Strategic Financial Management - Coursework one

Strategic Financial Management - one - Coursework Example The shareholder and the stakeholder are two important people in the organization. The shareholder is the owner and financier of the organization. It is therefore a noble objective, that any policy initiated by the organization, should aim at benefiting the shareholder. This is always depicted through a rise in their share prices, and periodic payment of dividends. This is the concept which is referred to as maximization of the wealth of the shareholder (Roe and Law, 2001). Another important constituency that contributes to the value of a company is the stakeholder. This is an individual who has the capability of affecting or being affected by the policies of an organization. These people include customers, the community where the company is operating, the government, suppliers, creditors, etc. This paper provides a discussion on whether maximization of shareholders wealth is a realistic objective by the company. After the financial crisis of the late 2000, and the emergence of the Enron scandal, there has been a critique of shareholder wealth maximization by experts of business and management. In as much as focusing on the value of the shareholder has the capability of benefiting the owners of a corporation, it is unable to provide a clear guidance that can be used for purposes of measuring social issues such as environmental, employment and ethical business practices (Kolb, 2008). For instance, the management can be involved in the maximization of the value of a shareholder, consequently lowering the welfare programs of third parties. For instance, in a bid to maximize the wealth of shareholders, the company may be forced to pay low salaries to its employees. A company such as Wal-Mart is constantly accused of underpaying its employees, for purposes of generating more profits to its owners. In fact, as of the year 2014, Wal-Mart is the company that had