Question

C. Based on your responses up to this point, what have you learned about the goal of maximizing shareholder value at the U.S. companies? As part of this question, explain how you may use your newly-found knowledge about the goal of the corporations in your work as a future manager.

Answer 1

To increase the shareholder of a firm a future manager should try following things:

1. Increase the profits of the company: The manager should try to maximise profit by reducing costs by increasing efficiency, negotiating with the supplier,etc. He should also try to maximise revenue by increasing price or increasing amount of sales.
2. Targeting optimum capital structure:: Manager can optimise capital structure by taking more debt or issuing shares. This reduces the cost of capital and maximises the value of the firm.
3. Investing in high NPV project: Manager can choose projects with high NPV to increase the value of shareholders.