Corporate Governance and Its Impact
Added on 2020-10-23
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CORPORATE STRATEGY ANDGOVERNANCE
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1Aims and objectives...............................................................................................................3Rationale of study...................................................................................................................3LITERATURE REVIEW................................................................................................................1DISCUSSION..................................................................................................................................4CRITICAL REVIEW.......................................................................................................................5RECOMMENDATIONS AND ACTION PLAN............................................................................9CONCLUSION..............................................................................................................................11REFERENCES..............................................................................................................................13
INTRODUCTIONCorporate strategy and governance consists of procedures that are designed to structureauthorization, balance social control to provide accountability to shareholders. It includesbalancing profitability with sustainability. Recognition of external stakeholders is importantcomponent of corporate governance which includes consumer, suppliers, vendors and group ofall those individuals who fall outside the internal working of an organisation (Klettner, Clarkeand Boersma, 2014). Building relationships with these people is the most concerned part ofcompany as they help increasing value on business and develop ability of organisation toproduce high quality and fairly priced product, which also helps in increasing customersatisfaction. Corporate governance structure also lays a focus on internal stake holders such asworkers, board of directors and administration. Building relationship with these people isimportant for long term success and growth of company. It also provides accountability to bothexternal and internal stake holders; it includes management of obligation of individual stakeholder and company. Corporal Social Responsibility is one of the methods of corporate governance, whichincludes social and legal obligation towards environment where business is operating. CSR isbeneficial for both society and environment and company itself (McCahery, Sautner and Starks,2016). It helps company in broadening relationship between individual and cooperation, boostmotivation and helps workers and employers to become more connected with each other. It alsohelps in building relationship with consumers, stake holders, suppliers and board of managementin a company. Corporate social initiatives of company include donations to charitable organisation,organising workshops, seminars or exhibitions to serve environment, enterprise funded advocacycampaigns, donations to charity organisations and providing goods on sale, funding any programrelated to some disease or disorder to help people in fighting them, charity done by company tobehaviour change programs etc. All these initiatives help company in creating good status forthem and also helps in increasing their brand value (Mason and Simmons, 2014). Many consumers have a belief that apart from making Profit Company should also beengaged in social activities, which help arrangement in creating consumer loyalty and gainingtrust of customers, which affect business growth and also help governance in expanding their1
market. Company can also know more about consumer regarding their beliefs, taste, preferencesand liking. CSR also includes environment management, economic sustainability, authorisedstake holders, labour management and their working condition, communal group relations, basichuman rights, gender equality and improved reputation of organisation (Marks and SpencerCorporate Social Responsibility, 2017). Marks and Spencer company operates business in United Kingdom and have more thanone thousand outlets across country. Business entity follows corporate governance to fulfil theexpectation of its customer and deliver long term benefit to stake holders, co-workers andenvironment in which they operate (Formentini and Taticchi, 2016). Company is also engaged infollowing Corporate Social Responsibility towards environment in which they operate whichprovide company with benefits like competitive advantage, such as increased access to capitaland markets, high growth in sales and profit, less expenditure in operation costs, increase inproductivity and efficiency of employees, strong human resource base, increase in quality andfeatures of products.Marks and Spencer also operates business online and believed that an effectivegovernance are realised through leadership and motivation as working together ensures highquality decision making in all areas concerning strategy, performance, responsibility andaccountability. These actions performed by company are sustained and controlled, which drives aculture of continuous improvement in processes and performance. Corporate governance has alsohelped company in building trust, which is developed by doing right things in right place andways (Filatotchev and Nakajima, 2014.). It has helped them in creating clear set of rules andregulations in which stakeholders, board management and directors have aligned incentiveswhich has led to organisation success. Marks and Spencer have always been responsible towards their consumers, employees,suppliers and environment by taking care of every sensitive issue and doing charity for society,problems related to weather change, utilising waste materials which has helped them in build agood reputation and image for themselves. CSR activities like donation to charitableorganisations are done through company’s local store. They are also involved in donating usedclothes and surplus to charity new life which funds medical research, support and awarenesscampaign of nurse and preparing equipment for disabled and handicapped child. 2
Marks and Spencer also donate extra produced goods or garments as goodwill exchangeto local charity stores or shelters, which has helped in building goodwill for them across country(Too and Weaver, 2014). They are also engaged in supporting their customers in every possibleway from recovering through disaster or serious climate change in country. They are alsoengaged in an effective management of resources, which includes reducing waste products, useof plastic carry bags and making sure that consumers throw rubbish in proper place withoutsending it to landfill. Organisation is also engaged in embracing all cultures, nationalities, races and religionsand also they do not support any country’s political or social body, which can create chaos in anenvironment and also this strategy is applied to all products. They are also engaged in buildingcustomer relationship by providing with quality products and services, which has helped themto expand their market to increase sales across country (Amran, Lee and Devi, 2014).Aims and objectivesTo explore the impact of corporate governance on growth of Marks and SpencerTo investigate effect of corporate social responsibility on customer satisfactionTo explore corporate social initiatives taken by Marks and SpencerTo analyse effects of Corporate Social Responsibility on firm’s reputationRationale of studyMark and Spencer has been involved in Corporate Social Responsibility to build relationswith customers but currently is facing a problem as they have lost core engagement withconsumers as competitors and substitutes are increasing. Organisation is aware of risk anddanger and engaged in developing products according to needs and wants of consumers. Theyare also facing problems related to management of external and internal stake holders, whichhelps company in creating quality and unique products (Ayuso and et.al., 2014.). For managingthem, a company is taking initiatives like allowing flow of informal communication would leadto develop friendly relationship between them.3
LITERATURE REVIEW Impact of corporate governance on growth of Marks and SpencerAccording to (Chan, Watson and Woodliff, 2014). Corporate governance helps inmanaging and directing employees, board of management and stakeholders of company. It helpsthem in balancing individual, societal, economic as well as financial targets and objectives. Theyalso use it as a mechanism to create interaction between shareholders, suppliers and senioradministration of company which helps in shaping corporate performance and efficiency ofindividual employees which also helps organisation in achieving business goals and targets.However, Glass, Cook and Ingersoll, has analysed that Corporate governance also helpscompany to make strategic decision and gives them ultimate authority and responsibility toperform task and achieve their predetermined objectives. It has helped company in growing theirshare in the market. It also includes transparency in transaction with investors, which ensuresstrong and balanced economic development and also helps in creating good reputation in market.It has also helped company in reducing capital costs, which makes them to save financialresources for better development of product, which can satisfy consumer needs and wants. It alsoassists company in enhancing leadership skill in workers, which has helped them to increasetheir confidence and motivational level (Mason and Simmons, 2014). It also boosts morale ofemployees to perform better. Company has a policy to involve shareholders and employees in decision making processof organization, which has helped them in gaining new and innovative ideas purposed bymembers that has led to organisation growth and success. Also, good governance for themincludes better reward system whether monetary or non-monetary for workers, which helps themin retraining talented employees in an organisation and has helped company in expanding theirmarket share across world. Company is also engaged in preparing products, which do not harmreligious and cultural sentiments of consumers, which will help them in building relationshipwith them.Creation of profit is main aim of company but for accomplishing this objective anorganisation also has to fulfil the interest of shareholders. Enterprise is involved in providingfair return to external and internal stake holders those who has helped them in creating image ofgood brand and has also increased sale of their product. It also helps its suppliers to cut cost,increase their efficiency, and perform task ethically which help company in attracting more1
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