In this article we will discuss about the corporate philosophy and corporate objectives of a company.
A particular Gas company, in addition to its statement of overall objectives, states the following “principles for guiding its action:
The company will provide for its stock a ready, convenient, and technically sound market to ensure optimum flexibility for its owners.
The company will deliver its gas customers, safely and dependably, a gas of uniform heating value that will burn cleanly and efficiently.
The company will pay fair and just compensation comparable to what others are paying for like work.
The company will maintain a safe system.
The company will deal fairly with its suppliers.
These statements spell out the philosophy of the company. They inform employees of management’s general intent in each of the areas covered, and so provide overall direction for corporate activities. As such, we can say that corporate philosophy is an extension of the corporate objective.
Management’s desire here was to extend the statement of objective, so that its intent or purpose in major areas of the business would be clarified for all. In this sense, these principles of growth or of action are a part of the company’s objective and give a more precise definition of the ‘character’ or ‘philosophy’ of the enterprise.
On a close look to the listed major areas from ‘investors to suppliers’ above, we find that the corporate body as an enterprise system should help people realise their ambition. This means that the company should serve, not vice-versa.
Thus, corporate philosophy may be defined as those principles which guide the actions of a corporation so as to serve the interests of ‘multiple masters’ and ‘multiple publics’ transcending beyond the limited horizon of a corporation and give a precise definition to the ‘character’ of its enterprise system.
On an amplification of this philosophy, we can develop the following corporate objectives for actions:
1. The company will serve to provide to its owners, the holders of the common stock, a growing per share value, measured in terms of both income and appreciation, and to be the maximum, in the long run, consistent with the company’s responsibilities to its customers, employees and the public.
2. The company will keep present and potential investors in the company and their representatives well informed about the company and its prospects, in order that they may make their investment decisions with full knowledge and that the company’s securities are appraised fairly.
3. The company will keep its books in accordance with the normally accepted accounting principles and practices.
4. The company will safeguard and soundly employ company funds and property.
5. The company will pay to the holders of its common stock in dividends a reasonable proportion of earnings after annual review.