Assignment for Shareholder Wealth Maximization - Essay Example

Shareholder Wealth Maximization The management of a company finds it tough when they are considering that what should be their goal- profit maximization of the company or the wealth maximization of the shareholders. The profit maximization objective can be pursued by the company management for the short term period. The company should has the objective to gain as much as profit by using the resources effectively and optimally. At the other side the company should take the long term objective of the stockholders’ wealth maximization.

The stockholders of the company are interested for getting the returns for the long term as well as short term. The wealth maximization objective should be undertaken by the company management for the long term as it considers the following factors. The risk or uncertainty associated with the performance and the return associated with the company performance. The wealth of the company for the long term is analyzed as the company has to plan for providing the long term return. The timing of providing the returns is also considered (Shim and Siegel, p.2). If the company takes the long term objective then they can also fill their short their objective.

If they are meeting the stockholder’s objective then the stockholders also invests in the company, as a result the investment will increase and the performance of the company would be better if they utilize those resources effectively. From the researcher point of view shareholder’s wealthy maximization should be the ultimate goal of the company. Goals and Objectives of the Management For analyzing the goals and objectives of a company the researcher has selected Coca-Cola Company which is listed in the New York Stock Exchange (NYSE) (MSN Money, “Coca-Cola Co”).

The goals and objectives of the company are as follows. The company’s objective is to start at least one program related to physical activity in the countries where they are operating by the end of 2015. Reducing the carbon emission from the manufacturing unit of the company. For the development of the communities they are associating with the management has planned to return 1% of the operating income to the communities. Packaging material efficiency improvement. Improvement of the water efficiency.

The wastewater treatment improvement is among the main goals of the company (The Coca-Cola Company, “Global Sustainability- Select Goals and Targets”). The goals of the vision 2020 package of Coca-Cola is to make the profit margin double from now, enhance their portfolio They work with 300 bottling partners and are working for the growth target in terms of the operating income and unit cases of volume (The Coca-Cola Company, p.2-33). Among these goals the strategic objectives of the company like increasing the operating income, increase the unit case of volume, enhancing the portfolio or improving the packaging material efficiency improvement support the shareholders’ wealth maximization goals when the company is also maintaining the corporate social responsibility.

They have the goals of developing the communities in the countries they are operating; also they are working for being environmental friendly through their projects. Analysis and Recommendation Coca-Cola Company has a sustainable long term