Corporate Governance: JAB Holding Company Stakeholder Analysis Report

This report provides a comprehensive analysis of corporate governance, focusing on JAB Holding Company. It examines the influence of owners on major decisions, the company's attitude towards stakeholders, and conflicts arising from differing objectives and time horizons. The report delves into financial, structural, strategic, manpower, and operational decisions, highlighting how owners shape these areas. It assesses stakeholder relationships, including shareholders, suppliers, customers, government regulators, and employees, emphasizing the importance of a positive approach. The report also addresses conflicts between owners, particularly regarding short-term versus long-term goals, and their impact on operational efficiency. It concludes by offering recommendations for aligning conflicting objectives to promote company success and growth. The analysis is supported by references to academic and business literature.

CORPORATE GOVERNANCE
AND INDIVIDUAL
ASSESSMENT

TABLE OF CONTENTS
INTRODUCTION ..........................................................................................................................1
REPORT..........................................................................................................................................1
Influence of owners on the major decisions taken by the company ...........................................1
Attitude of company towards its stakeholders ............................................................................4
Conflicts arising due to different objectives and the time horizons.............................................5
Dealing effectively with the conflicting objectives of company.................................................6
CONCLUSION ...............................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Corporate governance refers to combination of the rules, process and laws by which
businesses are being regulated, operated or controlled. Term encompasses internal & external
factors which affects the interest of company stakeholders including customers, shareholders,
government regulators, suppliers and the management. Board of directors of the company have
responsibilities of creating frameworks for the corporate governance which most effectively
align the objectives with business conduct. Report is based on JAB Holding Company which is
private investments company. Company is owned by Joh A. Benckiser and Reimann family.
Report will address the different decisions taken by a company and hows these decisions are
influenced by owners. It will also provide about the attitude of company towards different
stakeholders of company. Further report will cover about the different conflicts arising between
the objectives of owners and the time horizons. It provides about how conflicting objectives of
the owners could be aligned for moving the company towards desired success and growth.
REPORT
Influence of owners on the major decisions taken by the company
Owners are the people who have the responsibility of running the operations of business
efficiently and effectively. They have to take all the risks and rewards associated with staring and
managing the businesses. It means owners of the company acts as operation manager, marketer
and human resource manager at the same time. Company owners have to face myriad of the
decisions for making but few of these decisions are very essential for the profitable existence of
company. Decisions of the business should be taken from the ground level. They have to analyse
the decisions carefully as the growth and profitability of the companies is dependent over how
sound the decisions are taken by the owners regarding their business ensuring interests and
benefits of the stakeholders (Aguilera, Judge and Terjesen, 2018). A business is framed over
number of decisions taken and future growth is also dependent over the effectiveness of the
decisions to be taken by company owners. Every decision taken by the company could be
influenced by the owners on the basis of the their materiality and relevance for company.
Companies face issues where there are two owners of the company. There may be
conflicts in the objectives of the owners which may create confusion in the employees regarding
the instructions to be followed. Therefore the business is highly influenced by the business
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owners and decisions taken by them decides about the future of company. Owners have to take
number of decisions related to business in which major decisions that are taken by the owners are
Financial decisions are very important decisions for an organisation and its success. At
the starting it is related with sources of fund for raining finance and what will be the best source
of finance for company. They have to ensure that the best sources of finance is chosen by
organisation where they have maximum benefits. For existing business owners owners have to
take decisions related to management of cash flows for organisation. It also includes having
capital investments both in the financial capital and physical capital such as plant machinery and
equipments that are essential for running the operations or to expand the capacity and efficiency
of the company. Owners significantly rely over financial professionals for taking decisions
related to the business. Owners have to analyse the options and information provided by the
professionals regarding the finance and management of internal finances successfully (Yermack,
2017). They have to ensure that company is having enough funds for meeting the working capital
requirements of company from the available resources.
Structure
A major decision taken by the owners of company are related with structure of business
as many structures of business are there such as sole trader, partnership and company. They
have to asses the decisions related with different business structures that are available to them
and which would prove to be most beneficial for them. Every business structure have its own
implication in terms of the profitability, liabilities, cost sharing and tax purposes. There are cases
where the owners are deciding to change the legal structure of their established organisations.
Owners are required to analyse all the possible actions related with their business structure that
will be most beneficial and help in growth of entity. Business having two or more owners may
start a partnership concern or company as they could not be started as sole proprietorship.
Company is considered as most preferable option where the owners have long term future
growth. Also there are cases where the partnership firms are converted into companies as they
grow. There is a great need to decide about the legal structure of the business after concerning
with partners or owners.
Strategic Decisions
Every organisation is required to take strategic decisions which may be short term or long
term which will take the business towards profitable position. It includes decisions related to
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development of new products and getting into the strategic alliances like joint ventures. The
strategic decisions are to be taken by the experts teams with the involvements of owners as they
are having considerable risks that could impact the business significantly. These decisions are
taken by the concern of owners. They have to analyse all the information and the consequences
related with the strategic decisions that will be taken related to business. Strategic decisions are
generally related with increasing the profitability of the business which could be long term or
short term (De Haan and Vlahu, 2016). Risks taken by the owners make the business as they
have the capability of deciding what can will drive the business towards success and growth.
Strategies have to be framed for increasing the efficiency as well as productivity of company.
They have to continuously review the strategies framed and to ensure that they are working
effectively. Corrective measures are taken to improve the existing strategies or to frame new
strategies.
Man Power
A business can not be run by owners themselves. They require employees and people to
work for achieving the objectives of business. For every company personnel is greatest asset.
Business owners have to make choice about the most appropriate people that will help the
organisation to grow. Employees helps owners in achieving their desired objectives and ensuring
that the organisational objectives are achieved. Business owners are required to define the
criteria regarding the selection and recruitment of employees after providing the type of
employees that are required for the business. They have to analyse all the skills and knowledge
that is required by the company in its employees. Roles and responsibilities should be clearly
defined by the organisation for selection of appropriate candidates. Benefits and other
compensation structures are decided on the final say of organisation.
Operational Decisions
Owners of the business have to take decisions regarding how they will be running the
organisation. Operational decisions in a company are not limited to only administrative tasks. It
includes choosing right suppliers as well as distribution channels for the products or services.
Operational decisions of company include marketing of the products and services and how
consumers could be attracted towards the company. Owners have to take significant decisions
over sales revenues of the business and also the operational costs that are required to be
sustainable. It is essential for the owners to make effective utilisation of the resources to achieve
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the growth and objectives of business. Business idea may be innovative or creative but it will
not be successful if not implemented appropriately (Anginer and et.al., 2018). Operations of the
business have to be conducted in the manner where costs are minimum and revenues are
maximum.
Attitude of company towards its stakeholders
Every organisation has their own stakeholders. They are either individual, groups or the
organisation that are impacted by outcomes of the business. They are interested in the success
and failure of the company. Stakeholders can have positive as well as negative influence over the
company and business. All the stakeholders are interested in success of company and profits
derived from them. Every company is required to manage the stakeholder groups for achieving
success and growth in the organisation and to achieve the goals. A company must have positive
attitude towards its stakeholders. Corporate social responsibility aspects primarily focus over
establishing health relationship with stakeholders as they influence the business. A company has
many stakeholders from which main stakeholders are the shareholders, suppliers, customers,
government regulators and employees.
As per new corporate practices maintaining healthy customers and stakeholder
relationship has become a trend that helps the business in achieving the desired success and
growth. At present times customers recognise companies who are taking active initiatives
towards society and customers. Employees feel motivated for the organisation to work for the
organisation having positive public image.
RAB holding has positive attitude towards its stakeholders. Company works for
providing their customers with most beneficial portfolio where their investments will be
maximised. There are customers who are aggressive over investments but company ensures that
risks and loss associated with the dealings are minimised by taking effective decisions while
framing portfolios (Detthamrong, Chancharat and Vithessonthi, 2017). It ensures that benefits of
the customers are not deprived and it ensures that they receive the best services and their queries
and issues are properly resolved. Company is earning adequate returns from the business and
providing the shareholders with proper returns over their investments. It does not deprives the
right of shareholders.
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Employees of the company are satisfied as it undertakes various steps for providing them
with rewards and incentives on the basis of performance. It provides the employees with safe and
secure work environment. It undertakes various measures for upliftment of the society such as
donating monetary funds for charity for education of children and such other measures. It is
essential for the business to ensure that interests of the stakeholders are fulfilled with the
objective of organisation. Conflicting objectives of the stakeholders groups should be managed
by the owners efficiently by applying considerable steps and strategies. They could damage the
image of company which will affect the future growth plans of organisation.
Conflicts arising due to different objectives and the time horizons.
Conflict refers to difference between expectation, perception and reality. Conflicts in an
organisation could be destructive or constructive for the organisation. Conflicts could also be
referred as disagreement or the collision. Conflicts may be vital between individuals when there
is incompatibility between the goals or objectives, that could be between two owners or two
managers. There are different conflicts that may arise if the individual or groups are having their
personal beliefs and perception in the work and business. If these conflicts are not resolved at
starting they could significantly impact the business of company.
RAB is having two different owners and there are number of circumstances where the
owners have different perception and objectives for the business. There are cases where one is
focusing over the short term profits where other is focused over the long term benefits of the
organisation (Hong, Li and Minor, 2016). Also owner may have growth perspective related with
a particular decision where one may have profit objective.
Due to this many of times company loses its operational efficiency. Owners having
different concerns are not able to drive the organisation towards right direction and often the
decisions tend to fail. One may take decision for investing the funds over short term investments
for meeting the working capital requirements where one is focused over investing in funds that
provide long term benefit to the organisation. The conflicts would affect the decisions they could
take on proper analysis.
It creates confusion regarding the task to be performed by the employees and superiors
related to the instructions where it is to be approved by two owners. One may approve where
other may be dissatisfied with the decisions due to the outcomes may not be bringing profits for
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company. Other may have growth perspective regarding which the decision is taken by the
company.
There may be also conflicts regarding the approach to be followed where the owners are
having ore than two exclusive goals. One owner may see the positive side where the other may
have negative side as every goal has both positive as well as negative side. There are also
conflicts related to time horizons where some one is focused over gaining short term profits and
other is focused over making long term value for the company that will increase revenues as well
as position of the firm (McCahery, Sautner and Starks, 2016). Number of conflicts could arise in
organisation having two or more owners as all have their own ideas and perception but for the
success of the organisation it is essential that all the owners work for the organisational benefit
and effectively deciding about the decisions to be taken.
Dealing effectively with the conflicting objectives of company
Workplace conflicts could severely affect the business and its operations. Conflicts arise
when the employees or individuals are not clear about the respective interests and
responsibilities. There are situations where conflicts could occur when the objectives of the
business are having incompatible objectives in the business. Owners have the responsibility of
moving the business towards success and growth by managing the conflicting objectives of
business effectively.
It is essential for company to reduce the conflicts between owners regarding the
perspectives and expectations. Owners have to take active concern about the concern of each
other. They have to analyse the decisions understanding the perspectives and what benefits they
will bring to the organisation. An organisational hierarchy is required should be established in
the organisation where the employees and managers are following specific decisions given by
the owners. Employees should be responsible to one particular person to whom they could
approach so that confusion regarding the work is not create in the employees.
Owners should take disciplinary actions when coming on to decisions. Before any
decision is to be taken for organisation it must be discussed between the employees. It requires
the owners to communicate the decisions and perspective with each other and board of directors
who will analyse the perspectives and approaches and carry out deep analysis on the basis of
facts and further information in the business (Hussain, Rigoni and Orij, 2018). They should also
follow a ethical approach towards solving and deciding about varying perspectives. As the
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owners they have to think about the organisation as whole. They have to take decisions that will
create benefits and values for the whole organisation. In place of focusing over short term profit
making decisions they should pay attention over long term value creation for the company.
CONCLUSION
It could be summarised from the above report that corporate governance plays an
effective role in the growth and success of organisation. Organisations have to take different
decisions and these have significant influence of the owners. Owners have to take decisions that
lead the organisation towards success and growth. They have to manage the conflicts arising due
to perspectives and take decisions that are beneficial for the organisation as whole.
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REFERENCES
Books and Journals
Aguilera, R.V., Judge, W.Q. and Terjesen, S.A., 2018. Corporate governance deviance. Academy
of Management Review.43(1). pp.87-109.
Yermack, D., 2017. Corporate governance and blockchains. Review of Finance.21(1).pp.7-31.
De Haan, J. and Vlahu, R., 2016. Corporate governance of banks: A survey. Journal of
Economic Surveys. 30(2). pp.228-277.
Anginer, D. and et.al., 2018. Corporate governance of banks and financial stability. Journal of
Financial Economics.130(2). pp.327-346.
Detthamrong, U., Chancharat, N. and Vithessonthi, C., 2017. Corporate governance, capital
structure and firm performance: Evidence from Thailand. Research in International
Business and Finance. 42. pp.689-709.
Hong, B., Li, Z. and Minor, D., 2016. Corporate governance and executive compensation for
corporate social responsibility. Journal of Business Ethics.136(1).pp.199-213.
McCahery, J.A., Sautner, Z. and Starks, L.T., 2016. Behind the scenes: The corporate
governance preferences of institutional investors. The Journal of Finance. 71(6).pp.2905-
2932.
Hussain, N., Rigoni, U. and Orij, R.P., 2018. Corporate governance and sustainability
performance: Analysis of triple bottom line performance. Journal of Business
Ethics.149(2). pp.411-432.
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