Corporation’s Existence: At Whose Perspective Must Managers Consider

Steve Denning expressed in his article that corporations shifted their goal from solely
maximizing shareholder’s wealth to that of the stakeholders. He pointed out that mere
focus on what the shareholders’ need to increase their wealth means neglecting all the
other stakeholders that are of equal importance to the entity. However, the shift from
shareholders to stakeholders seemed to provide a vague concept as to the existence
and purpose of the corporation. Despite efforts of corporations to serve all its
stakeholders, their efforts were for naught because the shift seemed to have confused
managers as to the corporations’ goals and objectives. The focus on stakeholders
provided an ideal perspective but not a feasible and practical one. Thus, another shift of
the corporation’s focus has been introduced, that of a customer. The shift of a
corporation’s focus to that of a customer is by far, in my opinion, the best choice. A
company focused on satisfying their customers ought to retain the latter’s loyalty and
trust. This retention of loyalty and trust could then be an avenue for not just greater
profit but a stable one as well, provided that the loyal customers would encourage their
peers to patronize the company’s products and services. A multiplier effect could be
expected from this since those peers that would be convinced ought to do likewise to
their peers and relatives. Since there will be expected profit, the entity’s value is also
expected to increase, a result beneficial to stockholders and other stakeholders of the
company. Once the entity’s value increases, the company would likely be able to exist
for a longer period. Aside from gaining profit and increasing company’s value, a
customer-focused company ought to apply innovation and entrepreneurial mindsets to
maintain their customers’ interests. This initiative would help the company continuously
improve their operations and their organization in a constant manner, avoiding the risk
of being behind the industrial advancements or worse, having to shut the company
down for failure of adapting to the rapid technological improvements of the 21 st Century.
With the pros of considering the customer’s perspective as basis for the existence of the
company and its purpose of existence, one could not deny that there are some
disadvantages as well. Despite these disadvantages, managers may combat them by
finding alternatives, using economic techniques and tools, and minimize, if not diminish
their effects to the company.