...provide accountability. a) A narrow definition which consistent with agency theory focuses on relationship between company and shareholders. 2. OECD: a system a company can be directed and controlled, specify rights, responsibilities and rules; set and achieve objectives and monitor performance. b) A board definition consider relationship between company and stakeholders 3. Agency theory c) A contract under which one or more person engage another person or persons to perform some service on their behalf d) Agency problem rise because of the conflict of interest between principle and agent e) Three specific problems: i. Managers try to maximize their wealth at the expense of shareholders ii. Tendency for management to focus on short-term performance iii. Different attitude of managers and shareholders towards risk f) Corporate governance structures, policies and relationships can help to overcome these three related agency problems iv. Independent board of directors v. Independent board chair vi. Independent board subcommittees such as audit, remuneration and nomination 4. Stakeholder theory g) Reject the only important relationship is shareholders and managers, but consider from a much broader perspectiveshareholder is only one part of the group h) Stakeholders include employees, creditors, suppliers and so on, and they all have impact on the...
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...shareholder is simply an individual, organization, or company that legally own share(s) of stock in a joint-stock company. By owning shares of stock, a company’s shareholders collectively own the company itself and therefore have the right to vote on decisions that affect how the company is run. This usually means the shareholders as part owners will push for company actions that increase their own financial returns. Definition: A company that uses the shareholder approach to conducting business typically views the impact of business operations on profit. In addition, the length of concern for changes in business operations is usually short-term; such as focusing on meeting quarterly or annual results. Attributes: * Shareholders are primarily concerned with the company’s bottom line. * In a traditional business models, shareholders have the primary influence on the company’s strategy, usually resulting in business model with the foremost objective to increase the company’s stock value. In a shareholder business model, a company only addresses the needs and concerns of four parties: investors, employees, suppliers, and customers; with investors and customers receiving the most attention. Stakeholder approach: To make an analogy, stakeholder and shareholders are like sparkling white wine and champagne. All champagne is sparkling white wine, but not all sparkling white wine is champagne. Similarly, all shareholders are stakeholders, but not all stakeholders are...
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...is someone treats something as his or her obligation. And business is activities of buying and selling, or in another word, social dealings between hundreds of thousands people all around the world. So my understanding of the term “responsible business” is that companies and firms should build their businesses with the consideration of morality and values rather than only aim to maximize their profits, which means companies and firms should build a socially acceptable business that not only according to shareholders’ wants but also have good influences for society and the environment of our planet. Knight (2015) discussed there are two points of views as in shareholder and stakeholder. Docstos (2009) post details about these two theories that stakeholder theory is businesses have corporate social responsibilities with respect to employees, customers and society at large while Shareholder Theory is businesses have only one obligation, which is to maximize profit for shareholders. Enron, a good example that if a company doesn’t rely on a responsible business-even it’s huge once-it cannot evade nose-dive and crash (Shaw et al. 2013, p3). Founded in 1980s, Enron only took a short period of...
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...community. Stakeholder and shareholder theories have been discussed intensely with each being viewed and exhibited as having both its merits and demerits. While some argue that the stakeholder theory is crucial in management, others fiercely content the notion. The supporters of shareholder theory argue that a business’ primary objective is to gain profits. Conversely, the proponents of the stakeholder approach contest that there are other things a business ought to be in consideration of besides profits. This never-ending debate often leaves business executives in a dilemma for the appropriate management style. Thus, this paper compares and contrasts the merits of the two theories in relation to the company executives’ responsibilities. 2.0 Theories at work 2.1 Decision-making in the stakeholders and shareholders theories. A stakeholder approach to management will help a business executive make the right decision quickly. One thing the stakeholder theory advocates is the inclusion of crucial stakeholders such as employees in a decision-making process. By utilizing this method, a business executive is likely to end up making the right decision because varied opinions are allowed. Employees and suppliers are vital stakeholders in any business, and their input is essential to the enterprise (Mikkelsen, Jacobsen, and Andersen, 2015). In fact, ignoring these groups could be a detriment to not only the executive, but also the business as a whole. Typically, the stakeholder’s theory does...
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...The current issue and full text archive of this journal is available at www.emeraldinsight.com/1754-243X.htm Corporate governance theorising: limits, critics and alternatives Stephen Letza and James Kirkbride Liverpool John Moores University, Liverpool, UK Corporate governance theorising 17 Xiuping Sun Leeds Business School, Leeds Metropolitan University, Leeds, UK, and Clive Smallman Commerce Division, Lincoln University, Canterbury, New Zealand Abstract Purpose – This paper seeks to examine the mainstream theories of corporate governance in an attempt to suggest that their underlying assumptions and ideologies are misplaced and ought to give way to an emerging pluralistic view of the governing process in order to understand any governance contribution to the dynamics of the business environment. Design/methodology/approach – The paper engages with the traditional literature and views on governance models from law, business and organisational studies perspectives. It then considers the environment and changes in the environment and how those challenge the relevance of the traditional approach, drawing upon the impacts on the fluidity of management and governance perspectives and practices in the global economy. Findings – The reflections and analysis confirm the view that the underlying assumptions of existing models and regulatory frameworks for governance are misplaced and it is suggested, with reason, that a pluralistic view and framework are better than...
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...MANAGING FOR STAKEHOLDERS: TRADE-OFFS OR VALUE CREATION1 One of the central uses of stakeholder theory, in its original form, was as a counterpoint to the idea that corporations should be managed in the interests of shareholders. As the theory developed the debate was often framed in terms of “shareholders vs. stakeholders.” While developing “theories of the firm” is an interesting and useful project, focusing solely on “theory of the firm” obscures a more important contribution of stakeholder theory. The purpose of this brief essay is to set forth what I consider to be the central insight of stakeholder theory: the jointness of stakeholder interests. The Basic Idea The basic idea of “managing for stakeholders,” as I now see it, is quite simple, and I believe it is closer to the origins of the idea from Eric Rhenman and the Tavistock thinkers. In fact, Juha Nasi was correct in his assessment of the Scandinavian origins of the stakeholder idea that focus on what holds stakeholder interests together. Nasi originally suggested that we focus on “intressent” in Swedish. “In Finnish this term was modified as “intressentti” or “sidosryhma” which could be translated as an “interest group” or even as a “linkage” or “bonding” or “binding” group.” (Nasi, 1995 at 98) It is this bonding or binding idea that is most interesting to explore. Managing for stakeholders asks us to see stakeholders as “bound together by the jointness of their interests.” So, the basic idea goes like this. Business...
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...business practices. For being so, they can follow two approaches such as Carroll’s four part model of CSR and stakeholder analysis. It has become a vital concern for the firms like shell to conduct CSR activities as they have to operate in an environment where they have to be economically viable as well as conforming to the legal laws, rights and obligations of the society. Not only the corporate social responsibility but also the stakeholder’s satisfaction can influence a great deal in the firm’s success. So, the stakeholder’s theory means a lot to the firms. Stakeholders can be internal as well as external. For applying those approaches, shell has to consider several analysis like cost benefit, life cycle analysis, environmental impact analysis, stakeholder matrix , segmentation analysis and so on. Finally, the company will get findings of taking one approaches as per the analysis to implement for being sustainable. * Contents Executive Summary 1 1 Introduction 3 2 For effective management of sustainability, these two approaches can be considered by the Shell Group as prescribed. The approaches are 4 2.1 Carroll’s four part model of CSR and Sustainability 4 2.1.1 Economic responsibilities 5 2.1.2 Legal responsibilities 5 2.1.3 Ethical responsibilities 5 2.1.4 Philanthropic responsibilitites 5 2.1.5 Criticism 6 2.2 Stakeholder theory 6 2.2.2 Criticism 8 3 Analysis for the application of chosen approaches for sustainable management 9 ...
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...MICROWAVE FOODS 1 Frozen Microwave Foods Economics 550 Professor Curtis Youngblood Strayer University May 13, 2014 MICROWAVE FOODS 2 1-Outline a plan that managers in the low-calorie, microwaveable food company could follow when selecting pricing strategies for making their products as inelastic as possible. Provide a rationale for your response. After researching, Mark Laceky Has a good plan that managers can follow in anticipation of raising prices when selecting pricing strategies for making their products respond to a change in price less elastic. He has six (6) price planning strategies: 1-Plan Pricing from Two Starting Points The two points he considers are supply and demand. The supply side would take into account raw material, labor and packaging cost. The demand is where you would consider the elasticity. When prices are less elastic, managers should concentrate on a marketing mix for their low-calorie frozen microwaveable foods. When the manager is considering aspects of their product, they should consider customer loyalty. When customer loyalty is a factor, you are able to charge more because customer loyalty makes market demand less elastic. 2-Put in Place an Ongoing and Flexible Process Managers must review and monitor...
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...The term corporate governance is derived from the__________. a) Greek word b) English word c) French word d) Latin word 3. The definition “Corporate Governance is the system by which business directed and controlled” is given by a) SEBI committee b) OECD committee c) Cadbury committee d) All of the above 4. Internal control is implemented by the________. a) Board of directors b) Audit committee c) Management d) All of the above 5. OECD stands for_______________ 6. Which of the following have the power to hire fire and compensate the top management? a) Board of directors b) Audit committee c) Shareholders d) Management 7. CII stands for _________________ Examination Paper of Certified Corporate Governance Professional 2 IIBM Institute of Business Management 8. The managers are expected to act in the interest of: a) Audit committee b) Stakeholders c) Employees d) Customers 9. To endorse the organization strategy, develop directional policy, appoint, supervise and remunerate senior executives and to ensure accountability of the organization to its owners and authorities is the responsibility of: a) CEO b) Manager c) Top management d) Board of directors 10. SEBI stands for_________________ 11. The role of corporate governance is_______ a) To ensure the efficient use of...
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...hospital. In an effort to complete this duty, the hospital president must monitor the organization’s service and delivery system at all times to ensure optimal operation. Dr. DoRight has recently been hired as the president of the “Universal Human Care Hospital”. Dr. DoRight discovers that some patient in the hospital have been dying as a result of illegal procedures by the nursing and doctors, and negligent supervision and oversight on their part. In this thesis we will discuss the internal and external stakeholders that Dr. DoRight might have deal with on daily basis, compare and contrast potential conflict of interest that may exist between the internal and external stakeholders, whether Dr. DoRight has fulfilled his ethical duty by reporting the illegal procedures, describe the deontology and utilitarianism principals and apply them to the ethical dilemma Dr. DoRight faces in this case. Internal And External Stakeholders that Dr. DoRight Deals With In A Daily Basis A hospital President is responsible for attaining and maintaining patient care, safety, education and community service goals. Professionals in this position are accountable for improving health status in the community as a whole. They also ensure hospital objectives are met through the process of selection, development, organization, motivation, management, evaluation and the promotion of human resources. A hospital President manages the...
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...Social Responsibility refers specifically to a description and moral evaluation of the impact than an organization has on society * Ethics can be a business constraint “ethics costs” but also an advantage “ethics pays” 1970 – 1985: Rise of business ethics (academia) 1985 – 1995: Ethics into firms 1995 – 2000: Internationalization 2000 – 2012: Corporate Scandals and government regulation * Ethics Scandal Costs: Fines, lawsuits, prison, investor losses, bankruptcies, unemployment, and increased regulation * Market Morality: Will everyone invest their money as agreed or will greed effect them? * Parable of the Sandhu Ethics vs. the law Unclear over moral responsibility Easier to say what is morally right than to do it * Employees value health and safety ethics Consumers value product safety Shareholders want return on investment Need to look at environment * Macroenvironment: social, economic, political, technological factors * Our society is pluralistic in nature * Pluralism: there is diffusion of power among society’s many groups and organizations Decentralization and diversity of power * Strengths of Pluralism: prevents power concentration; maximizes freedom; diversified loyalties; provides safeguards; disperses individual allegiances. Has a set of built in checks and balances * Weaknesses of Pluralism: pursuit of self-interest; proliferates organizations with similar...
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...MERGERS AND ACQUISITIONS LITERATURE REVIEW LUKE WALTON Table of Contents Abstract 3 Introduction 3 Background and motivation 3 Objective or aim of this literature review 4 Findings from current available literature 4 Issues from current research 5 Contribution to current literature and stakeholders 5 Section One 6 Motivation of M&A’s 6 Synergy 6 Agency theory 7 Hubris 7 Relationship between motives and financing 8 Section Two 9 Payment methods 9 Financing hierarchy vs. market conditions 9 Differing views on leverage 10 Valuation and the agency problem 10 Managerial ownership 11 Section Three 12 Performance of mergers and acquisitions 12 Performance indicators 12 Methodology 13 Profitability 13 Performance due to the motivation 14 Conclusion 15 Summary and findings 15 Areas of future research 17 Qualitative research in M&A’s 17 Decision making process for methods of payment 17 Unified methodology in determining M&A performance 17 References 19 Abstract Mergers and acquisitions have become a common practice for firms as a mean to expand and increase profitability. Existing evidence is still unable to strongly determine what factors make a successful M&A due to inconsistency in data and findings. This paper aims to provide an insight to the steps included in the M&A process by comparing existing literature and hopes to suggest key determinants of a successful M&A transaction. Evidence shows...
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...Innovation, Ethics, and Entrepreneurship Morgan P. Miles Linda S. Munilla Jeffrey G. Covin ABSTRACT. This paper is a response to Ray’s (2004) recent proposal that the intellectual property rights (IPR) attached to potentially life saving/life sustaining innovations should become public goods in cases where markets are either unable or unwilling to pay for the creation of the intellectual property. Using a free market approach to innovation based on Western moral philosophy, we suggest that treating intellectually protected life saving/life sustaining innovations as public goods will likely reduce social welfare over the long term. KEY WORDS: entrepreneurship, ethics, innovation, intellectual property rights, policy ‘‘For the Scripture says, ‘Do not muzzle the ox while it is treading out the grain,’ and ‘The worker deserves his wages’ ’’ 1 Timothy 5:18. Ray (2004), in a recent critique of Miles et al. (2002), proposes that the intellectual property rights (IPR) generated from any life saving/life sustaining entrepreneurial initiatives should be transferred to the public domain whenever potential users of these innovations are unable or unwilling to enter into mutually beneficial exchange relationships with the creators of the IPR. This reply offers a perspective on why Ray’s (2004) imperative does not maximize social welfare and, in fact, will tend to diminish social welfare over the long-term as a result of lower economic incentives for innovation. Introduction ‘‘Few...
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...Global risks: Economic Risks Risks in the economic category include fiscal and liquidity crises, failure of a major financial mechanism or institution, oil-price shocks, chronic unemployment and failure of physical infrastructure on which economic activity depends. Environmental Risks Risks in the environmental category include both natural disasters, such as earthquakes and geomagnetic storms, and man-made risks such as collapsing ecosystems, freshwater shortages, nuclear accidents and failure to mitigate or adapt to climate change. Geopolitical Risks The geopolitical category covers the areas of politics, diplomacy, conflict, crime and global governance. These risks range from terrorism, disputes over resources and war to governance being undermined by corruption, organized crime and illicit trade. Societal Risks The societal category captures risks related to social stability – such as severe income disparities, food crises and dysfunctional cities – and public health, such as pandemics, antibiotic-resistant bacteria and the rising burden of chronic disease. Technological Risks The technological category covers major risks related to the growing centrality of information and communication technologies to individuals, businesses and governments. These include cyber attacks, infrastructure disruptions and data loss. Ten Global Risks of Highest Concern in 2014 1 Fiscal crises in key economies 2 Structurally high unemployment/underemployment ...
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...Table of Contents Section 1 1 1.1 Company Profile: 2 1.2 Corporate Governance Disclosures, and are they sufficient? 2 1.3 Key issues that may have impacted on the company’s corporate governance performance 3 1.3.1 Glass Ceiling 3 1.3.2 Climate Change 3 1.3.3 Petroleum Accidents 4 1.4 Potential ethical considerations impacting on the company and the industry in which it operates 4 1.4.1 Petroleum Industry 4 1.4.2 Price Fixing 4 1.5 Theoretical Frameworks supporting Caltex CSR disclosures: 5 1.5.1 Stakeholder/Legitimacy Theory 5 1.5.2 Agency Theory 5 2.1 Part a 6 2.1 Part b 7 Recommendations: 8 References 9 Section 1 1.1 Company Profile: Caltex is regarded as the leading transport fuel supplier and convenience retailer in the Australia and are the only integrated oil refining and marketing company that are listed on the Australian Securities Exchange. Caltex sources and refines over 75 million barrels of crude oil a year and supplies a third of Australia’s transport fuel (Caltex 2013). As a percentage of crude oil is sourced overseas Caltex operates in a sensitive industry for a number of different reasons, the risks of transporting oil alone is not to be taken lightly given the corporate governance issues that arose from the infamous Exxon Vladex spill that cost the company not only financially but also significantly damaged the environment and their reputation (Miranda, Ferrara & Michele 2012). According to (Davison 1963) the domestic...
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