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GLOBAL BUSINESS ENVIRONMENT

GLOBAL BUSINESS ENVIRONMENT
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Introduction

 The Global business environment is the business area in different sovereign countries with the inclusion of exogenous factors of the home environment of the focused organization. These environments influence the decision-making based on the capabilities and resources. This environment can be classified into both external and internal. The external environment includes economic, political, social, legal, cultural, technical and tax environment. The internal environment includes that which relates to the stakeholders in the daily running of the business. Both environments relate to the rentier and the financier of the business

The Historical Critique

The Global business environment is an innovation that was facilitated in the year 1844 and 1856 and legalized by the U.K government in order to make an easier use of tradable investor’s shares under limited liability. The Global business environment was originally initiated through the railways companies in the UK hence the dispersing of share ownership (Arrighi 2002, p. 84). There has been drastic change in the social structural role of the shareholder for the past hundred and fifty years to the reinvention of the current Ireland. These changes can be analyzed as a drastic break between the current shareholder’s ideas and that of the inter-war period.

The term rentier was commonly used in the 1920’s and 1930’s for the current known shareholder. There has been an experienced change in economical value that has been attached to the role due to terminology. This is because the original name was related to parasite while the later name as a shareholder as used currently is viewed as economically and socially beneficial (A.Berle & Means 2009, p. 112). The drastic shift is largely related to the changing assumptions concerning the social shareholding basis during the two separate durations.

The value of shareholder in the 1990’s or investor rhetoric’s of activists in the 2000s reveals that the enforcement of shareholder’s rights can resolve the urgency problem. It is also able to produce benefits for everybody when everybody is involved as a shareholder. This ideology differed from the earlier notion which was limited to the view of rentier’s claims of parasites and activities of financier (Talbot 2008, p. 103).  Both activities resulted in economic instability and social inequality. This understanding forms the basis of agency theory and management of value maximization.

Importance

The importance of shareholder’s value can be understood and derived from the historical experiences through the inter-war text by the authors and recognizing the differences in their views.  However, the ideas of current academics are not distinctive and clear concerning the historical discourse on shareholding (Bowman 1996, p. 94). Therefore, it is important to get the clear understanding through the views of the anti-shareholder discourses of the early years that concerns the resistance of rentier claims and activity of financier through pro-shareholder prism.

The critique brought about the understanding of wrong notion concerning the claims of ownership and control separation in the 1930’s. It is vital to understand the differences between ownership and management which plays a vital role for the shareholder values. This conventional framing of the problems in the current environment in terms of separation of control and ownership helps in dealing with procrastination on the earlier understanding in different context of socio-economical roles (Fu 2010, p. 68).

The misconceptions of financialization are practical consequences that are intellectually serious that encouraged critique of rentier and financier inter-wars. The assumption has been a vital aspect of challenge that brought to the financial income growth for non-financial corporation in the US (Constantinides, et al. 2003, p. 101). This resulted in the important measurable changes that date back to 1970s. In addition, this critique goes back to earlier years hence the current debated issues vary on the dominance of inter-war financial capitalism. This provides the trustees of the corporate managers by law, to run their mandates in the interest of the shareholders. However, in the management environment is not pegged on one position hence creating a situation of in-flux in case on management vacuum (Piketty 2014, p. 73).

The understanding of the developments and social misconceptions of the duties of the shareholders reveals the challenges that investors incur to correlate the social and environmental policies with the risk management strategies. This is very fundamental to the ultimate financial performance of the company or business (Gambee 1999, p. 132). The focus on the shareholders and their mandate has resulted in the current four major issues that relate directly and indirectly to the business performance.

The social or environmental issues are pegged on the political contributions and lobbying, practices of labor and human rights. It also involves the sustainability factors, environmental risks and effects to the business. The second value of shareholders is anchored on the matters that are Board-focused (Fabozzi & Drake 2009, p. 87). This is based on the board composition, leadership independence, board declassification and the strategies on voting to elect the directors. Other issues that have been in controversy over the years and affected the value of the shareholders in relation to global business are the issues related to strategic antitakeover. These issues are based on the mutual agreements and decision making within the business and the act of written consent for trust.

The earlier assertion on the understanding of the shareholder created a huge barrier in global business especially to the society. The idea or understanding of the society was pegged on the vision of community interest through policies of new deals which was at the expenses of the rentier’s passive property. This property was understood to be the prerogative of the income and management control. In this understanding, the control and ownership controls were able to stand against the community interests that were paramount. This resulted in the imbalance between variety of claims by community groups and natural technocracy (Cassis 2010, p. 91).

Finance Capital

The era of domestic monopoly and global imperialism has been affected by metropolitan capitalism. The earlier arguments were synthesized on the aspect of imperialism which focused on the value of financial capital. The understanding was tailored to the latest phase of capitalistic development. Capitalist competition was being overpowered by national economies through innovations. These innovations were successfully resolving organizational problems that were attached to social economy. This was mainly caused by the rise of monopolizing corporations of industries and cartels (Davis & Gallman 2001, p. 114).  It also involved the fusion of industrial capital and banking which was placed under a common high finance direction.

This direction resulted in new opportunities for money capitalists like the financiers who could make promoter’s profits and rentiers who become responsible for issuing of tradable papers by corporations. This context resulted in the development of parasitic rentier stratum idea. This was focal in the earlier ages and increased the circulation of financial papers and encouraged increased rentier stratum (Baker & English 2011, p. 73).This created the indirect participation in the activities of trade and production in the global business environment. The rentier and financier development resulted in the acceptance of private property, wage labor, and profit motive. However, it wished the limitation of labor, products and effects of capital market through collective reform. This resulted to the obstruction of social security and economic stability. This is what is referred to as liberal collectivist that is illustrated through close work analysis.

The work of capitalism was to be more relevant in large economies such as U.K. and U.S. in connection to their political environment. The inspectional point was based on the conditional rights to property in which contestable and illegitimate claims are made through rentier. This was income without service and a presentation of property without function (Lin, et al. 2013, p. 79). The changes in capitalism were as a result of monopoly which is widely known as the separation of management and ownership. This created a new class of managers who had solid technical abilities together with modest salaries. This gave the management an image of intellectual proletariat.

The fundamental point of origin and ending of the liberal collectivists were always political and not economical. This is due to the close relation of classic debate between liberty and property. Since the early ages, liberals have been involved in political contest and theoretical debate in order to justify the wealth acquisition and property enjoyment. In the case of inter-war liberal collectivists, the issue was the distinction between illegitimate and legitimate forms of property rather than mere property. This distinction was encapsulated on the understanding of property and “improperty” or active and passive property. In this context, there is condemnation of ground rents, mineral rights and shares as passive property form that can yield income that is not a productive functions or services.

The modern industrial society involves a greater mass of property which consists of various kinds of ground rents, royalties and also includes shares in the industrial undertakings. All these yields an income irrespective of the services rendered to it by the personal owner. This is a critique that affected the rentier and financiers in the historical and developed economic global environment (Perez 2003, p. 201). The understanding of maximization of the returns for the shareholder’s rights is anchored on the corporation ownership of the business by the shareholders. This argument is problematic because the corporation is not owned by the shareholders legally. The returns are also harmed in the long run by the prioritization of the value by shareholder.

In the current age, shareholding is based on a number of principles which makes it attractive and lures investment into the business in relation to the global environment. They are based on managing earnings and provision of earnings guidance. The shareholders are vital in making strategic decisions that helps in the maximization of expected value even at situations of the expenses of lowering earnings of near-term through acquisition making. They also take values to new levels by carrying only assets that can maximize value. Value oriented business or a company monitors the willingness of buyers in the principle of paying meaningful premium on a regular basis (Constantinides, et al. 2003, p. 126).

Value creation in shareholder in the current global environment is tailored in cash return to the shareholders in the case that there is no opportunities for value creation through the business investment. There is need for motivational incentives from the shareholders to the management. This is known as the rewarding of the CEOs and the other senior executives for the delivery of the superior long-term returns in the business strategies. It is essential to have stock options that are properly structured with a mandate to raise the business or company performance in value addition.

The value addition in the shareholding flows down to all the structures of the business both internally and externally. This involves rewarding middle managers, employees that are in the frontline in the delivery of superior performance that are in-tandem to key value drivers in which they directly influence. The system requires the bearing of risk by the key senior executives on the ownership in the same manner as the shareholders do. This means having the interest of the company and business at heart which in turn creates attractive inventor interest (Bowman 1996, p. 87). There is need for balancing the required benefits of the senior executives in holding continued ownership stakes and the resulted restrictions on the diversification and liquidity of the business. It is also fundamental to provide the investors with the value-relevant information about the business. This is always pegged on the corporate performance statement of the business which gives the general details of cash flow accruals.

Business environment is always tailored to the rewards and risks which determine the stability and effective performance of the business. The great strategic challenge in share value is value-creating growth. For this reason, success requires business to develop good and new businesses that cannot be potentially disrupted. The technical causes of business instability is understood to be from steady state under-consumption on the marginal consume propensity assumption at a very low degree. This is due to the lack of total increment expenditure income by the consumer.  In the earlier years, the technical problem that ensued then was due to the fluctuation of the investment volume which did not compensate for under-consumption regularly.

This technical problem was referred back then to return expectation in the specific stock market capitalization context. This is also known as the marginal capital efficiency.  In this situation, the liquidity price is in speculation with violent fluctuations in conventional and shallow judgments of market investors of the market (Perez 2003, p. 103). In Laissez-faire conditions, there may be impossible avoidance of wide employment fluctuations without a far-reaching change in the investment market psychology in unreasonable expectation. The current investment volume ordering is not always safe in the hands of private individuals.

This solution is to engineer a reduction in rentier’s marginal capital efficiency that results in the low-interest rates that would be able to zero the pure interest rate.  This would be advantageous in the boosting of investment hence aggregate demands. This will be able to ensure the return of the accumulated wealth rate in a gradual disappearance (Cassis 2010, p. 72). The aspect of capitalism of rentier as a transitional phase is for this reason identified although the clear explanation of how rentier euthanasia would be achieved. The differences that are created through policy and process stance are very essential of all due to liberal collectivists on finance challenge. This relates to the current conventional wisdom on the financial markets extending benefits and the marketization risk. This risk has ossified form the earlier years of financial deregulations.

Conclusion

The basic understanding is that finance is always planned in a state when things go wrong. Shareholders are known to be the owners of the corporation. The business operations and decisions are typically affected directly by the concerns of the stakeholders in the business. This interest is hugely related to the output in relation to financiers (Morrison, 2011). It is essential to balance the interest of both the shareholders and stakeholders in order to have profit projective that are steadfast in focus. The attraction and retaining of stakeholders and the gaining of solid stock value is pegged on profitability of the business. The profitability of the business in anchored on the environmental values that relates to the rentier and financiers.

References

A.Berle, A. & Means, G. C., 2009. The Modern Corporation & Private Property. 10th ed. New Jersey: Harcourt, Brace and World, Inc.., pp. 112.

Arrighi, G., 2002. The Long Twentieth Century. 2nd ed. New York: Verso, pp. 84.

Baker, K. H. & English, P., 2011. Capital Budgeting Valuation: Financial Analysis for Today’sInvestment Projects. United States: John Wiley & Sons Publishers, pp. 73.

Bowman, S., 1996. Modern Corporation and American Politics Thought: Law, Power and Ideology. Unietd States: The Pennslyvania States University Press, pp. 94; 87.

Cassis, Y., 2010. Capitals of Capital: The Rise and Fall of International Financial Centers 1780-2009. 1st ed. New York: Cambridge University Press, pp. 91; 72.

Constantinides, G. M., Harris, M. & Stulz, R. M., 2003. Handbook of the Economics of Finance: Corporate Finance. 1st ed. Amsterdam: Elsevier B.V., pp. 101; 126.

Davis, L. E. & Gallman, R. E., 2001. Evolving Financial Markets and International Capital Flows: Britain, The Americas and the Australia n1865-1914. 1st ed. Cambridge: Cambridge University Press, pp. 114.

Fabozzi, F. J. & Drake, P. P., 2009. Finance: Capital Markets, Financial Management and Investment Management. New Jersey: John Wiley & Sons Inc.., pp. 87.

Fu, J., 2010. Corporate Disclosure and Corporate Governance in China. Netherlands: Kluwer Law International, pp. 68.

Gambee, R., 1999. Wall Street: Financial Capital. 1st ed. New York: W.W. Norton, pp. 132.

Lin, C. Y.-Y., Edvinsson, L., Chen, J. & Beding, T., 2013. National Intellectual Capital and the Financial Crisis in Brasil, Russia, India, China, Korea and South Africa. New York: Springer, pp. 79.

Morrison, J., 2011. The Globa Businessl Environment: Meeting the Challenges. 2nd ed. United Kingdom: Palgrave Macmillan, pp. 62.

Perez, C., 2003. Technological Revolutions and Financial Capital. Cheltenham: Edward Elgar Publishing Limited. pp. 201; 103.

Piketty, T., 2014. Capital in the Twenty-First Century. United States: President anf Fellows of  Havard College, pp. 73.

Talbot, L., 2008. Critical Company Law. 1st ed. New York: Routledge Tailor&Francis Group, 103.

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