Sample Essay on Some Evidence Suggests that there is a Direct and Positive Relationship between a Firm’s size and its top-level Managers’ Compensation

1-Some evidence suggests that there is a direct and positive relationship between a firm’s size and its top-level managers’ compensation. Explain what inducement you think that relationship provides to upper-level executives.

            It is true that there is a direct correlation between the size of a firm and the compensation awarded to its top level managers. In big firms such as Coca-Cola, Pepsi, Dr. Pepper Snapple Group and Google Corporation, executives at the top-level management are compensated heavily in salaries, bonuses, stock options and other benefits. These managers have high levels of education and experience that spans a number of years that make them highly suitable for high level positions within a company.

            These enormous benefits which are times labelled as “obscene bonuses” act as an incentive to the top level managers leading to motivation to deliver on the company’s prospects, that is, goals and objectives.These executives work around the clock since they cannot afford to put their company down. Additionally, these executives come from organizations with high reputations hence they are able to attract high command from various corporate quarters.

2-Recommend what can be done to influence the relationship so that it serves shareholders’ interests.

            The relationship between the size of firms and compensation of top-level managers can be influenced by determining the perks awarded to top executives in a firm during the Annual General Meeting (AGM) of shareholders. The shareholders can evaluate the performance of the top executives which is commensurate to overall performance of the company in terms of revenues and profits. The shareholders can then determine whether to or not to award the executives with enormous perks pegging their decision on the performance of the company.

3-The case study (attached separately) outlines six specific strategies that the firm has chosen to support its strategic direction. Determine which strategy is most likely to benefit the firm. Explain your rationale.

            There are six specific strategies that the firm has chosen to support its strategic direction namely:-

  1. Building and enhancing the leading brands.
  2. Focusing on opportunities in categories that deliver high growth and high margins.
  3. Increasing the presence of their products and services in high margin channels and packages.
  4. Leveraging on an integrated business model.
  5. Strengthening the channels of distribution through mergers and acquisitions.
  6. Improving the effectiveness of operations.

The strategy most likely to benefit the firm is the one of building strong brands. Strong brands have a high exposure in the markets leading to increased consumer tastes and preferences towards the product. Furthermore, majority of the big firms such as Apple, Google, Nestle, Coca-Cola, Pepsi and Nestle just to mention a few have built their presence through aggressive development of leading brands.

4-Briefly outline at least one other strategy the firm could take to support its strategic direction. Illustrate why this new strategy would be successful.

            The firm should promote and market its productsin a manner that they appeal to health-conscious consumers. There has been an aggressive campaign towards manufacturing of soft drinks that are healthy to the consumers. Carbonated drinks that are heavily loaded with syrup (concentrated sugar) are considered unhealthy towards the consumers. Government campaigns have discouraged the public general from buying such drinks which may lead to fatal diseases such as diabetes.