Corporate Governance and Leadership: Facebook Cambridge Analytica Scandal

Corporate Governance and Leadership
Facebook Cambridge Analytica Scandal

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Table of Contents
Introduction............................................................................................................................. 2
Stakeholder Approach..............................................................................................................3
Corporation.............................................................................................................................. 3
Governance Structure.............................................................................................................. 3
Issue......................................................................................................................................... 4
Legislation/Compliance............................................................................................................4
Ethical Behaviour/Social Responsibility....................................................................................5
Sustainability............................................................................................................................ 6
Leadership and Governance Challenges...................................................................................7
Conclusion................................................................................................................................ 8
Bibliography............................................................................................................................. 9

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Introduction
Recently, the importance of compliance with corporate governance policies by the
board has increased across the globe. The board of directors in corporations are pressured
to adopt a stakeholder approach in which they consider the interest of all stakeholders
rather than focusing on generating profits for the company. This report will evaluate the
article posted by The Guardian titled ‘Facebook fined for data breaches in Cambridge
Analytica scandal’ to understand the corporate governance issues raised in this case (Hern
& Pegg, 2018). This report will evaluate stakeholder approach and its impact on
organisations. This report will provide a description of Facebook along with its governance
structure. The issue and its impact on the corporation will be evaluated in the report to
determine its effect on stakeholders. This report will evaluate ethical behaviour,
sustainability and leadership challenges faced by Facebook in this scandal.

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Stakeholder Approach
A stakeholder approach provides that the managers of a company develop and
implement policies in the company which are focused on satisfying the demand of its
stakeholder in order to achieve effectiveness. The stakeholder includes those parties which
are affected by the operations of the company. Generally, corporations merely focus on
generating more profits, however, the stakeholder approach requires the board to evaluate
who is their primary and secondary stakeholders and analyse their interest which is affected
by the operations of the company to comply with corporate governance policies (Cooper,
2017). After this analysis, the board formulate and implement business strategies which are
focused on sustainable growth of the company while fulfilling the interest of its
stakeholders. The primary stakeholders of a company include employees, customers,
shareholders, suppliers, local communities and others. The secondary stakeholders include
trade bodies, competitors, government, media, social pressure groups and others.
Corporation
A corporation has a separate legal entity from its owners based on which it can enter
into legal contracts, and it can sue or get sued by third parties. Its members have a limited
liability based on which their personal assets cannot be used to repay the debts of the
corporation. A company can distribute its shares in the public to raise capital for its
operations. Its decisions are taken by its board of directors who are responsible for
managing its operations. Facebook is chosen for this report which is an America based social
media and social networking service company (Facebook, 2018). The company was founded
in 2004, and its headquarters of the company is situated in Menlo Park, California, United
States. Currently, the company is the biggest social media website in the world with more
than 2.27 billion monthly active users (Statista, 2018).
Governance Structure
The management of Facebook is handled by its Chief Executive Officer (CEO), Mark
Zuckerberg, who is also the Founder and Chairman of the company. He founded that
company in 2004 and currently he is responsible for overall direction and product strategy