In organizational development, several things need to be done to ensure the running and the expansion of the organization is swift and systematic. Among the things done touch on investors and making a comprehensive business design. The two practices enhance the foundation of any organization and its development.
The concept of maximizing the shareholders value is a principle in the management principles also known as value based management. The concept is adopted in any organization once it has been noted that the interests of the shareholders in the business are worthwhile and are of benefits to the business (Kontes 2011). These are decisions made by the management. This is quite different in the public companies where the executives have the mandate of maximizing the profits of the business. The executives at the same time are not mandated to increase the shareholders share value (Jones 2008).
The short term profit maximization strategies do not necessarily increase the shareholder value. The elements in the business enrich themselves at the expense of the shareholders who may not necessarily benefit in any way. In this effect, it becomes advisable to increase the investors share value by sub dividing and multiplying the share value (Pal 2005). Failure to do this exposes the business to the risk of attaining a low capital base in several ways.
The shareholders through the media and other sources will realize that although the business seems to be making massive profits, they do not get the advantage of the profits. In this case, the investors may decide to do two things, which may adversely affect the business, they may first decide to withdraw their investment from the business to more liberal business ready to add the share value or may decide to pay less for the shares of the business (Dobbin 2004). Either way, the effects of the decisions will be adverse especially on an organization in the private sector where the competition is stiff. It is thus advisable that any organization take up the challenge and multiply the shareholders share value at different times to retain investors (Markman 2011).
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Organizational structure is defined as the formal system of relationship providing guidelines and rules of how the business will be conducted within an organization. The system analyses the process of decision making and give guidelines of making such decisions. The influence of the structure impacts heavily on the business and its resources (Phillips 2011). The deciding making process determines the processes at all levels of the business and ensure the business stands organized and firm. It also ensures that the business is recognized in structure and operation. The organization’s management deeply depends on this structure by allowing it to make an impact crucial factors touching on the business image, market and finance (Eikelenboom 2005).
The areas affected by the structure include control and management of the employees and all other human resources. It also impacts positively on the public display of the company or organization by assuring the investors and consumers that the business is objective and operates within set goals (Knoll 2008). The critical issue of crisis management also counts widely in this area. The organization is able to handle and control damage as the decision making process and application criteria defined avoiding instances of conflict in the public domain during such crucial times (Schermerhorn 2010). Businesses with well structured systems of operation are reliable in that they appear organized and secure to both investors and employees. The government and the authorities also feel safe and secure and encourage investors into such organizations as they view them as strong sources of revenue (Lückoff 2011).
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