation, a classic article of Milton Friedman in the New York Times magazine 1970â€Å"The social Responsibility of Business is to Increase its profits† (Poitras, Geoffrey 1994). Considering classical views of Friedman (1970), Grant (1991), and Danley(1991), Geoffrey analysed the connection between shareholders wealth maximisation and profit maximisation, as an foundation for establishing an ethical analysis for shareholders wealth maximisation. However, Friedman had a moderate view later relating to the concept of profit maximisation towards social responsibilities. (Pradip N Khandwalla, Management paradigms beyond profit maximisation 2004) While there were similarities between these two objectives, Solomon; 1963, chp.2 highlighted the inconsistencies in his classic article (Poitras, Geoffrey 1994). Considering the above views from different authors, Geoffreys suggestion was â€Å"Even though there are significant consistencies between these two goals, the goal of profit maximisation has designed for the traditional microeconomic environment and for the firms which do not have the conflict of ownership and control. It is also assumed that its applied for the environment where there was no uncertainty and no stock issues†( Poitras, Geoffrey, 1994). According to Keown, Martin and Petty, 2008; Lasher 2008; Ross Westerfield, and Jordan; 2008, â€Å"Managers are encouraged to maximise its current stock prices by the shareholder theory, therefore the criticisms are understandable†. This approach determines the existence of agency problem towards incentive schemes, as incentives are rewarded with the continuous growth of share price and leads to an unethical behaviour of managers, towards manipulating the firms current stock prices (Daniel, Heck Shaffer). CONFLICT OF OWNERSHIP AND CONTROL The conflict of ownership and control was first identified by Adam Smith (RBS Review 1937) and he suggested that the Director cannot protect the other peoples money with the same way that he protects his money (Tony Howell; Shareholder ship model versus Stakeholder ship model). Its also mentioned in Tony and Howells article, that the separation of ownership and control make a significant influence for corporate behaviour and its deeply discussed by Berle and Means (1932). But La Porta et al. (1999) argued against Berle and Means, and he suggested â€Å"its different from the large corporations, because the shareholders of large corporations involved in corporate governance actively where managers are unaccountable† (Tony and Howell; shareholder ship model versus Stakeholder ship model). Winch (1971) suggested the goal of profit maximisation is consistent with the ethical theory of utilitarianism whilst allocating resources under different circumstances. (Poitras, Geoffrey 1994). Having considered Winchs suggestion related to the utilitarian theory and profit maximisation, Geoffreys   (1994) view was that, inter temporal behaviour is important   for firms and efficient investment has a significant affect towards maximising of profits as a result of uncertain future cash flows. It is also discussed the potential conflict of ownership and control. Therefore Geoffrey (1994) suggested the separation of ownership, the decision makers (managers) and owners (shareholders) are involved to the corporate structure. SHAREHOLDERS Vs STAKEHOLDERS Even though most of the economists and authors acknowledge the theory of shareholder wealth maximisation (Berle and Means, 1932; Friedman, 1962), other authors argued the criticisms of shareholder wealth maximisation. They argued that Shareholder Theory encourages the managers to make short term decisions and behave unethically as a result of the influence of the other stakeholders. According to Smith (2003) believed â€Å"Shareholder theory is prepared to maximise short term objectives at the expense of long term goals† (Daniel, Heck Shaffer; Journal of Applied Finance; winter 2008). However Daniel, Heck and Shaffer analysed the reasons for the criticism and the misguidance of the shareholders theory in their article about shareholder theory, â€Å"How Opponents and Proponents Both Get it Wrong?† The misguidance has been occurred as a result of pursuing a long term objective in shareholder theory. Managers should maximise the future cash flows and its important to con sider the stakeholders accordingly (Jensen, 2002; Sundaram and Inkpen, 2004a). According to Freeman (1984) a firm should consider both shareholders and stakeholders when making their business decisions. However Daniel, Heck and Shaffer describes that the stakeholder theory determines the same criticism as short term behaviour but the shareholder theory has got the protection for both shareholders and stakeholders in the long run. â€Å"Therefore stakeholder theory is not predominant to shareholder theory†. Daniel, Heck and Shaffer suggested the expected future cash flows to analyse the above scenario and they argued that its essential to undertake all the positive NPV projects to maximise shareholders wealth analysing towards maximising current stock price. If there was a goal of increasing of current share price, managers who are rewarded by incentives may attempt to boost the stock price of the firm. However Jenson (2005) and Danielson and press (2006) argued â€Å"the eff ort to increase or maintain the stock prices by management could be destroyed the long term values of the firm by manipulation, unethical behaviour, delaying NPV positive projects, reducing or not spending on research and development.† Jenson has taken Enron as an example for explaining the above scenario. The management of Enron had hidden their debts through off balance sheet activities and by manipulating the company accounts (Daniel, Heck and Shaffer). Therefore Daniel, Heck and Shaffer suggested that its essential to design strategies which are consistent with the objective of increasing future cash flows rather than adopting an objective of increasing of current stock price to maximise the wealth of shareholders. Freeman, Wicks and Parmar (2004) argued that â€Å"all the recent business scandals are oriented toward ever increasing shareholder value at the expense of other stakeholders† (Poitras, Jefforey; 1994) After a number of high profile firms collapsed i:e: Enron, WorldCom and Arthur Anderson in US and Maxwell, Polly Peck, BCCI, Barings bank in UK, its been determined the requirement of a good Corporate Governance (Tony Howell; the shareholder ship model versus stakeholder ship model). According to Tony Howell, Corporate Governance has been growing for the past 25 years and the foundation for Corporate Governance was placed, after the introduction of Cadbury report in 1992 (UK). Omran et. al.2002; Mills, 1998; Fera, 1997 suggested â€Å"the importance of Corporate Governance as a result of the new entrance of Institutional Investors to Capital markets, Globalisation of Capital markets, increase of Stakeholder and Shareholder expectations†(Tony and Howell). Analysis According to financial management theory, its assumed that the fundamental objective for a firm is to maximise shareholders wealth (Watson Head 2007).   Analysing the suggestions and arguments towards fundamental objective, it can be seen that not only in theory but also in the real world it is essential to maximise the wealth of shareholder. Analysing the objective of profit maximisation, overriding the classical economics views by Hayek (1960) and Friedman (1970), other authors, Solomon (1963) and Geoffrey (1970) argued about the criticisms associated with the objective of maximisation of profits. The conflict of short term goal of profit maximisation and long term objective of shareholder wealth maximisation can be identified as the main conflict. If a firm adapts to an objective of profit maximisation and the managers are rewarded incentives for achieving it, the agency problem could be arise. Therefore in such a situation managers may take decisions towards their own selfish interests, rather than on shareholders. Achieving their self interest managers may reduce costs by cutting research and development costs, reducing quality control measurements, reduce advertising, using lower quality materials. At the same time the NPV positive projects could also be postponed to reduce their costs to determine more profits in s hort term. Producing low quality products, losing market share, losing customer trust on their products and finally reducing financial performance could be resulted as a result of using low cost strategies. It may lead the business towards insecure stock prices in long run. The other criticism is profit maximisation does not appraise the associated risks. Therefore managers may undertake higher NPV projects to determine higher returns. â€Å"However higher the required returns, higher the risk† (Peter Atrill; Financial Management for Decision Makers, 2008). Investing on risky projects will result future cash flow problems. However, shareholders are assumed as rational investors who provide finance for firms to invest in future projects. As rational investors they require a reasonable return for their investments. Therefore it can be suggested that objective of profit maximising is different from the wealth maximising. Even though shareholder wealth maximisation is the fundamental, firms are not being able to reject the profit perspective goals, because there are stakeholder groups who is interesting about financial activities in a firm. In addition to shareholders, Managers, Employees, Customers, Suppliers, finance providers and the community at large are included in the typical stakeholder group. Therefore its essential to take account of profit maximisation within the firm. As a result of these multiple objectives managers can easily pursue their own interest. In real world, financial statements are used to assess firms performance. However, profits are defined as profit before interest and tax, profit after interest and so on. Therefore the ratio of Earnings per Share is often used instead of profit which is calculated using the net profits and the number of shares issued. Investors usually use EPS as a measurement of valuing stock. EPS is mostly used as it contains of net income of the firm, and it is also used as an indicator measuring firms future cash flows. Although the disadvantage is EPS does not determine shareholders wealth. However, firms value should be determined by the future cash flows and the risk also need to be considered which is associated to the cash flow. However as mentioned earlier, profits does not take account of risks. I:e:â€Å"Reported profit figures such as Biotechnological companies and other new economy ventures have insignificant relationship on its stock prices† (Financial Management –Kaplan Publishers, 2009). Therefore, in the short term theres an inconsistence between profit maximisation and increase in stock prices in a firm. According to Smith (1937), Berle and Means (1932) and Geoffrey (1994) the separation of ownership is involved the corporate structure. The conflict was mostly seen during the recent past, following the corporate scandals. According to Maria and William in the article of Privatisation and the Rise of Global Capital Markets (Financial Management; winter, 2000) â€Å"The past years there was significant growth in capital markets valuation, growth in security issuance as a result of the privatisation programmes†. The impacts of share issue privatisation are increasing market liquidity, pattern of share ownership (i:e: Individual and institutional investors such as Pension funds and Insurance Companies), and increasing of number of shareholders in many countries. However, globalisation was also affected on firms activities simultaneously. Therefore the firms (i:e: Enron Maxwell), which had poor Corporate Governance had the possibility to involving in unethical activities such as creative accounting and off balance sheet finance(Financial Management, Kaplan Publishers; 2009). At the same time Directors involved in high level of corporate takeover activities, achieving their personal interest such as empire building, large remuneration packages (Financial Management, Kaplan publishers; 2009). Further analysis of Stakeholder theory and Shareholder theory by different authors, Jenson â€Å"2005) and Daniel and Press (2006) argued the criticism of stakeholder theory, whilst Daniel, Heck and Shaffer (2008) and Freeman (1984) argued the importance of both shareholder and stakeholder theory. However, it can be suggested that the stakeholders play a significant role towards increasing shareholders value. As an example to motivate employees of the firm, they should be treated in a good manner by rewarding increments, bonuses and so on. Long term employee satisfaction could drive the firm towards higher performance and the development of the business by increasing higher productivity and better quality of products. Simultaneously, building up a trust among customers and acquire and maintain the industry leadership. At the same time shareholders provide finance for firms for its working capital management and noncurrent assets for its future projects. Therefore it can be seen an inter relationship and importance of shareholders and the other stakeholders. According to Peter Atrill, (Financial Management for Decision makers , 2008)â€Å"In the early years financial management theory was mainly developed as part of accounting and the suggestions and arguments were based on casual observations rather than theoretical frame work†. But after the number of high profile firms collapsed, the requirement of corporate governance occurred. Number of committees met and discussed to improve the Corporate Governance and the main concern was the conflict between shareholders interest and managers. Enron was the seventh largest listed company in US when its collapsed in 2001 as a result of manipulation of financial statements. Its affected to shareholders, more than 20000 employees worldwide, creditors and customers (Janis Sarra; St Johns Law Review ; Enrons Repercussion in Canada). The 11 titled â€Å"Sarbanes Oxley Act 2002† CONLUSION By analysing the review of literature, it can be suggested that its essential to maximise shareholder value rather than maximising profits alone. However maximising profit is also can be defined as a performance measurement of a healthy business. Extremes of profit maximisation can also be caused unethical behaviour of management towards its shareholders and stakeholders. Although, Earnings per Share inconsistent with the long term value of shareholder, its still can be used as a performance measurement, since its got firms net profit. As a result of recent corporate scandals such as Enron, WorldCom and Arthur Anderson, shareholders and other stakeholder groups had given much emphasis on corporate behaviour. The unethical and illegal behaviour of those high profiled firms were lost investor confidence of capital markets. They identified the importance of Corporate Governance which provides the â€Å"road map† for managers to follow, pursuing different objectives towards the firm (Basley Brigham). At the same time the arrival of Sarbanes Oxley Act 2002 provided investors a much more confidence and strength towards capital markets. However, stakeholders are also important for firms. They are also treated well for the to maintain a Even there are conflicts between stakeholder theory and Shareholder theory, it‘s necessary to balance these two theories. According to Cathy Haywards article (Black – hole sums; Financial Management May 2003), during the period of May 2003 the pension funds in US and UK were in a bad condition. According to the assessment of National Association of Pension Funds, there was a drop in UK pension funds by more than  £250 million in 2002. Its being told that there were many reasons for the crisis but, the huge drop in stock market during the economic down turn 2000-2003 has mainly been affected. The pensions funds are heavily depend on the dividend payments and the stability of the equity markets, as a result of the drop in share prices the pensions funds struggled to meet their obligations. References Besley Brigham â€Å"Essentials of Managerial Finance† Daniel, Heck Shaffer Journal of Applied Finance; Fall Winter 2008 – Shareholder theory,  Ã‚   â€Å"How Opponents and Proponents Both Get it Wrong?† Denzil Watson Antony Head â€Å"Corporate Finance (electronic resource): principles and practice 2007 â€Å"Management paradigms beyond profit maximisation† – Colloquium a debate by S K Chakraboty, Verghese Kurien, Jittu Singh, Mrityunjay Athreya, Arun Maira, Anu Aga, and Anil K Gupta. Maria K. Boutchkova William L. Megginson â€Å"Privatisation and Rise of Global Capital Markets† , Financial Management;   Winter, 2000, p31-76 Peter Atrill â€Å"Financial Management for Decision Makers† 5th Edition 2008 (electronic resource) Poitras, Geoffrey â€Å"Share Holder wealth Maximisation, Business ethics and social responsibility, Journal of Business Ethics; feb 1994;13,2;ABI/INFORM Global pg125 Rebecca Stratling â€Å"The Legitamacy of Corporate Social Responsibility† ; Corporate Ownership and Control; Volume 4; Issue 4, Summer 2007 Tony Ike Nwanji, Kerry E. Howell; â€Å"A review of the two main competing models of Corporate Governance: The Shareholder ship model versus the Stakeholder ship model; Corporate Ownership and Control, Volume 5, Issue 1, Fall 2007