Corporate Governance: A Review

Running head: CORPORATE GOVERNANCE
CORPORATE GOVERNANCE
Name of Student
Name of the University
Author Note

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Table of Contents
Introduction..........................................................................................................................2
Background of the organization.......................................................................................2
Problem faced by the company........................................................................................3
Literature Review................................................................................................................3
Concept of Corporate governance...................................................................................3
Importance of corporate governance formulation...........................................................5
Fulfilling corporate social responsibility.....................................................................5
Increased number of corporate scams..........................................................................5
Mergers and takeovers.................................................................................................5
Improving the corporate performance.........................................................................5
Increasing the trust of the investors.............................................................................5
Access to the global market.........................................................................................6
Overcoming corruption................................................................................................6
Accountability..............................................................................................................6
Business expansion..........................................................................................................6
Takeover and relevant expansion activities.....................................................................7
Problems associated with takeovers................................................................................8
Advantages of takeovers..................................................................................................9
Primary and secondary research undertaken.....................................................................11

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Critical review of the results of the research.....................................................................14
Recommendations and action plan....................................................................................19
Approaching new investors...........................................................................................19
Making changes internally.............................................................................................20
External business consultant firms and financial advisors for overcoming this situation
...................................................................................................................................................21
Proposed timeline..........................................................................................................21
References..........................................................................................................................23

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Introduction
Corporate governance refers to combination of all the processes, rules and laws that
operates, regulates and controls the businesses. Moreover corporate governance includes all the
internal and external factors that affects the company’s stakeholders interest including the
interest of the customers stakeholders, government regulators, suppliers and management
(Abdallah and Ismail 2017). Therefore corporate governance includes the system for controlling
and directing the company. The board has the responsibility to determine proper strategies for
the organization, provide leadership that can help in implementing the strategies, undertake
supervision and reporting all the issues to shareholders (Admati 2017). The corporate
governance is built on some of the major pillars of- accountability, transparency, fairness
stakeholder management, leadership and assurance. The company selected for the purpose of this
paper includes- The Poundland Company that is a British variety store company. The main aim
of the paper is to understand the corporate governance issues of the organization under study.
The paper will therefore discuss about the corporate governance issues faced by the company
selected for the purpose of this study, literature review to understand the concept of corporate
governance in depth and the various issues related to corporate governance, discuss the primary
and the secondary research undertaken by the company, critical review of the results and provide
necessary recommendations and action plan for overcoming the issue identified with the
corporate governance of the company.
Background of the organization
The Poundland Company chain of variety store based in United Kingdom. It was founded
in the year 1990 and has been known for selling its products and services including proprietary

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brands and learned items at a single price that is 1 euros (Aguilera and Crespi-Cladera 2016).
Initially it had to face a number of issues because it was rejected by a number of landlords due to
the fear that a single priced store can adversely affect the existing local stores. According to a
2016 report, about 7 million customers shopped in the store majority of the shoppers being
women.
Problem faced by the company
The company had been facing a major issue related to its corporate governance that was
its inaccurate business expansion strategy (Aguilera, Judge and Terjesen 2018). The company
had recently decided to take over the 99p store with the objective of boosting its domestic
portfolio with the help of the 252 more stores that was would come into operations as a result of
acquisition of the 99p Store. Moreover the company expected revenue synergies from the
takeover. However the integration took a lot of time and moreover the 99p store had poor shelf
life by the time it was taken over by the Poundland Company. Moreover the Poundland
Company was unable to pay the suppliers and there was a withdrawal of the credit insurance.
Moreover it was later reported by the Telegraph reports that the company paid too much for the
takeover. According to the report as soon as the business was sold by the family owners all the
mess started happening. The company failed to identify the significant risks associated with the
takeovers and as a result of such poor expanding strategic decision on part of the company, the
public is losing its confidence (Anginer et al. 2018).

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Literature Review
Concept of Corporate governance
Corporate governance includes- the processes, mechanisms, and the relations that helps
controlling corporations. The governance principles and structures identify the roles and
responsibility division among participants of the organization such as the, managers, the board of
directors, the creditors, the shareholders, and others and therefore include a number of rules and
regulations for making decisions. Corporate governance is necessary because it can help in
resolving the possible conflict of interest between different stakeholders usually between the top
management and the shareholders. Corporate governance also includes setting the objectives of
the organisations and pursuing the same in the regulatory, market and social conditions.
Therefore corporate governance includes- monitoring the policies, actions, practices and
decisions of the organizations, their shareholders and other affected stakeholders. Therefore
corporate governance is done in order to ensure that the interest of different parties are aligned
with each other. Moreover the interest of the various political parties and the public had been
maintained in the corporate governance due to the various corporate scandals. Some of the
largest corporate scandals includes- MCI and ENRON. One of the major reasons as has been
identified behind the corporate governance includes- mitigating the conflict of interest between
different parties. The conflict of interest arises between the upper management and the
shareholders and also between the shareholders (Bain and Band 2016). The two main conflict
that can be resolved with the help of corporate governance includes- the conflict between the
principal agent and also the conflict between the principal and the principal. In organizations
where there is a separation of management and ownership, there can be conflicts between the
agents and the principals or the top management and the shareholders. The shareholders may