This statement shows that the publicly listed corporation in which the owners of the football club have no direct or few power to control over decisions of management that allow the corporation to allocate the optimal amount of scarce resources that will increase the value of public listed corporation or maximize the wealth of shareholders. In 21st century, there are many corporation owned by larger number of shareholders. As a matter of fact, a corporation may be owned by the million or billion shareholders. The corporation can be easier to raise up the huge capital from the shareholders. Concept of separation the ownership from the management was the idea of the America’s largest corporation.
The owners of the football club have separate from the corporation’s management that they do not have or little right to control the decisions of management. The reason is the shareholders of football club basically do not understand or master the management knowledge in order to manage the operation of the football club. Consequently, the shareholders of football club will vote the board of directors (BOD), who in turn to set up the top management in order to make and implementing the football club’s business policy. However, once the shareholders of football club are unhappy with the performance of management team, they can exert the powerful right which is proxy fight to change the board of directors and top management team. There are several rights as the football club’s shareholders. First, the shareholders have the right to transfer ownership which is the number of shares to other people.
Second, they also have the voting right on some important issues such as merger with other football club or direction of football club. Besides, the shareholders have the legal right to sue the any wrongful acts contribute by the board of directors or the top management. Next, the existing shareholders also can buy the new number of shares that issue by the football club at the specific price.
The specific price generally will lower than the price that offered to first time buyers.In the football club management structure, the top management layer is chairman and board of directors. The role of top management is responsible for overseeing the football club’s long term strategic planning and short term daily operation. In addition, the board members also held the responsibility in the strategic planning, allocate the scarce resources and driving the transformation.
Next, the second management layer is chief executive officer (CEO). The role of CEO is implement the long term strategic for the football club and CEO is assist by the different department officer. The lack of professional managerial knowledge suggest that ownership should separation from the management in order allocate the limited resources in the optimal way. The growth of a football club is need the people whom have different skill or knowledge of management to manage the operation of the football club in the efficiency way. However, many of shareholders of football club lack of the professional managerial knowledge to make the best decisions and sometimes may made the wrongly decision for the football club.
Therefore, they need to create the management team such as Board of director, CEO and management team to make the best decisions for the football club.The different opinions of the shareholders also suggest the ownership should be separation from the management. A football club is owned by million and many shareholders and it is very consuming the long time to proceed the decision-making process in case the shareholders have involve in the management of the football club. During that time, the scarce resources might not be allocating in the optimal way due to the different opinions of the shareholders on determine the allocation resources issues. Relatively, the shareholders are not involved in the management of football club and management system replace by hire the professional management team.
Perhaps, the determination of allocation resources issues can be more clearly and allocate it in the optimal way. Lastly, separation the ownership and management can provide the better communication way from the top management level to bottom management level. The optimal allocation of the resources is determining by whether the instructions given are clear or not. If the large number of shareholders are involved in the management of football club, the instruction might confuse the employees. However, the owners of the football club have no direct or few power to control over decisions of management that allow the CEO to give clear instruction to managers due to the CEO will be the only person that have the right to give the instruction.
The CEO can allocate the resources in the optimal way due to the he or she know which department is need more the resources or allocate less resources to the department that really do not need the resources.