From Maximizing Shareholder Value to Delighting the Customer - Assignment Example

From Maximizing Shareholder Value to Delighting the EXECUTIVE SUMMARY ‘From Maximising Shareholder Value to Delighting the s’ The article of Stephen Denning titled “From Maximising Shareholder Value to Delighting the Customers” mainly talks about the approaches of the companies to maximise the values of the shareholders in the business. Contextually, the article depicted that firms mostly in region of America and Europe utilised the aforementioned approach as compared to other regions.

However, in accordance with the article, it is determined that maximising shareholder value is not a strategy but a result of delighting the customers of the business. The article further depicted that there is a principle-agent relationship where shareholders are principle of firms and executives are the agent who perform their duty on behalf of them. The article states that rather than maximising the value of the shareholders, it is important to focus on the customers who are ultimately providing benefits to the shareholders.

However, the approach of the company to focus on improving its performance and in turn enhance the value of the shareholders failed considerably which further resulted unfavourably in various domains of the business. The article provided the example of General Electric (GE) which had to deal with similar sort of situation. Correspondingly, the article stated the effectiveness of shifting to the approach of delighting the customers. In this regard, the example of Apple Inc and Proctor & Gamble were considered in the article which depicted the way in which they emerged as market leaders owing to their approach of delighting the customers rather than the shareholders.

In precise, the article depicted that focusing on the customers will provide opportunities to the companies to enhance their brand image for a long-term period which will ultimately benefit the shareholders in the form of maximum return (Denning, n.d.). CRITIQUE ‘From Maximising Shareholder Value to Delighting the Customers’ From the above synopsis of the article, it is apparent that it mainly intends to depict the aspect that customer satisfaction should be given more priority as compared to enhancing the value of the shareholders.

The article stated that companies often imbibe the approach to satisfy the needs of the shareholders as they are quite valuable to the business. However, it has been affirmed this approach of companies might not ensure effective results for the business rather it will affect the shareholders’ value in turn. This presented notion of the article can be supported with the fact that well reputed companies such as GE failed to gain favourable results owing to the implementation of the particular approach of enhancing the value of the shareholders.

Observably, GE was one of the biggest companies of the world under the leadership of Jack Welch who believed that customers are the biggest asset for any business and their satisfaction should be the utmost priority for the business. Contextually, he also believed that enhancing the value of the shareholder is one of the dumbest ideas a business can ever adopt. This thought process replicated by him was further proved by the fact that the company after his retirement, failed considerably in performing with the approach of enhancing the value for the shareholders.

In the article, famous author Roger Martin stated the need for shifting towards a different approach where the customers should be given the highest priority rather than the shareholders. This aspect can be supported from the fact that companies such as Procter & Gamble and Apple work entirely towards satisfying the needs and demands of the customers and contextually their success and brand image in today’s business scenario are quite evident. Hence, this analysis depicts that focusing on enhancing the value of the customers helps companies to augment their brand image which is valuable both for the shareholders and the company as well.

Furthermore, the article refers to the changes in the approaches of the companies towards the customers, employees and the relationship of the business with them. In this regard, companies need to show their responsibility towards the society by meeting the expectation of the marketing through their performance. This aspect can be supported from the fact that focusing only on the shareholders value not only affects the performance of a company but also results in affecting the firm’s ability to innovate and compete which can further destroy the economy of the nation altogether (Denning, n.d.).

Hence, these constituents depict that a business runs mainly with the support of funds from the shareholders but its operational performance largely depends on the trust and support of the customers towards the business and its offerings. Therefore, the message of the article which is to shift from the approach of enhancing the value of the shareholders to delighting the customers can be considered to be justified. Reference Denning, S. (n.d.). From maximising shareholder value to delighting the customer.

Western Connecticut State University, 51-54.