ECONOMICS 1. The Managerial theories of the firm seek to provide Essay

ECONOMICS 1. The Managerial theories of the firm seek to provide models characterised by realism in motivation, whilst recognising the continued importance of profit in the corporate environment - Essay Example As income taxes have risen over the past historical era, the outright impact of salary or bonus increases has been moderated somewhat. The incremental tax on income in the UK and the US is at about 50%, when all local and national income taxes are taken into account. Thus the standard supply and demand relationship demonstrates a curve, as shown below. Since taxes climb with income, the curve's change in slope is more pronounced: As compared to the turn of the last century, when income taxes were less than 10%, the total impact of increases in wages has therefore moderated. The second influence on this moderation has been the increase on the value of leisure time (Kokoski 1987). As the value of leisure hours has increased, the amount which needs to be paid to offset the value of leisure time has also increased, all else being equal. Group incentives can take the form of income increases (salary and bonus) or non-monetary rewards, such as additional vacation days. From a microeconomics standpoint, there is no difference between group pay incentives and individual pay incentives. There are psychological differences which can be substantial, however, depending on the type of performance being rewarded. An extreme example of the point above is an individual whose personal rewards far exceed those of the group, and in achieving his goals may actually be a detriment to the shareholders. An example of this might be Robert Eaton, who was the Chairman of the Chrysler Corporation at the time that his company was approached by Daimler-Benz. Eaton agreed to a plan whereby Daimler-Benz would merge with Chrysler, and he sold the Board of Directors and employees' unions on the plan. What he didn't reveal was that he stood to gain over $100 million personally if the deal went through. The resulting hue and cry was that Eaton "sold out" Chrysler, which was borne out by subsequent events. Chrysler's largest shareholder at the time, the Tracinda Corporation1, sued Daimler-Chrysler for over $8 billion for erasing nearly $38 billion of market capitalization due to the transaction (CNN 2000). Figure 2: Reduction in share price since merger (CNN 2000) Thus a personal incentive (for Eaton) was in direct opposition to the interests of the shareholders. Stock Options Stock options have the advantage of better alignment with shareholder expectations. The theory is that managers are

Corporate Social Responsibilities report Assignment

Corporate Social Responsibilities report - Assignment Example The company ensures environmental sustainability through incorporating best practices which reduces impact on environment. Wendy is more concerned about people and believes in giving something extra to stakeholders apart from offering superior quality food choices. This organization serves local communities and takes active measures to minimize any form of societal issues. On the contrary, the Subway system is inclined towards providing healthier and tasty food choices. The company attempts to reduce environmental impact and structures effective programs for local communities. Sustainable sourcing is one of the corporate social responsibility activities undertaken by the company. It maintains a strict code for vendors and streamlines supply chain activities. Safety standards and high food quality are maintained by the organization and they are involved in reducing water conservation, energy utilization, etc. They even serve local communities through large number of donations and spon sorships. Subway is an active participant in context of extending support to educational institutions and local charities. Wendy’s and Subway forms a major part of the food industry. The companies are actively involved in providing superior quality foods to customers. Nutrition and health standards are taken into consideration while manufacturing food products. Environmental sustainability is a common approach adopted by both the companies. There are different practices adopted by the firms in order to enhance environmental sustainability. Environmental friendly practices are common for both the organizations. They are actively indulged in reducing level of water or energy conservation. This is an important corporate social responsibility approach and it needs to be focused on by all companies. However both the companies have initiated different programs so as to ensure that their