Corporate Strategy and Governance

Corporate Strategy and
Governance
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CONTENTS
Contents...........................................................................................................................................2
INTRODUCTION...........................................................................................................................3
Background of study....................................................................................................................3
Review of issue faced..................................................................................................................3
Aim:.............................................................................................................................................3
Research Objective:.....................................................................................................................4
Research Questions......................................................................................................................4
LITERATURE REVIEW................................................................................................................4
The concept of Corporate governance and its role within an organisation.................................4
The issue of corporate governance faced by the Marks & Spence..............................................6
The relationship between inappropriate corporate governance and increasing dissatisfaction
among stakeholder toward Marks & Spencer practices..............................................................7
Strategies by Marks & Spencer under corporate governance for keeping stakeholders satisfied.
.....................................................................................................................................................8
RESEARCH METHODOLOGY....................................................................................................8
DATA ANALYSIS AND DISCUSSION.....................................................................................12
Discussion of primary investigation..........................................................................................13
Discussion on the basis of secondary data.................................................................................17
RECOMMENDATION AND ACTION PLAN............................................................................17
Recommendation.......................................................................................................................17
Action Plan................................................................................................................................18
CONCLUSION..............................................................................................................................21
REFERENCES..............................................................................................................................22
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INTRODUCTION
Background of study
The corporate governance is defined as the set of rules, processes and systems through
which an organisation is controlled and directed. The main focus of corporate governance is to
balance the interest of company with that of many stakeholders such as customer, supplier,
shareholder, senior executive, financer and government (Puranam and Vanneste, 2016). The
corporate governance help in forming a structure within the organisation where its objective are
connected with the ethics and laws in order to bring accountability and transparency within the
operations of an organisation. In order to further investigation about the role and importance of
Corporate governance this study is conducted by focusing over a multinational organisation
named as Marks & Spencer. It is a leading British retailer that offering high quality, greater value
in its food, clothing and houseware to millions of customers throughout the world by maintaining
its own chain of stores or through online medium.
Review of issue faced
The current report is based on a corporate governance issues which is faced by Marks and
spencer which in bring a huge impact over the business and dissatisfaction among its
stakeholders. As there is a tough competition among the several player that are operating at
international level and affecting the performance of Marks & Spencer such Asda, Tesco etc. In
order to deal with the competition and recovering the sales growth, the CEO of Marks and
Spencer presented their product or services at a huge discount within marketplace with an aim to
distort the competition and attract more and more consumers to purchase their product (Jacoby,
2018). But this in turn has bring another impact where the heavy discount over product result
into sale but the revenue of the company drop down as it doesn’t able to create any profit. Other
than this it also squeeze out the actual spending power of the consumer that further affected the
sale of after discount as people now likely to expect for this kind of discount sale and they don’t
want to pay off high chargers. As a result of which a huge drop is found within the profit margin
of the company .
Aim:
To investigate about the impact of inappropriate corporate governance over the
satisfaction of stakeholder with organisational affairs. A study on Marks & Spencer.
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Research Objective:
 To explore about the concept of Corporate governance and its role within an organisation
 To determines the issue of corporate governance faced by the Marks & Spence.
 To identify the relationship between inappropriate corporate governance and increasing
dissatisfaction among stakeholder toward Marks & Spencer practices.
 Recommend strategies to be adopted by Marks & Spencer under corporate governance
for keeping stakeholders satisfied.
Research Questions
 What is the concept of Corporate governance and its role within an organisation?
 What issue related with the corporate governance does Marks & Spencer faced?
 Explain about the relation between inappropriate management of corporate governance
and increasing dissatisfaction among the stakeholder of Marks & Spencer?
 What strategies to be adopted by Marks & Spencer under corporate governance for
keeping stakeholders satisfied?
LITERATURE REVIEW
The concept of Corporate governance and its role within an organisation
According to the view point of Chen. J., 2020, corporate governance is defined as the
system of rules, processes and practice which is adopted by an organisation in order to direct and
control the business effectively. This corporate governance involve the process of balancing the
interest of stakeholders of an organisation. The corporate governance help in forming up a
framework that help an organisation in attaining its set objectives, this framework encompasses
every sphere of management which is from internal control and action plan to performance
measurement as well as corporate disclosure.
The term governance refers to set of rules, policies, control and resolution which is being
put in place for directing a particular corporate behaviour. Hence, when it combined with term
corporate then it means a structure adopted within a corporate in order to guide, monitor and
control the functions of the company in right manner. The corporate governance is crucial to
investors as it present the company’s direction as well as business integrity. Good corporate
governance support organisations in building up the trust among the community as well as fro
the investors which in turn promotes the financial viability by generating eth long term
investment opportunity for market participants.
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The board of directors are considering to be the primary stakeholders who have the
capability to influence the corporate governance. The directors are elected by the shareholders or
get appointed by the other board members who then represent the shareholder of company. This
board task with formulating important decision like executive compensation, corporate office
appointment, dividend policy etc. The board of directors are responsible for ensuring that the
corporate governance policies of an organisation must get incorporated with the risk
management, corporate strategy, transparency, accountability and ethical business practices.
On the other side according to Rouse. M., corporate governance is integration of various
rules, processes or laws with which the business mainly control, operate and regulate its
activities. The corporate governance consist of both internal and external factors which directly
influence the interest of stakeholder that includes government, suppliers, customer, shareholder
and management. It mainly provide with a pattern in which corporate and activities performed
within it is being operates and control by the management. The corporate governance is mainly
handle by the board of directors as well as concerned committee that actually focuses toward the
balancing the individual such as economical, societal and environmental goals so that an
organisation would be able to survive within marketplace. The corporate governance plays
significant role within an organisation that can be understood with the help of following
discussion:
 Accountability: - The corporate governance support in describing about the roles and
responsibilities to the employees as per their job roles which in turn support in keeping
the people accountable for the actions which they perform. This further contribute
toward improving the flow of business operations in right and ethical manner. This
accountability further support companies to make an adequate decision regarding who
must get rewarded for performing good work and who must get punishment for
misconduct.
 Lowering risk: - With effectively managing the corporate governance an organisation
would be able to reduce the incidents of criminal liability, scandal and fraud. Tit is so as
it involve the accountability that further support in easily identifying the issues and cause
behind it to take corrective and Tinley actions.
 Public acceptance: -The corporate governance mainly consist of transparency principles
within its work. So, when the stakeholder and general public get access to this
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information then it further support in building up trust and positive image in front of
community.
The issue of corporate governance faced by the Marks & Spence.
As per the view point of Wood. Z., 2020, the share of Marks & Spencer fells sharply after
the Christmas sales were dented by the discount of rivals as well as due to its own buying
mistake after it get stocked up on many men’s skinny jeans and mince pies. A pick up within the
trade in M&S food halls during the holiday period which support the company in deliver its first
positive quarterly sales within last three year, where the products are sold at high discount which
result into increase in sale. But the success of its resurgent food division was overshadowed due
to increase in food waste which in turn eroded profitability. The chief executive of Marks &
Spencer Steve Rowe said that its clothing division has faced a huge competition and challenging
trading environment at the time of Christmas. This make the Marks and Spencer to provide more
discount over its offering in order remain in competition and maintain its sale in marketplace.
This is so because there was a huge discount by the competitors which was continued from the
Black Friday to the Christmas which in turn made December month one of the most challenging
month which in turn also affected the gifting sale of Marks & Spencer.
Other than this the clothing sales within the Marks & Spencer stores get open for more
than one year which experienced a drop of around 1.7% when it makes an attempt for making its
menswear range more fashionable backfired. After the statement customer made that the
menswear lines were too old it revamps by involving number of slim and skinny fit trousers
which it sold which drastically reduced the choice of classic styles that promptly sell out in larger
size. Hence in order to avoid the risk of getting loss from this left over stock at the event of
Christmas it provide an unprecedented discounting in order to get sales from this stock. This in
turn make the customers attracted toward the offering of Marks & Spencer. From the sale it has
been found that the UK consumers were more carefully thinking about purchasing the products
event at the time of Christmas as they are buying very few and opt for high quality items. But the
demand within the stores from the cashmere jumpers of women’s and men’s was goes up by
15% and 40% respectively.
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