Strategies for Improving Efficiency and Cost Reduction Essay

Strategies for Improving Efficiency and Cost Reduction - Essay Example As the shareholders are the legal owners of the company, therefore management has the fiduciary obligation to act in the best interest of the shareholders. Stockholders are often called shock absorbers as they provide risk capital to the company. The stockholders cushion the claims of other stakeholders. The value of any company can decline by as much as the value of equity capital. Without shareholders and their equity, the companies would have all been financed by debts and would continuously face financial anguish which results in liquidation or bankruptcy. The shareholder value approaches favorable strategies, by compelling managers to review business strategies based on prospective cash flows. The more company ability to generate cash, the more it can distribute to its shareholders. In short maximizing shareholders, wealth is equivalent to maximizing company's price. In order to attract the capital equity easily, many companies focus more on establishing shareholder value. Capit al equity is especially sensitive in those companies which are seeking to grow and operates in a risky environment. Every business profit is calculated by deducting expenses from the business incomes. The profit margin varies from business to business as the nature and size of the business requires different kinds of resources. The business needs resources for its development and each of this development has a cost to bear. No matter what type of business is your need human and financial resources needed to establish it. It is the utmost responsibility of the management of any company to provide quality resources at reasonable costs because they play the vital role in the business. The more company ability to generate cash, the more it can distribute to its shareholders. In short maximizing shareholders, wealth is equivalent to maximizing company's price. In order to attract the capital equity easily, many companies focus more on establishing shareholder value. Capital equity is esp ecially sensitive in those companies which are seeking to grow and operates in a risky environment. The profit margin varies from business to business as the nature and size of the business requires different kinds of resources. The business needs resources for its development and each of this development has a cost to bear. No matter what type of business is your need human and financial resources needed to establish it. It is the utmost responsibility of the management of any company to provide quality resources at reasonable costs because they play a vital role in the business.