RE: Looking for a good book on "corporate culture"

["Joe Malin" <jmalin -at- tuvox -dot- com>]

The real answer is:

There's no real answer.

In *theory*, a corporation is supposed to maximize return for its
investors. This goes back to the original purpose of "companies", the
predecessor to modern corporations. Merchants founded companies to pool
money for money-making opportunities that required more money than any
individual investor could put forward. These companies also worked to
get governmental privileges for themselves, to the exclusion of other
investors. Naturally, the investors made decisions that maximized their
own return on their investment.

Companies eventually sold shares, limited their liability, and
established other procedures and structures that drew in investment
money without requiring detailed involvement in the management. From
that, the principle that a corporation's goal is to "make maximum profit
for the shareholders" evolved.

As far as I know, that isn't a legal requirement. Bankruptcy law favors
(to some extent) employees and creditors over investors.

A corporation's board of directors is charged with overseeing operations
in the interest of shareholders, but boards have historically been
reluctant to wield influence. The most recent round of corporate
shenanigans (for example, Enron) has led to more board activism.

In a privately held start-up, the board of directors is composed of
major funding investors and other influential parties. They look at
operations quite closely, with the goal of making the company profitable
and gaining the best possible return on venture capital investment. The
start-up's senior management is always very concerned about the board's
approval for operating decisions.

Mechanically, a company makes revenue by using its capital to turn raw
material into sellable goods (or services). The company's costs are the
raw material, the processing costs, and maintenance of the capital. A
company makes a *profit* when the revenue exceeds costs, so the goal is
to get cheap raw material, make processing inexpensive, and make the
capital productive. 

A smart board of directors and senior management instantly realizes that
employees are a company's most important capital. The market pretty much
sets the cost of raw materials and the sales price, so on balance a
company makes a profit *by using its capital wisely*. That means being
productive in processing and in buying capital. Which in turn, means
making employees productive.

Joe
(who makes no excuse for having taken business courses)

Joe Malin
Technical Writer
(408)625-1623
jmalin -at- tuvox -dot- com 
www.tuvox.com
The views expressed in this document are those of the sender, and do not
necessarily reflect those of TuVox, Inc.	

-----Original Message-----
From: techwr-l-bounces+jmalin=tuvox -dot- com -at- lists -dot- techwr-l -dot- com
[mailto:techwr-l-bounces+jmalin=tuvox -dot- com -at- lists -dot- techwr-l -dot- com] On Behalf
Of peter -at- galley -dot- ie
Sent: Monday, December 05, 2005 8:21 AM
To: ajmarkos -at- yahoo -dot- com; ghart -at- videotron -dot- ca
Cc: techwr-l -at- lists -dot- techwr-l -dot- com
Subject: Re: Looking for a good book on "corporate culture"

Neither is true - the real answer is:

To make the maximum profit for the shareholders.

Peter


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