Question 1: How can Dennis Blake work towards maximizing shareholder profit whil

Question

Question 1:

How can Dennis Blake work towards maximizing shareholder profit while maintaining its work culture of providing fun and dignity at workplace? Give at least 2 recommendation and state its pros and cons.

Question 2: What are your key learnings on this case? (Cites specific management principles (and sources) applied without necessarily detailing what they are about.)

SAS is one of the largest energy companies in the world, but few people know about the powerful leadership vision that has guided it since its start-up. Former CEO Frederick Calvin is a driven, determined, self-confident leader who doesn’t play by the rules. That isn’t to say that he lacks honesty and integrity: in fact, Calvin has those virtues in spades. Rather, it means that he marches to the beat of a different drum. He and cofounder Jonathan Myerst started SAS with a simple leadership philosophy: (1) People should be trusted and (2) businesses exist to serve, not to make money. Do not call employees “human resources” in front of Calvin: He values the dignity and uniqueness of people far too much to lump them in with other resources such as fuel or capital, or to consider them as mere means to an end. Moreover, Calvin’s view, work should be fun for all employees, and leaders should focus on ensuring that together they live up to shared values that are work pursuing. This outcome is far more important to Calvin than merely making money. It is not that SAS doesn’t make money. In fact, the company is the largest provider of electricity in the world. Revenues and profits have been impressive since the inception of SAS in 1981. Within two decades after its launch, it had grown to 40,000 employees in more than 100 plants in 31 countries with revenues of $8.6 billion annually. Nonetheless, profits are not the ultimate measure of success at SAS. Calvin like to tell the story of how “the U.S. government thought it was very risky to attempt to operate a business with integrity, fairness, social responsibility, and a sense of fun”. Calvin was describing the 1990 review of documents that SAS had submitted to the Securities and Exchange Commission when SAS sought to become a publicly traded company. The documentation made it clear that SAS was not a typical profit-maximizing corporation. SAS’s biggest challenge is how to continuously think of different ways to provide fun and dignity in the workplace.

Explanation / Answer

The companies continue to look for ways to achieve greater business success as well as maintaining the same work culture. Whether the measure is growth , profit , return on investment, market share or another similar metric , they are constantly looking for opportunities to improve the performance, which means increasing shareholder value. There are fundamental ways to generate shareholder values are :

Increase the unit price : Increasing the price of the product assuming that u continue to sell the same amount , or more will generate more profit & wealth.

Sell more units : Assuming that you are able to keep fixed cost constant or increasing fixed cost to an extent that the rate is less than sales growth , this will produce per unit cost and as a result , contribute the shareholder value.

Pros and cons

Maximising shareholder value is achieved by increasing a stocks price over time and by increasing dividends. The focus of corporations on maximising shareholder value is often criticised because it potentially can have negative consequences:

Corporate Involvement in Politics

Pros: Despite some criticism from social and environmental groups, maximising shareholder wealth provides some key benefits to a business.

1. Increased Returns

2. Strategic Consistency

3. Avoids Emotion or Impulse

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