Essay about Get to know me

Submitted By kyledaviz
Words: 1017
Pages: 5

Dodge v. Ford Motor CO. In 1919 stockholders in Ford Motor Co. filled a suit against Ford’s Co stating that Ford was not fulfilling has duties to their shareholders. The price of the Model T Ford's main product had been cut over the years while the cost of the workers had dramatically increased. The company's president Henry Ford sought to end special dividends for shareholders in favor of massive investments in new plants that would help Ford to increase production and the number of people employed at his plants. While continuing to cut the costs and prices of his cars. Ford only sought to make his cars more affordable and to employee more people as a charity to the community. Ford assumed that no one would a problem with him bettering the community and economy but as the Dodge v. Ford Motor Co. states a corporation is organized first for profit of stockholders and not charity. While Ford may have believed that such a strategy might be in the long-term benefit of the company he told his fellow shareholders that the value of this strategy to them was not a primary consideration in his plans. The minority shareholders objected to this strategy demanding that Ford stop reducing his prices when they could barely fill orders for cars and to continue to pay out special dividends from the capital surplus of his proposed plant investments. Two brothers, John Dodge and Horace Dodge, owned 10% of the company among the largest shareholders next to Ford. While Ford may have believed that such a strategy might be in the long-term benefit of the company, he told his fellow shareholders that the value of this strategy to them was not a primary consideration in his plans.

It’s true that the primary duty of the management is to maximize the stockholders wealth, this may sound bad at first but when you think about the power and influence big stockholders have in a Co and on its successes then it’s only the rational recourse. Ford made a very ethical and generous statement when he began razing employee wages and reducing the price on the model T but we can’t be quick to assume that the Dodge brothers actions were selfishly when they could have just being doing what’s best for the Co. As this case states clearly a Co is made to and for the profit of the stockholders, I can understand this because the stockholders were the ones who helped not only get the business off the ground but help it thrive and grow. Thinking from that angel it makes complete since that the stockholders dissever dividends for their assistance to the Co. Fords motives were clear and ethical but Ford was already backed up on orders and would need the money for manufacturing. Ford was pulling a risky move to gather more employees so he could build more plants to better and mass manufacture his products, but if he couldn’t pay for the orders he already had than he would have to recall his plan anyway. Corporations have to have money circulating to sustain its self without that money accumulated in the business it can’t run and will accumulate more and more debt. On the flip side of the argument this case brings up the considerable question of can a corporation partake in charitable activities instead of giving dividends? Although I don’t see corporations dropping dividends I believe that corporations should be involved with charity to better the economy and better the outlook of their business. The world of the Ford Co could have completely changed, his plan could have helped massively increased his production and manufacturing capabilities while helping make jobs and produce spending money to help the flow of the economy. What if the stockholders didn’t fill a suit and allowed Ford to continue with his charity, and it worked, with all his new employees Ford…