Important For Stakeholder Essay

897 words - 4 pages

Executive SummaryIt is important for SREC to recognize the mission and objective, as Sodor Railway Engineering Corporation Plc (SREC) has recently become privatization. The objective which is whether shareholder or stakeholder such as employees, government and customers interests should be taken account, is vital for financial decisions making to take place. The different group will bring SREC different outcomes or benefits.I would suggest that SREC takes the shareholder into account when making decisions since SREC has recently privatized and needs shareholders' investment. This is also the way to keep SREC survive. Besides, as Rappaport A mentioned "European continent, there is increasing political tension between the shareholder value business practices required in a competitive global market and the long-standing tradition of social welfare." Therefore, shareholders are important to us. The main aim of setting shareholders as consideration to management process is to maximize shareholders' wealth. Significantly, we do not use accounting figures or ratios to measure the benefits to shareholders.Shareholder theorists such as Milton Friedman argue that managers should serve the interests of a firm's owners - shareholders. They contend that the social obligations of the firm are limited to:- making good on contracts- obeying the law- adhering to ordinary moral expectationsBriefly, "obligations to nonshareholders stand as sideconstraints on the pursuit of shareholder interests (Marcoux, 2000)."Marcoux asks, in the Friedmn vein, "... why firms are obligated to give something back to those to whom they routinely give so much already. Rather than enslave their employees, firms typically pay them wages and benefits in return for their labor. Rather than steal from their customers, firms typically deliver goods and services in return for the revenues that customers provide. Rather than free ride on public provisions, firms typically pay taxes and obey the law. Moreover, these com-pensations are ones to which the affected parties or (in the case of communities and unionized employees) their agents freely agree. For what reasons, then, is one to conclude that those compensations are inadequate or unjust, necessitating that firms give something more to those whom they have already compensated?"Net Present Value is a way to calculate how much of the money in today's value will be worth in the future in terms of time of money which is result from inflation and risk. Therefore, we use NPV to measure the value added today by commencing an investment.B1:Original Net Present Value with Real Cash Flow at Real Discount RateIt is vital to be clear about what to be included to calculate NPV. Only the...

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