Return on invested capital (ROIC) and growth in profits are arguably the best tools with which to measure the ability of the company to satisfy shareholders and the other stakeholders’ demands. Of course return and growth must be maximized while in compliance with laws and regulations. Illegal activities will have severe consequences for the company. Excess attention to growth would lead to investment in less attractive business lines and lower ROIC. However excess attention to maximizing ROIC leads to ignoring growth opportunities that would produce future profits. The twin strategy of maximizing ROIC and growth maximizes the funds available for division among the stakeholders. While not minimizing the real conflicts among stakeholders, all are best served by a dual focus on ROIC and growth. The purpose of the stakeholder impact analysis (SIA) is to force the company to make choices among the stakeholders and identify which groups are most critical to the company. |
