Thanks for the feedback, Kamutula, and interesting point on the “agency problem”.

However, although it might be possible to secure shareholders’ support for difficult strategic decisions a firm might want to make, depending on the size of the firm and the number of shareholders involved, it could be a logistic and expensive nightmare.

In the case of Dell, and firms that trade on the major stock exchanges, they may have hundreds of thousands of shareholders, so having the level of consultation or engagement necessary to communicate the company’s strategy successfully might be near impossible. Further, shareholders typically see their investment in a company as a means of increasing personal wealth and as a source of revenue. Basically, they want share value is maximised and that firm does well enough to pay dividends regularly.

Hence ultimately, there might inherently be a disconnect between the shareholders’ desires and those of the company’s principals, when can result in the tension and struggle Dell experienced in order to be in a position to make critical decisions hat affect its long term viability.

My opinion is that one of ( if not ) the frequently observed sticking points in the so-called “Agency Problem”, is the inability, on the part of the agents ( business officers ) to communicate strategy to the shareholders.

Shareholders do not craft strategy, and often may not even fully comprehend its basic thrust when presented, especially if presented in business esoteric language.

When shareholders have not fully appreciated what’s been proposed, they will develop cold feet. Conversely, when they have understood the strategy and the eventual benefits thereto, they will support it.

The latter circumstance, enables control, risk taking and business focus.