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Vol.21
For whom do companies exis? |
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There has recently been a
debate on the theme of “for
whom do companies exist”? If
you narrow down the focus of
this debate, I think the main
argument would be whether to
prioritize shareholders or
employees.
A company
can only start a business once
it gains investors. In this
sense, I understand how
shareholders demand high
dividends.
Then what
are the conditions for a
company to generate profits in
order to yield dividends and
continue to expand? Some
examples can be its capacity
for technological development,
latest production facilities,
managerial capability, and the
motivation of its employees.
Nevertheless, there are demands
from shareholders from time to
time to “reduce research and
development costs and cut
capital spending for higher
dividends.”
It is
common for companies,
manufacturers in particular, to
seek to grow their profits and
expand their business under
medium to long term business
strategies. In comparison,
investors generally tend to
make a move for their immediate
gain. Although shareholders
hold a strong position at the
time of business establishment,
companies cannot continually
report profits every term if
they do not take good care of
executives and employees who
generate profits once the
business is established.
In other words, company
executives and employees
receive benefit in the form of
investment from their
shareholders when starting a
business, and once it has
started the shareholders
receive benefit from the
efforts of the executives and
employees. The leading role
changes before and after the
business launch.
A
company is made up of money,
people, facilities and
technology. Once the business
is running, its executives and
employees generate profit by
putting their heads together,
working hard to operate its
facilities, and improving
technology.
Profits
gained from business that
operates under social justice
naturally have appropriate
limits, and if you go over the
top it would destroy the rhythm
of business which could even
cause bankruptcy. I believe
that only when the company
executives and shareholders
cherish their employees who are
the line troops can the company
achieve long-term stable
dividends and stock price rise.
Investing in markets with a
high element of gambling
involved and becoming a company
shareholder are fundamentally
different.
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