You are invited to attend a meeting of the Board of Directors of a local publicl
ID: 427956 • Letter: Y
Question
You are invited to attend a meeting of the Board of Directors of a local publicly traded firm. The board is discussing the goal of management and Jim claims that management’s goal should be to minimize costs. Sue disagrees and asserts that management’s goal should be to maximize revenue. Because the board realizes that you are an MBA student, they ask for your opinion. Briefly explain what the primary goal of management should be. Also, briefly explain why you agree or disagree with Jim and Sue. You are invited to attend a meeting of the Board of Directors of a local publicly traded firm. The board is discussing the goal of management and Jim claims that management’s goal should be to minimize costs. Sue disagrees and asserts that management’s goal should be to maximize revenue. Because the board realizes that you are an MBA student, they ask for your opinion. Briefly explain what the primary goal of management should be. Also, briefly explain why you agree or disagree with Jim and Sue. You are invited to attend a meeting of the Board of Directors of a local publicly traded firm. The board is discussing the goal of management and Jim claims that management’s goal should be to minimize costs. Sue disagrees and asserts that management’s goal should be to maximize revenue. Because the board realizes that you are an MBA student, they ask for your opinion. Briefly explain what the primary goal of management should be. Also, briefly explain why you agree or disagree with Jim and Sue.Explanation / Answer
The primary goal of management is a mixture of what both Sue and Jim proposed. It is the judicious and optimized use of resources just as much as it is increasing the profit and the capabilities of the company for future growth. We can say that this represents the interest of the stakeholders and therefore, both the choices are correct in this case. If we take the shareholder theory into account, we can say that obtaining profit is the main concern of the management, it is their duty to the shareholders to increase the profits and the ROI. for a holistic approach, however, we need to take into account that a business is considered to be effective where both the considerations of optimization and expansion are present. This means that the management needs to develop a system such as lean methodology and sigma six in order to achieve the best possible functionality from their present resources, this in return would allow for increased profits for the company.
The arguments presented by both Jim and Sue are correct but both are incomplete in the sense that one cannot be considered to be complete in a system without the other. As a management theory, however, we will take into account that the whole reason for a for-profit business is “profit” this goes without saying that Jim’s approach is not as useful as sue’s approach as even with utilizing the resources the best possible way, the company is not implementing/utilizing the funds completely and need to invest in further investment such as supply chain management, in order to create a value chain which provides the company the greatest benefits. Therefore, Sue’s approach is favorable.
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