FIN490 Week 1 Discussion 1

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School

Miami Dade College, Miami *

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Course

490

Subject

Management

Date

Jan 9, 2024

Type

docx

Pages

2

Uploaded by jocelyn.cruz001

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Good evening everyone, The goal of shareholder wealth maximization is a fundamental principle in financial management that posits the primary objective of a firm is to enhance the wealth of its shareholders. This objective involves making decisions and undertaking actions that increase the value of the firm's stock, thereby maximizing the returns to shareholders. Shareholder wealth maximization is generally considered a long-term goal, requiring sustained efforts to improve operational efficiency, profitability, and strategic positioning in the market. However, a conflict often arises between the goal of shareholder wealth maximization and other stakeholder concerns, encompassing environmental, social, and governance (ESG) factors. While maximizing shareholder wealth focuses on financial returns, stakeholders such as employees, customers, and the community may prioritize ethical, social, and environmental considerations. A notable example of a company incorporating stakeholder concerns in its mission is Unilever. Unilever's Sustainable Living Plan outlines the company's commitment to environmental sustainability and social responsibility. The plan includes ambitious targets for reducing the environmental impact of its products and promoting fair labor practices throughout its supply chain. Unilever's incorporation of ESG concerns enhances its shareholder wealth maximization goal in several ways. First, by aligning with sustainability and social responsibility, Unilever attracts consumers who increasingly value these principles, potentially leading to increased sales and market share. Second, responsible business practices can enhance brand reputation, fostering customer loyalty, and positively influencing investors. However, there may be short-term costs associated with implementing sustainable practices, potentially impacting immediate profitability. A question related to shareholder wealth maximization goals could be: "How can companies effectively measure and communicate the long-term financial benefits of incorporating environmental, social, and governance concerns into their business strategies to shareholders and investors?" References: Unilever PLC. (2023, May 5). Leading and delivering on Sustainability . Unilever. https://www.unilever.com/news/news-search/2023/leading-and- delivering-on-sustainability-through-our-compass-commitments/ Links to an external site. Unilever. (2018, January 9). https://www.unilever.com/files/92ui5egz/production/9752ff2d82b8afabb5 07eb92c47b5dad795801d5.pdf Links to an external site.
Moyer, R. C., McGuigan, J. R., & Rao, R. P. (2018). Contemporary financial management (14th ed.). Cengage.
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