Discuss the relationship between ownership and control in the modern corporation.

Authors Avatar

EQ2342                Raxit Vanmali

Discuss the relationship between ownership and control in the modern corporation.

Owners and managers no longer run large firms in modern society. Nowadays numerous shareholders own and often control firms. Large decisions are left in their hand, although primarily and predominantly, the decisions are in the hands of management in the corporation. Many firms are often employee owned. A company such as John Lewis PLC operates upon the basis of employees owning and controlling the business. Shareholders own other firms such as British Telecom - a private company, and strive to maximise profit and control the business as well as own it. This is similar to John Lewis PLC because employees are trying to own as well as control the business.

There are many scenarios involving ownership and control. Shareholders aim to maximise profits. They want their money invested to bring back a profitable return. Managers on the other hand are quite different, they too want to maximise profits but can have other reasons too. Managers can have alternative objectives since they have control such as controlling their side of the business even if another side of the business were to slightly suffer. Also managers would have to worry more about staff and motivating them and enriching their jobs. It would be the managers’ objectives, which would determine the behaviour of the firm, therefore implying that it is control that matters and not ownership.

Join now!

Control does play a large part in modern corporations and is important. In certain scenarios it can be more important than ownership. If firms are subject to competitive pressure and they do not compete effectively and efficiently whilst maximising profit, they run the risk of not surviving in a competitive market. Therefore, in this scenario it is seen that it does not matter who has control because competition such as other firms and corporations take the control.

In a modern corporation the relationship between ownership and control suggests that there is a need for some discretionary behaviour. ...

This is a preview of the whole essay