Management Decisions Paper Term Example | Topics and Well Written Essays - 2000 words

Management Decisions - Term Paper Example On the other hand, increase of stock prices causes economic growth through investment and consumption channels. The finding of this essay shows the interrelationship between the increase in stock’s price and growth of the economy. This is enhanced through consumption and investment channels that exist in the product and financial market Management decisions Introduction Management in a firm entails board of directors who are entrusted by shareholders with responsibilities of running the business because they have the required expertise. Management should hire temporary workers and upgrade old machines in order to lower cost of input. Additionally, they should also ensure the optimal parts kept in the shelf have the capacity to sustain demand in the product market and give optimal profit. It is agreed in all business circles that a firm’s management should also look over shareholders’ interest. This is in an effort to maximize shareholders’ value by engagin g in decisions that that facilitate rise of value and economic growth of the firm. In order to have an efficient financial and product market, stock prices should be addressed because it holds the present and future information of the firm. This implies that great performance of firm’s managements should be focused and reflected in price stock. Therefore, every decision made by the management should address stock prices of the firm in the financial market. This is in an effort to maximize profits thus reflecting to the growth of the economy. In addition, the management should embark on decisions that that lowers the cost of the input in a firm. This is in an effort to increase profit margin, which is achieved when cost of inputs is lower while stock prices increases. This paper work focuses on management decisions to regulate stock prices and input cost in order to enhance economic growth of the firm. Value maximization in a firm The corporate objective of managers in a firm is to safeguard the interest of all stakeholders, who includes customers, employees and the general public who are associated with the company. During decision-making, the management is faced with trade-offs which makes them unable to serve all the stakeholders at the same time. On the contrary, it is elaborate that when the management takes the right decision, there is maximization of stakeholders’ value. In addition to this, they also make a substantial contribution in the growth of the entire economy which causes the prosperity of all stakeholders (Hayes, 2001). Management decision of lowering the cost of inputs and raise the stock price has a greater influence in the economy. This is because it increases the profit margin which is the main objective of firms in the economy. According to macro economics the profit margin in a firm can be achieved through investment and consumption channels in the market. Change in stock prices affects patterns of consumption in the economy thus increasing shareholders wealth. This assumption is based on the life cycle theory, which states that individuals consume a constant percent of their present value and future income. This indicates that stock price and level of consumption have a direct relationship in the economy (Offenbacher, 2007). On the other hand, the relationship