Cima F3 Exam Question No 15

Question No 15:

How is Shareholder Wealth Maximised?

• Maximising shareholder wealth is done through increasing profits which can be achieved through:
• § Increasing profitability, through cost reduction and efficiency programs
• § Investing in profitable projects or investments
• § Expanding through new products and new markets
• § Acquiring or merging with other organisations
• The objectives of the organisation must incorporate all stakeholders and the organisation has to "balance" the needs of all interested parties.
• Once the objectives have been identified, the organisation must then plan to achieve those
• objectives. This will involve at looking at various options available, analysing those options,
• choosing the appropriate one by ensuring there are enough funds and resources available to
• implement the option or options.
• Once implementation commences, it is important to monitor and control the chosen option to ensure it is consistent with objectives. This is mainly done through performance measures.