Sunday, October 4, 2009

HRM - Assignment 6


A corporation is defined as a legal entity or structure created under the authority of the laws of a state, consisting of a person or group of persons who become shareholders. The entity's existence is considered separate and distinct from that of its members.

Like a real person, a corporation can enter into contracts, sue and be sued, pay taxes separately from its owners, and do the other things necessary to conduct business. Since a corporation is an entity in its own right, it is liable for its own debts and obligations. As a result, providing that corporate formalities are followed, the corporation's owners (the shareholders) enjoy limited liability, and are legally shielded from the corporation's liabilities and debts.

The existence of a corporation is not dependent upon who the owners or investors are at any one time. Once formed, a corporation continues to exist as a separate entity, even when shareholders die or sell their shares. A corporation continues to exist until the shareholders decide to dissolve it or merge it with another business.

Corporations are subject to the laws of the state of incorporation, and to the laws of any other state in which the corporation conducts business. Corporations may thus be subject to the laws of more than one state. All states have corporation statutes that set forth the ground rules as to how corporations are formed and maintained.

Sparked by new technologies, particularly the Internet, the corporation is undergoing a radical transformation that is nothing less than a new Industrial Revolution. This time around, the revolution is reaching every corner of the globe and in the process, rewriting the rules laid down by Sloan, Henry Ford, and other Industrial Age giants. The 21st century corporation that emerges will in many ways be the polar opposite of the organizations they helped shape.

The organizations that flourish will have several defining features.

-- It's management by Web. That means not just Web as in Internet but the web-like shape of successful organizations in the future. If there are pair of images that symbolize the vast changes at work, they are the pyramid and the web. The organizational chart of large-scale enterprise had long been defined as a pyramid of ever-shrinking layers leading to an omnipotent CEO at its apex. The 21st century Corporation, in contrast, is far more likely to look like a web: a flat, intricately woven form that links partners, employees, external contractors, suppliers, and customers in various collaborations. The players will grow more and more interdependent. Fewer companies will try to master all the disciplines necessary to produce and market their goods but will instead outsource skills--from research and development to manufacturing--to outsiders who can perform those functions with greater efficiency.

-- It's more about bits, less about atoms. The most profitable enterprises will manage bits, or information, instead of focusing solely on managing atoms (the corporation's physical assets). Sheer size will no longer be the hallmark of success; instead, the market will prize the ability to efficiently deploy assets. Good bit management can allow an upstart to beat an established player; it can also give an incumbent vast advantages. By using information to manage themselves and better serve their customers, companies will be able to do things cheaper, faster, and with far less waste.

-- It's mass customization. The previous 100 years were marked by mass production and mass consumption. Companies sought economies of scale to build large factories that produced cookie-cutter products, which they then sold to the largest numbers of people in as many markets as possible. The company of the future will tailor its products to each individual by turning customers into partners and giving them the technology to design and demand exactly what they want. Mass customization will result in waves of individualized products and services, as well as huge savings for companies, which will no longer have to guess what and how much customers want.

-- It's dependent on intellectual capital. The advantage of bringing breakthrough products to market first will be shorter-lived than ever, because technology will let competitors match or exceed them almost instantly. To keep ahead of the steep new-product curve, it will be crucial for businesses to attract and retain the best thinkers. Companies will need to build a deep reservoir of talent--including both employees and free agents--to succeed in this new era. But attracting and retaining an elite workforce will require more than huge paychecks. Corporations will need to create the kind of cultures and reward systems that keep the best minds engaged. The old command-and-control hierarchies, with their civil-service-like wages, are fast crumbling in favor of organizations that empower vast numbers of people and reward the best of them as if they were owners of the enterprise.

-- It's global. In the beginning, the global company was defined as one that simply sold its goods in overseas markets. Later, global companies assumed a manufacturing presence in numerous countries. The company of the future will call on talent and resources--especially intellectual capital--wherever they can be found around the globe, just as it will sell its goods and services around the globe. Indeed, the very notion of a headquarters country may no longer apply, as companies migrate to places of greatest advantage. Every outpost will be seamlessly connected by the Net so that far-flung employees and freelancers can work together in real time.

-- It's about speed. All this work will be done in an instant. The Internet is a tool, and the biggest impact of that tool is speed. The speed of actions, the speed of deliberations, and the speed of information has increased, and it will continue to increase. That means the old, process-oriented corporation must radically revamp. With everything from product cycles to employee turnover on fast-forward, there is simply not enough time for deliberation or bureaucracy.

The 21st century corporation will not have one ideal form. Some will be completely virtual, wholly dependent on a network of suppliers, manufacturers, and distributors for their survival. Others, less so. Some of the most successful companies will be very small and very specialized; others will be gargantuan in size, scope, and complexity.


Some enterprises will last no longer than the time it takes for a new product or technology to reach the market. Once it does, these temporary organizations will pass their innovations on to host companies that can leverage them more quickly and at less expense. The reason: Every company has capabilities, but also disabilities. The disabilities--things like deeply held beliefs, rituals, and traditions--often smother radical thinking.

The corporate ecosystem of the 21st century will be characterized by a blurring of once-distinct boundaries: between public and private, foreign and domestic, insider and outsider, friend and foe. The effect will be liberating in many ways. Corporations will be freer to pursue opportunity wherever in the world they find it, and to exploit it according to the requirements of circumstance, not the blind dictates of tradition. Outsourcing will become ever more prevalent, transforming many corporations into super efficient, virtual facsimiles of their old selves. But success will not come easy in this brave new world. The growing fluidity of vital business relationships will require constant vigilance and improvisation by all concerned. Like it or not, corporations also will assume a larger role in education and other public-sector preserves, taking over tasks that government either is unwilling or unable to do itself.


The most important force of all: the growing power of ideas. People are cranking out computer programs and inventions, while lightly staffed factories churn out the sofas, the breakfast cereals, the cell phones. The turn of the millennium is a turn from hamburgers to software. Software is an idea; hamburger is a cow. There will still be hamburger makers in the 21st century, of course, but the power, prestige, and money will flow to the companies with indispensable intellectual property. You can see it already. In an economy based on ideas rather than physical capital, the potential for breakaway successes is far greater. That's because ideas, like germs, are infectious. They can spread to a huge population seemingly overnight. And once the idea--say, a computer program--has been developed, the cost of making copies is close to zero and the potential profits enormous. With the possibility of gargantuan returns, it's no wonder that idea-based corporations have easy access to capital.

The sheer abundance of capital could be bad for the capitalists themselves, including ordinary investors in the stock market. That's because the commodity they supply--money--is no longer scarce. What's scarce are the good ideas. Thus, shareholders are likely to lose some power in the 21st century, while entrepreneurs and idea-generating employees gain it. Huge bonuses and option grants to key employees are early evidence of the trend.

True 21st century corporations will also learn to manage an elaborate network of external relationships. That far-reaching ecosystem of suppliers, partners, and contractors will allow them to focus on what they do best and farm everything else out. And it will let them quickly take advantage of fleeting opportunities without having to tie up vast amounts of capital. Outsourcing and partnering, of course, are hardly new. But in the coming century, such alliances will become more crucial.

The 21st century Corporation will require an array of new skills, all of which must be mastered for leaders to gain the upper competitive hand. Globalization has opened new markets. Deregulation has broken down industry boundaries. Venture capital has funded thousands of new tech-savvy insurgents who now threaten incumbents. And the ever-ubiquitous Web has brought the potential for remarkable gains in productivity--but also for frightening deflationary pressures. All these forces are fast propelling the creation of new business models in the 21st century; models that will look nothing like the once-healthy and seemingly invincible enterprises of an earlier age.
The truly great 21st century companies will recognize that the real power of technology is not just the ability to make a business more efficient but also it’s potential to spark transformative change. Much of that change will involve the company's relationship with its customers. In an era of unprecedented choice, in which prices and product specs for almost anything are only a click away, companies will have to offer a lot more than bargain prices.

The rising importance of ideas creates all kinds of difficulties for corporations. Books, music, and software are devilishly difficult to create--and diabolically easy to copy. And now so is the Internet, thanks to services that enable people to download music, movies, and software for free. Theft of intellectual property is lethal to innovation. Yet overly strict enforcement of intellectual-property protections can dampen innovation as well by letting the property owners get lazy. To keep the Creative Economy growing, governments will have to strike a delicate balance: enforce patents, copyrights, trademarks, and noncompete clauses to preserve incentives to create, but not so much that it suppresses competition.

The most important intellectual property isn't software or music or movies. It's the stuff inside employees' heads. When assets were physical things like coal mines, shareholders truly owned them. But when the vital assets are people, there can be no true ownership. The best that corporations can do is to create an environment that makes the best people want to stay.


Of course, not everyone will benefit equally from the shift to an information-based economy. And education is likely to become even more essential to prosperity in the future. The five fastest-growing occupations are all computer-related. Corporations faced with a shortage of skilled help are likely to respond through a combination of training, exporting work offshore, and looking for ways to ''de-skill'' certain jobs. Fast-food cashiers, for instance, punch buttons for food items rather than keying in prices.


The power to exert influence is nearly unlimited because there's no ceiling on how many people can be made to depend on idea-based assets. Global corporations will try to take advantage of their transnational status to operate beyond the control of national governments. They can play governments off one another through their decisions about where to locate factories or research labs. And many use unrealistic transfer prices to shift income from high-tax jurisdictions to low-tax ones.


http://www.businessweek.com/

http://www.allbusiness.com/

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