Business Exist to bring Value

Order a paper like this one

Kenneth Frazier, the CEO of the pharmaceutical company known as MSD outside of North America, discusses his upbringing and how it influences his leadership as chief executive. He is one of the few African-American CEOs in the Fortune 500, and shot to prominence after resigning from a council advising the Trump White House. Frazier discusses the importance of values in leadership. The researcher gathered a few aspects of the analyzed interviews and discussed various subjects that were noted.

Corporate Social Responsibility
Madariaga and Cremades in 2010 defined CSR as “the set of obligations and lawful and ethical commitments with stakeholders, stemming from the impact of the activities and operations of firms on the social, labor and environmental and human rights fields”.

Fig 1- Carrols CSR pyramid (Caroll, 2016)
According to Carols pyramid above, the core business of an organization is to be profitable. This is the foundation of all corporate responsibility, CSR endeavors should not deviate a company from achieving this. In addition an organization can only remain in business if it is profitable to do so. This is followed by the legal responsibilities, it is important to be law abiding in order to continue operating. Thirdly we have the ethical responsibilities, an organization has an obligation to operate in a manner which is not harmful to themselves or their community. Lastly there is the philanthropic responsibility whereby an organization goes over and beyond what is expected of them due to a personal calling or conviction to do well in their community.

Long Term vs Short Term Value
There is an ongoing debate in the media, as well as among politicians, regulatory authorities, investors and academics on whether company management focuses too much on short-term value (“investing for the next quarter”), an approach also coined as short-termism. Shorttermism is the tendency of company management to take actions that maximize reported short-term earnings and stock prices at the expense of long-term company performance (Levitt, 2000). In particular, the debate is about the extent to which a focus on short-term value negatively affects long-term value creation (McCahery et al., 2016). It has been argued that short-termism may reduce investments in projects that generate long-term returns, such as spending on research and development projects and branding campaigns (Reilly et al., 2016), whereas it may increase spending on investments and/or other decisions aiming at obtaining short-term returns, such as mergers and acquisitions, and laying off employees. If your business start accumulating debts, you may contact a financial company seek debt advice. Consult an expert in corporate restructuring valuation and insolvency to analyze your finances and help you manage your business debts.

Proponents of reducing the pressure for short-term results argue that shareholders holding substantial stakes in a company should counterbalance this pressure by being more actively involved in supporting management decisions that focus on the longer term, for example by discussing strategic decisions directly with management and/or by voicing their interests at the annual general meeting of shareholders (AGM). It has been claimed that investor short-termism may resonate in the boardroom and influence decision-making, i.e. when managers feel the pressure to respond to requests from investors. In line with this, corporate management sometimes complains that many investors and analysts are too much focused on short-term value. According to a recent survey study, almost 65 per cent of executives and directors report that the pressure to show short-term results has increased over the past five years (Barton, 2017).
Short-termism has also been associated with higher activity with respect to mergers and acquisitions (Cella, 2019), corporate strategies focusing on increasing sales growth, which is typically a short-term corporate strategy, instead of improving profit margins per unit sold. To succeed achieving the latter requires investments in product innovations and improvements, which demands a longer-term orientation (Mckinsley, 2017). A short-term time horizon may also be associated with more active corporate restructuring (Barton, 2017). In particular, decisions to lay-off employees and cuts in production may reduce costs and increase profits in the short-run. Also, cutting expenditures on marketing, advertisement and branding campaigns is a short-term strategy as the pay-off from these activities generate higher income only in the longer run (Barton, 2017).

Conviction in decision making
Conviction in a leader is an incredibly valuable yet increasingly rare trait. It’s in short supply because our brains are wired to overreact to uncertainty with fear. As uncertainty increases, the brain shifts control over to the limbic system, the place where emotions, such as anxiety and panic, are generated. Leaders with conviction create an environment of certainty for everyone. When a leader is absolutely convinced that he’s chosen the best course of action, everyone who follows him unconsciously absorbs this belief and the accompanying emotional state. Mirror neurons are responsible for this involuntary response. They mirror the emotional states of other people—especially those we look to for guidance. This ensures that leaders with conviction put us at ease (Barton, 2017).


Barton, D., 2017. Refocusing capitalism on the long term: ownership and trust across the investment value chain. Oxford Review of Economic Policy, 33(2), pp.188-200.
Carroll, A.B., 2016. Carroll’s pyramid of CSR: taking another look. International journal of corporate social responsibility, 1(1), p.3.
Cella, C., 2019. Institutional investors and corporate investment. Finance Research Letters.
García-de-Madariaga, J. and Rodríguez-de-Rivera-Cremades, F., 2010. Corporate social responsibility and the classical theory of the firm: Are both theories irreconcilable?. Innovar, 20(37), pp.5-19.
Levitt, A., 2000. Renewing the covenant with investors. Remarks delivered at NYU Center for Law and Business, New York, NY, May, 10.
McCahery, J.A., Sautner, Z. and Starks, L.T., 2016. Behind the scenes: The corporate governance preferences of institutional investors. The Journal of Finance, 71(6), pp.2905-2932.
Reilly, G., Souder, D. and Ranucci, R., 2016. Time horizon of investments in the resource allocation process: Review and framework for next steps. Journal of Management, 42(5), pp.1169-1194.

We also write articles for various websites such as The Success Guardian, FootballAxis, and BestWebHostToday.

We are also in writing partnership with England Editors and Mzansi Writers.

Related Posts

Open chat
Contact us now