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

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Introduction

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. ...read more.

Middle

This means decisions often need to be made quickly and there is very little time for all stakeholders to partake in the decision - making. The traditional approach of who controls a corporation is to view the shares. Using this empirical data, it is seen that if shareholders own 51% of the shares then they can control the management. If they control less than 50% then they do not control the management and effectively the corporation, they still have a degree of influence over the running of the business but do not dominate. Although described as being separate, ownership and control are often linked together because they are similar. They are similar in the sense that they are both affecting the business and that they are positions of great importance to the corporation. Whether it be shareholders of directors in control and owning the corporation, there is a similarity in terms of how close both parties are to the corporation and thus, the risks they both face. ...read more.

Conclusion

The relationship between ownership and control is that it is an ever - changing relationship, it depends on many conditions such as external influences including competitive forces and the economy as well as government. A famous case of the government intervening is the splitting of software company Microsoft. This resulted in a major change in ownership and control. Owner Bill Gates lost some ownership and control whereas shareholders gained some ownership and control. Modern corporations are nowadays experiencing a combination of ownership and control from stakeholders such as owners, top management such as directors and managers and shareholders. With the number of firms in markets and increasingly competitive nature in the economy, along with increasing globalisation and the ever - developing world economy, competition is more fierce and competitive forces can more easily gain control within a corporation in the bid to survive and maximise profit. Ownership and control are paradigms used to show the way in which a corporation is managed and organised and those who are in command of it. 1Allen and Unwin, (1975), 'An Introduction to Industrial Economics', page 106 EQ2342 Raxit Vanmali ...read more.

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