The ANQ Way: Profit Maximization Not a Corporate Goal  

Oleh:

Ramanathan, N.

Jenis: Article from Proceeding
Dalam koleksi: Asian Network for Quality (ANQ) Congress 2011, Ho Chi Minh City, Vietnam, 27-30 September 2011, page 1-14.
Topik: Profit Maximization; Capital Markets; ANQ Way; Prosperity; Stakeholders; and Emotional Owners
Fulltext: IN31-Profit Max not goal NR 1107- Full Paper.pdf (119.81KB)

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Capital Markets: Money markets and many business leaders today take it as axiomatic that maximizing profits is the primary goal of a business enterprise. The paramount concern of a business, it is believed, should be to maximize ‘shareholder value’. Value is a term that is used in connection with customers, but has been usurped by the capital markets, as if to provide legitimacy to the simple desire to acquire the most wealth possible from an enterprise. This tendency has gathered strength over the past three decades, with the rise of Reagonomics and concepts of market economy that border on laissez faire. Management Thinkers: In the 1920s, Henry Ford saw that the profit focus of a business is a confusion arising from petty business where the shareholder and business are one. Matsushita believed that a business that held accumulation of profits as its sole objective cannot be defended, while not making a profit worked against the society. Peter Drucker had argued, in the same vein, that defining a business as a profit making organization was ‘irrelevant’, and that profits were instead a test of effectiveness. Henry Ford went so far as to say that it was ‘nonsense’ for ‘mere money brokers’ to manage a productive enterprise. The ANQ Way: The Asian Network for quality has set out the ‘ANQ Way’. ANQ seeks to promote quality of life and prosperity. These goals do not imply endless consumption, though, for the ANQ Way emphasizes the Asian way of austerity and simple living. Prosperity means leaving a legacy for future generations, and this includes restriction of the consumption of resources that may not be easy to renew. Consequences: Unrelenting pressures on CEOs and top managers on producing everincreasing quarterly profits has led to distorted behaviour. Top managers have become fiercely short-term in their thinking, often at great cost to the future of their organizations. This disease of course hit the financial sector itself the most, and led to the recent global meltdown. Especially in the US, CEO pays have skyrocketed, and the CEOs who have downsized their organization get more pay on the average than those who have not. Despite all talk of Six Sigma and TQM, top management obsession remains with costs, in reducing which long-term damage is often inflicted. There are stories of lack of integrity in dealing with customers, employees and even shareholders. Relationship with ‘stakeholders’: This paper aims to provide new definitions of the relationship of an enterprise with its shareholders, employees, customers and society at large. Without such a re-definition, it would be difficult to find a way out of the profitfixation of companies.

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