My final article for the week will talk about corporation issues. We could not discount the fact that there will always be problems and issues that corporations will face at any point in time in the business. These challenges are but normal in the life span of a corporation, and this should be seen as an area of opportunity and growth. Let us take on some of these issues and see what are the tips in which we can avoid them in the future.
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Corporation Issues Faced by Corporations
- Amendments of By Laws. Movements in the company may lead to certain amendments of by laws. They may either be repealed or amended by shareholders. One of the challenges is that it is usually those who are in power who will initiate this.
Solution: Protect minor shareholders from the majority by making sure that their interest in the company is protected.
- Suits. Some shareholders might sue the corporation over corporate issues such as misappropriation of the assets of the company, and breach of duty by the officers and directors.
- Solution: You need not wait for derivative suits to happen. Prevent them from happening by making sure that checks and balances in the company are in place. Also representation for the minor shareholders such as transparency in reports shall be done. Good management is also an asset.
- Mergers and Acquisitions. Depending on how you see it, mergers and acquisitions are avenues for opportunities of growth for companies. Mergers are consolidations between another company, usually bigger in nature. Acquisition is the process of either buying in a smaller company or being bought by a larger company.
Solution: This is not a problem as much as an issue. Some of the points that you need to talk about would be the profitability of both, and how you could protect your shareholders. Study if the merger or acquisition is going to produce good ends in the long run.
- Economic challenges. Whether you like it or not, your corporation is going to be exposed to the economy and it will be affected by inflation and instability in the company. This may result to bankruptcy, downsizing, or even closing of the business. This may result to the feeling of uncertainty, which leads to short term focus of the business.
Solution: Build your business on a solid foundation. It must be able to have processes that may serve as a buffer during economic crisis. The solution to uncertainty is to have long term plans in place, which is about a five-year visioning.
Challenges of globalization for management. This may mean competition to your company. The struggle to compete with big corporations or the struggle to innovate to meet new needs of economies and other markets is a real challenge.
Solution: Put in your plan future plans for emerging markets, and innovate new products and services. This should form part of the goal of the company.
Implications of Government Regulation
Your company will always be affected by changing government regulations and policies. This is one of the corporate issues that you need to be proactive about. You need to be prepared for such changes in policies and make sure you follow them to prevent any problems with the law. Study the implications to your business and have the necessary skills to deal with them.