biz org class 1

"the corporation"













"corporations create great wealth but cause great harm." -- do you agree? 
"corp's are designed to benefit the stockholders and not the stakeholders." -- who are these stakeholders?

two methods of stockholder investment to raise capital:
1. invest w/ a promise of profit (equity instruments) if the company does well. risk based with a requirement of a profitable venture.
2. selling notes or bonds (debt instruments) with a promise to be repaid a specific amount at a specific time. creditor with a promise to be repaid.

stakeholders are consumers, employees, creditors, the community in which companies do business.

corporation structure.
1. shareholders
2. officers
3. board of directors (monitor)

another view: all groups key to the corp's success are the corp structure.
expand the corp structure listed above to include consumers, creditors,
suppliers, employees, the business community

do corporations have a social responsiblity? (blog article)

open secrets, gladwell article.

AP smith v. barlow: corporation wanted to donate money to princeton
and shareholder objected. the court determined corporations are not
by their nature eleemosynary institutions but instead institutions which 
exist solely for the benefit of its shareholders.

subprime loans/mortgages.

securitization

Dodge v. Ford Motor Co. about the competitive relationship between the dodge brothers and henry ford. the dodges were both shareholders and parts manufacturer suppliers to ford. when ford decided to assembly line and create its own parts, dodges lost a major customer. fiduciary duties are owed from ford to the dodges in the positions and relationship between the company and its shareholders.

ford got to build a new plant but also had to establish new dividends.... there's a lot of probabilities involved. ford felt like he had already made the dodges incredibly rich, and he didn't want to have to continue issuing large, special dividends. though there is some discussion of non-competition, the court doesn't discuss any probability of ford withholding to make the dodges unable to compete.