Question

In the context of the "Nature of Management," what is true regarding managers and ownership in modern enterprises like joint-stock companies?

• A. Managers are always the sole owners of the company.
• B. Managers and owners are typically the same individuals.
• C. Management and ownership are distinct entities, and managers are professionals who may not be owners.
• D. Managers are only appointed if they have significant ownership stakes.

Answer 1

Answer:

C. Management and ownership are distinct entities, and managers are professionals who may not be owners.

In modern joint-stock companies, management and ownership are distinct. Owners are the shareholders who provide capital, while managers are professional, skilled employees hired by the board to run the company's day-to-day operations. This separation allows companies to be managed by experts who are not necessarily owners, creating a clear division of labor between providing capital and exercising control.