17 State any two possible conflicts between owners & managers & give solutions to them. [6]

[Sir Afzal Shad]

Q17 State any two possible conflicts between owners & managers & give solutions to them. [6]

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Possible Structure
[KN]
[AN]
[AN+]

[KN]
[AN]
[AN+]

[Syed Mustafa Ali]

[KN] Risk of owners and managers
[AN] Conduct a risk assessment and align the company's risk strategy with both owners and managers.
[AN+] By finding a balance between risk and return, potential conflicts can be minimized.

[KN] Dividends given Vs reinvestment
[AN] Establish clear communication channels between owners and managers to discuss financial strategies.
[AN+] Managers should explain how reinvestment benefits the company's long-term health and potential for higher future dividends. Owners, in turn, should appreciate the importance of reinvestment for sustained growth and increased shareholder value.

[Kumail Alvi]

[KN] Divergent Interests
[AN] Owners, or shareholders, usually want to make the most money possible and get the most out of their investment, but managers may put personal objectives, job security, or pay raises ahead of short-term profitability.
[AN+] In order to align managers' interests with the owners', implement performance-based compensation plans that link managers' incentives to the company's financial performance. Both sides can benefit from open communication and regular transparency in understanding and appreciating one another's objectives.

[KN] Risk Tolerance
[AN] It's possible that managers and owners, particularly individual investors, have different risk tolerances. Managers may be more willing to take chances in order to achieve growth and innovation, whereas owners may be more risk-averse in order to safeguard their investments.
[AN+] Clearly define the company's risk appetite and establish a framework for decision-making and risk management. This framework can assist in striking a balance between taking risks and making sure they fit the owners' comfort zones. Owners can also benefit from regular risk assessment and reporting by receiving transparency regarding the risk profile of their company.

[Salman Khalid]

[KN]financial performances
[AN]this misalignment of interests can lead to conflicts if the financial performance of the business does not meet the expectations of both parties.
[SOL] Establish clear performance and incentive plans that align the interests of both owners and managers

[KN]decision making
[AN]conflicts can arise if there is a lack of clarity or agreement on investments, or major business decisions.
[AN+]consider establishing an advisory board or governance structure that includes both owners and managers

[Talha Asim]

[kn] conflict of interest [an] the owners and shareholders may have different objectives this will result in reduction of time [an+] both the stakeholders must have good unity and each opinion should have a voting system to make quick decisions

[kn]profit maximization [an] most majority owners may want profit maximization but this will not be looked upon by the other group[an+] this can be fixed by providing a proper presentation in its defense

[Syed Raza]

[KN] Conflict Over risk taking
[AN] Owners may be more risk-averse and hesitant to take significant risks with the business, while managers might see certain risks as necessary for innovation and growth.
[AN+] Owners and managers should discuss risk tolerance and risk management strategies and they can create policies

[KN] profit maximisation
[AN] profit maximization used to increase the value of their investment, while managers might advocate for long-term growth and investment in the business, which may reduce immediate profits.
[AN+] Both parties should engage in open communication and establish a clear strategic plan that balances short-term financial objectives with long-term growth goals.

[Ibrahim Aamir]

[KN] profit shared between them
[AN] their might be an conflict between percentage of profit shared
[AN+] the solution would by pre deciding the profit shared between them

[KN] decision making
[AN] their might be an conflict about making important decisions about the business e.g hiring more works or working with another company
[AN+] the solution could be that both owner would hire a person who makes any important decisions

[hafsa kashif]

[kn] owners want long term growth while managers are focusing on short term investments from shareholder's
[an] both have a different objective to be achieved in the same amount of time leading to time wasted
[an+] in order to fix this manager should increase dividends so shareholders would stay even with long term investment which will be more supported by the owner
[kn] profit shared between them
[an] the profit shared may vary which would cause conflict's of arguments between them
[an+] thus they should pre decide how much profit will be given to either person

[Maham fatima]

[KN]high return on investment(shareholders) vs growth(owner)
[AN]Owner of a business is likely to reinvest profits to increase output and grow the business however shareholders may want to earn high dividends to increase their incomes which may lead to a conflict and may even ruin relations of owners and shareholders hence shareholders may leave to other companies
[an]To resolve this,it is important for the business to have all details regarding business policies of dividends and growth objectives in documented form and they must be communicated to shareholders before selling shares to avoid any gaps

[KN]Communication problems
[AN]Shareholders and owners may perceive business objectives differently thus this can create misunderstandings and so a goal may not be achieved
[AN]To resolve this they must have face to face meetings to discuss business objectives in depth

[khadija nasir]

[kn] wanting more incentives/increase in salary
[an] owners may pick profit maximisation and would want to reduce expenses which could cause conflicts
[an+] fixing the matter by verifying prior contracts that contain salary and bonus guidelines

[kn] difference in objectives for the business
[an] owners often have long-term aims in the business's success whereas managers may be more focused on short-term performance to fulfil immediate objectives rather than sustainability 
[an+] relving the issue by communicating goals by organizing meetings before initiating any major decision to stay on the same page

[Hadia Zia]

[KN] Investment based decisions.
[AN] Owner may want to reinvest the collected profits back into the business but managers might prefer distributing profits or investing in different areas and so due to lack of cooperation conflicts are likely to rise.
[AN+] Thus in order to solve this proper meeting sessions must be held between the two in order to find out the best purpose for profit to be used considering the current business objective too.

[KN] Difference of opinions.
[AN] Owner may have different strategies in order to make business future successful and sustainable however managers may have other plans which leads to disparities in opinions hence creating further disagreements.
[AN+] Thus this can be solved by making a successful plan compiled with owner and manager both ideas in order to decide the successful future of business in order to avoid any negative circumstances.