Corporate Governance
Define corporate governance and explain why it is used to monitor and control managers’ strategic decisions
Corporate governance is the system of rules, structures, and processes that determines how a company is guided and controlled. Mechanisms are set to manage the relationships among the owners and the performance of the company. The board of directors is responsible for developing strategies that will ensure that needs of stakeholders are met. Good real examples are the responsibilities of stakeholders such as investors, managers, and auditors and how they will be fulfilled.
Discuss the use of corporate governance in international settings, especially in German, Japan, and China.
Corporate governance is often used to regulate capital that is spent by the company either to reinvest into its business. This capital comes from profits and investors therefore stakeholders are supposed to make capital decisions. The board of managers sets a capital budget that is overall for individual organizations, then it is approved by a certain value of spending. This allows the stakeholders to get projects finished at the right time and how much is spent on the company.
Describe how corporate governance fosters ethical strategic decisions and the importance of such behaviors on the part of top-level executives
Business ethics are a set of impositions and constraints to business characters that depend on an elaborate soul searching and deliberation in companies for easy flow of interpersonal relations and a mutual sense of mission and accomplishment. The ethical strategy for business provides a strong base to exercise moral values and ethical reasoning. Stakeholders in business are responsible in a corporate setting where their duties and roles are defined by the company. This implies an ethical alignment of individuals, corporations, and the economic system that is defined by corporate governance.
Corporate governance deals with holding the balance between economic and social goals and between individual and communal goals. The governance strategy is there to enhance the efficient use of resources and equality that requires accountability for the stewardship of those resources. The importance of corporate governance in providing incentives and performance measures to achieve business success. Finally, the significance of corporate governance in enhancing the stability and equity of society recognizes a more positive and proactive role for the business.
Organizational Structure and Controls
Describe the relationship between strategy and structure.
The strategy is a plan laid by accompany to ensure it achieves the set goals to sustain and increase in the competitive world. While the structure is the relationship and connection between the internal resources of a company. The structure is all about different groups that are formed within the company. For instance, functional structure in an organization will operate differently in terms of roles such as manufacturing and marketing. The strategy is the main stem that determines the structure of an organization. For example, the Coca-cola company operates on a multi-divisional structure wherein the organization has structured its business differently globally.
Discuss the functional structures used to implement business-level strategies.
Companies using functional leadership makes plans to sell large quantities of standardized products to the industry. Simple reporting relationships, few layers in the decision-making and authority structure, a centralized corporate staff, and a strong focus on process improvements through the manufacturing function rather than the development of new products through an emphasis on product R&D characterize the cost leadership form of the functional structure. This structure contributes to the emergence of a low-cost culture—a culture in which all employees constantly try to find ways to reduce the costs incurred to complete their work. In terms of centralization, decision-making authority is centralized in a staff function to maintain a cost-reducing emphasis within each organizational function. While encouraging continuous cost reductions, the centralized staff also verifies that further cuts in costs in one function won’t adversely affect the productivity levels in other functions
Explain the use of three versions of the multidivisional (M-form) structure to implement different diversification strategies.
The multidivisional (M-form) structure consists of operating divisions, each represents each separate business or profit center in which the top corporate officer assigns roles for everyday operations and business-unit strategy to division managers. Each division represents a distinct, self-contained business with its functional hierarchy. Uses of M-form structure are: it enables corporate stakeholders to effectively monitor the performance of each business. It facilitates comparisons between divisions, which improves the resource allocation processes. It stimulates managers of poorly performing divisions to look for ways of improving performance. Active monitoring of performance through the M-form enhances the likelihood that decisions made by managers heading individual units will be in shareholders’ best interests. Diversification is a dominant corporate-level strategy in corporate-level strategy in the global economy, resulting in an extensive use of the M-form.
References
Ahmady, G. A., Mehrpour, M., & Nikooravesh, A. (2016). Organizational structure. Procedia-Social and Behavioral Sciences, 230, 455-462.
Du Plessis, J. J., Hargovan, A., & Harris, J. (2018). Principles of contemporary corporate governance.
Jacoby, S. M. (2018). The embedded corporation: Corporate governance and employment relations in Japan and the United States. Princeton University Press.
Janićijević, N. (2017). Organizational models as configurations of structure, culture, leadership, control, and change strategy. Economic Annals, 62(213), 67-91.
Samra, E. (2016). Corporate governance in Islamic financial institutions.Cambridge University Press.