Capitalistic Reality and Corporate Governance - Research Paper Example

?Topic The Roots of Contemporary Capitalism Contemporary capitalism entails production objectives, creation of goods and services and the ownership of such. This includes creation of markets, management of competitive markets and construction of a pricing system (Hall and Soskice, 2001:5). This helps individuals, organisations and firms attain a financial status that helps in their maintenance. This explains the various aspects of a firm that helps in making the economic success. Therefore, an individual or firm that needs to make an economic impact should have a structured way of approaching capitalism. This will indeed reflect on the performance of the firm as growing, startling or diminishing. Managerial capitalism as Chandler suggests, is a structure where an enterprise is controlled with managerial skills (Chandler and Alfred, 1984:476). This is a system that has been used by a number of organisations and firms since the nineteenth century, especially in the United States and Great Britain. As a fact, the stakeholders and owners are not in control of their enterprise. Therefore, the performance of an enterprise will solely depend on the managers. The administration of all activities in an enterprise is the work of the managers, which is reflected on the end results. Managers that have apt managerial skills are on the forefront of recording success in an enterprise. As such, they will give adorable results in each financial year. However, managers that do not have the required skills are likely to reflect negative results. On the other hand, Taylorism is a form of management where main objectives of an enterprise or firm are stipulated for economic efficiency (Dunning and Boyd, 2003:129). In this type of management, labour productivity is instilled by using scientific forms which have analysed ways of flowing activities. In such a manner, most of the activities of a firm are done according to the laid out criterion. Similarly, some organisations chose to use Fordism and bureaucracy in management. Fordism involves industrialised forms of production, which are geared towards making a massive production. These forms are mostly industrialised to make work easier. However, bureaucracy in management involves an administration that executes legal rules and enforces them to make an achievement in the organisation. These administration rules are socially organised by the administration. All these managerial administrations are core concepts in controlling and managing an enterprise, which reflects on the performance. These are historical concepts that have been used by many organisations. Some organisations encompass several managerial concepts depending on how they work and the success of each one of them. Therefore, it is in the best interests of a firm to choose on the best concept to use, especially when they need to amass resources for their development (Ryrvik, 2011:62). For instance, in managerial capitalism, all the managers have the right to make decisions in a firm. The stakeholders do not have to change such decisions as they do not have a right. On the other hand, in bureaucracy management, all the stakeholders and mangers have to settle down for a unanimous decision. As such, all the people that are in the firm have to make decisions for the firm. On the other hand, Taylorism and Fordism involves scientific ways of management. These are structured ways that ensure a firm is developing accordingly. Changes are only made with reference to these scientific ways. As Hall and Soskice state, each of these methods is fundamental in making a firm or enterprise progress. As much as firms continue to conduct their business, some problems may occur. In such instances, there should be generations of solutions. For instance, when there is a problem in a firm that embraces Fordism and Taylorism, they have to look for structured ways that will help avert the situation. However, in a firm that embraces bureaucracy and managerial capitalism, the management is the core subject to structure the solution. Topic 2: The Crisis of the Model In organisations, different people tend to solve problems in different avenues. Since each person has a different idea, they have to settle down and reach at an agreement. This will ensure a unanimous approach in solving the problem. In this crisis, they are faced with challenges of increasing their demand in the market (Heidenreich, 1996:405). First, they are faced with harsh conditions in the market, which reduces their success in attracting a larger demand for their products. Since they are competing in the while world, some industries tend to have a competitive advantage over this enterprise. Secondly, the enterprise is faced with the challenge of instilling innovations and reducing costs. This is especially directed towards massive production and economies of large scale. Companies that produce products in large quantities enjoy the economies of large scale, where they reduce on labour, maintenance and operational costs. Similarly, they reduce transport costs as the products are transported in bulks. Thirdly, the enterprise is faced with the challenge of increasing the concentrations of its regional network. As a fact, increasing the regional concentration is a way in which the enterprise will increase its niche market. When the market increases in regions, it is an admissible fact that the enterprise will be enjoying success. As such, they have to structure a perfect drill that will make the enterprise achieve positive and attractive results. In their decisions, Emilia-Romagna wants to restructure the enterprise by using service based solutions. This is by increasing the demand for new production based related services. As such, the enterprise has to structure new ways in which production will be improved. In doing this, the demand for the products that are produced by the enterprise will increase. Similarly, other related services will be improved by making a better production process. In making this happen, Emilia-Romagna insists on quality control. Quality control is an aspect where the products are improved to fit into the market. The standards of the products are improved, which adds value. As such, the market will achieve more from the product as it is effective and efficient. Secondly, Emilia-Romagna insists on improving the financial services of the enterprise. This will help in ensuring all the finances are directed to the right activities. Thirdly, Emilia-Romagna wants to bank on marketing, which will help improve the supremacy of the product in the market. Marketing is an effective way of ensuring the market has know-how of the good and products. On the other hand, Baden-Wurttemberg insists on using technology and research based restructuring to improve the enterprise. Using emergent technology is an idea that has been used by virtually all enterprises in the world. For instance, most of the small and medium firms in the world are embracing technology. Technology helps improve on the production process, quality and production output. Similarly, it cuts down the use of many labourers. As such, the enterprise will achieve a financial gain with the improvement of technology. Similarly, the enterprise can use research in expanding its market share. Approaching a market by research ensures an enterprise makes the right moves. These solutions apply universally. However, the approach should be dependent on the market segment. Topic 3:Comparing Business Systems – Corporate Governance Comparative governance involves all parties structuring their rights and responsibilities in a firm or enterprise as stated by Aguilera (Aguilera and Jackson, 2003:448). Therefore, it is in the best interests of all stakeholders to ensure they conduct their responsibilities accordingly. This will in the end be reflected on the outcome and results at the end of a financial period. A firm that has responsible stakeholders is evidently prepared for success. However, firms that do not have responsible stakeholders may not give the required results. Though stakeholders and managers have their rights and responsibilities, they differ from one corporation to another. This is defined by the difference in the corporate management and the conduct of the stakeholders (Haque, 2011:39). The different paradigms that are used define the institution and its success strategy. It is an admissible fact that institutions that use strong paradigms of corporate governance achieve success. However, enterprises that rely on weak paradigms risk being driven out of the market. This is due to the presence of many enterprises in the market, which make it hard for weak firms and enterprises to thrive. Business systems are compared by using various paradigms. However, all these paradigms base on three vital aspects in a firm. These include capital, labour and the management (Whitley 2007:7). To begin with, capital is considered as the forefront need in starting an enterprise. For any success in an enterprise, there should be substantial capital that will be used to run all the businesses. For instance, an enterprise that has substantial capital is well prepared to purchase raw materials on a frequent basis, depending on the need. Similarly, an enterprise that has substantial capital is prepared to acquire machinery for the business. Therefore, these could be used as a point of comparison. Enterprises that have massive capital are efficient and effective. This is especially directed towards supply of raw materials and the basic factors of production. However, businesses that do not have a strong capital base are not efficient and effective. This is due to the struggle in choosing where to invest and how to acquire more resources (Ridderstrale and Nordstrom, 2004:281). In such a situation, a business could be stalled. In the same direction of capital in business comparison, there are various aspects that should be used in making choices (Whitley 2007:4). For instance, different managers have to make tough decisions over finance versus strategy, liquidity versus commitment and equity versus debt. In some instance, managers chose to make financial investment rather than indulging a strategy. Similarly, some managers choose to have debts other than having equity. Labour encompasses all the work that is done in production. Without labour, there would be no production. Therefore, businesses and enterprises have to ensure they have efficiency and effective labourers that will help the enterprise achieve its targets. For instance, management that makes decisions in hiring and firing determines the strength of an enterprise. However, different businesses have different ways in hiring and relieving employees. This makes a difference in their performance. For instance, some enterprises have an age limit on their employees. These are decisions that are made by the management after scrutiny on employee performance. Some business enterprises argue that employees of a certain age are not efficient and effective. Therefore, they have to pave way for efficient and effective employees. In comparing labour in business enterprises, some managers chose the participation of labourers while others chose the control of the labourers. Similarly, comparison is pushed towards the labourers in relation to their skills, while others reflect on the flexibility of the labourers. As such, there is a difference in their comparison. Lastly, the management is an aspect that is used in comparison of businesses. In some enterprises, the management has full responsibility of making directives while in other firms, it is a social responsibility. References Aguilera, R.V. & Jackson, G. (2003) “The Cross-National Diversity of Corporate Governance: Dimensions and Determinants”, Academy of Management Review, vol. 28, no. 3, pp. 447-465. Chandler, Jr. & Alfred, D. (1984) “The emergence of managerial capitalism’, The Business History Review, vol. 58, no. 4, pp. 473-503 Dunning, J.H. & Boyd, G.M (2003) Alliance capitalism and corporate management: entrepreneurial cooperation in knowledge based economies, New York, Edward Elgar Publishing. Hall, P. & Soskice, D. (2001) Varieties of capitalism, Oxford, Oxford University. Haque, U. (2011) The new capitalist manifesto: building a disruptively better business, Harvard, Harvard Business Press. Heidenreich, M. (1996) “Beyond flexible specialization: the rearrangement of regional production orders in Emilia-Romagna and Baden-Wurttemberg”, European Planning Studies, vol. 4, no. 4, pp. 401-419. Ridderstrale, J. & Nordstrom, K.A. (2004) Karaoke capitalism: management for mankind, New York, Financial Times Prent.Int. Ryrvik, E.A. (2011). The allure of capitalism: an ethnography of management and the global economy in crisis, London, Berghahn Books. Whitley, R. (2007) Business systems and organisational capabilities. The institutional structuring of competitive competences, Oxford, Oxford University. Read More