Concepts in “Porsche Changes Tack” by Moffett

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Table of Contents

The three most important concepts learned from the article
Application of the article’s concepts to an employer
The most surprising in the article
Concepts in the article to disagree with
Works Cited

The three most important concepts learned from the article

First, one of the most important concepts learned from this article is shareholder value. From the article, it is evident that shareholders of a company or business organization are critical entities that cannot be ignored by managers. For example, shareholders provide the much-needed capital to start and expand the business operations of a firm (Losbichler, Mahmoodi, and Rothboeck 85). Shareholder value also ensures effective and uninterrupted management practices, accountability, and transparency in an organization. In any case, there are several cases when shareholders have to be consulted before major investment decisions can be executed. Through shareholders, a business organization is also in a position to remain afloat owing to effective management practices and the provision of surplus resources. In addition, shareholder wealth maximization accelerates the growth of a business entity bearing in mind that the profits generated are usually plowed back into the company.

Second, stakeholder capitalism is another fundamental concept learned from the article. Equity demands long-term returns. The concept of stakeholder capitalism embraces the fact as much as shareholders are prudent in the growth and development of a business organization, the capitalistic nature of stakeholders is equally crucial. Some of the key stakeholders pointed out in the article include regional entities, governments, labor unions, and creditors. The author argues that most Anglo-American markets are less powerful than labor unions that usually agitate for workers’ rights.

Third, agency theory is another crucial term used in the article to describe the roles played by shareholders in motivating managers. The latter is supposed to enhance the generation of wealth for shareholders. For instance, shareholders and management teams should think along the same line when it comes to shareholders’ wealth maximization. If the targets set by shareholders are not attained, boards of directors may be obliged to replace the concerned management teams.

Application of the article’s concepts to an employer

Agency theory can be applied in a number of ways in my present workplace environment. For example, the structure of the organization relies on the set goals and objectives that ought to be achieved within a given time. In fact, agency theory assists in addressing issues emanating from conflicts of interest. It is a common occurrence at my workplace to witness creditors, managers, and stockholders engaging in malpractices that may jeopardize the wellbeing of the firm (Walker and Geyfman 112). Through this theory, risk-bearing in the organization, separation of management, and residual claims can be analyzed in the most effective manner. Risk-sharing trade-offs may also be avoided if agency theory is put into practice. In addition, contractual provisions at my current place of work can be analyzed using this theory. In most instances, stockholders and claim holders encounter numerous conflicts of interest that tend to interfere with the core operations of the organization.

The most surprising in the article

The most surprising aspect of the article is that even though shareholders are valued entities in a firm, they cannot surpass the roles played by customers or the targeted market. In the given case study, Porsche excelled quite well in the automotive industry without prioritizing the value of shareholders. As much as consumers’ needs, tastes, and preferences are met consistently, a business organization is guaranteed success. In fact, the above automotive firm maximized its revenue base without necessarily concentrating on shareholder value. I initially thought that the most successful organizations place shareholder value at the top of their priority list (Moffett 5).

Concepts in the article to disagree with

The “management of two minds” concept adopted by Porsche was an unhealthy practice because it failed to synchronize production and management processes at the firm. This concept could not highlight the nature of the value proposition is adopted. Although the company embraced it for a long, the concept led to major operational failures.

Works Cited

Moffett, Michael. Porsche Changes Tack. 2007. Web.

Losbichler, Heimo, Farzad Mahmoodi, and Markus Rothboeck. “Creating Greater Shareholder Value From Supply Chain Initiatives.” Supply Chain Forum: International Journal 9.1(2008): 82-91. Print.

Walker, John, and Victoria Geyfman. “Is Community Bank Creating Value For Shareholders?” Journal of Accounting & Finance 13.4 (2013): 107-123. Print.

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Concepts in “Porsche Changes Tack” by Moffett

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