AAF019: Corporate Governance and Financial Regulation Report

This report delves into the crucial aspects of corporate governance and financial regulation, using Morgan Sindall Group plc as a case study. It begins by identifying and analyzing the operational and strategic risks faced by the firm, including product failure, acquisition failures, and supplier monopolies, alongside operational risks like catastrophic events, hacking, and fraud. The report then evaluates the importance of various stakeholders, such as customers, employees, investors, and the government, and discusses conflict resolution strategies. Furthermore, it provides an in-depth analysis of corporate governance principles and their impact on the organization's performance and sustainable growth, emphasizing the importance of effective management and decision-making. The report concludes by highlighting the interconnectedness of risk management, stakeholder engagement, and corporate governance in ensuring long-term success and ethical operations within the financial and construction sectors.

Corporate governance
and financial regulation
AAF019-2

Contents
Contents...........................................................................................................................................2
INTRODUCTION...........................................................................................................................1
MAIN BODY..................................................................................................................................1
1. Identification of the different aspect like the operational and strategic risks that are involved
in the working of the firm............................................................................................................1
2. Examination and evaluation of the stakeholders of the company that possess a lot of
importance in the present market.................................................................................................3
3. Analysis and evaluation of the aspect of corporate governance with respect to the
organisation..................................................................................................................................4
4. Identification of three factors that are management of risk and stakeholders, and corporate
governance and its possible impact on the working of the enterprise in the long run.................5
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
Corporate governance is one of the most important as well as crucial aspect for each one of
the firm that is operational in the market irrespective of the industry in which it is operational as
in it different laws and legislations are made so that the companies that are working in the
current market scenario can abide by all the laws so that it can help them to sustain and survive
in the market for a longer time period as compared to its rivals that are also operating in the
similar market (Bottenberg, Tuschke and Flickinger, 2017). In it the government formulates
different rules and regulations for the corporate and thus has to be followed by them so that it
cannot hamper its activities in the long term context. Morgan Sindall Group plc is a company
that is geographically located in the UK and deals in the sector of regeneration and construction
and thus has captured a larger market share as it is operating since a pretty long time period. In
this report there is a detailed elaboration done of various aspects that are related with the above
mentioned firm which range from the risks that are involved in its working so that a detailed
examination can be done of all the things that directly as well as indirectly affects the working of
the company. Apart from that the report also includes various other things like the prospective
stakeholders of the company and the conflict solving ability of the higher management that is
used in this context. Further the report also covers analysis and evaluation of the topic of
corporate governance in relation with the company that is mentioned above.
MAIN BODY
1. Identification of the different aspect like the operational and strategic risks that are involved in
the working of the firm
Strategic risks are the one that impacts the strategy that is used by the business firm in the
market in which it is working while the concept of operational risk involves the risk that is
associated with the execution of the strategy in the long run and thus both possess a lot of value
in the market and thus has to be analysed and evaluated in a very precise and accurate format so
that it can add value to the company in the long term. Since the company that is Morgan Sindall
Group plc is a firm that is operating on a very big scale and thus it becomes much more
important for it to examine all the things in a detailed manner so that it can help in reducing the
overall cost and thus adding to the growth and prosperity of the enterprise (Pillai and Al-

Malkawi, 2018). The risks with reference to Morgan Sindall Group plc are explained in a
detailed manner below-
Strategic risks-
 Product failure- It is one of the most common risk that almost each and every firm faces
since there are high chances that the new product would not do better as it is expected by
the authorities and thus causing a lot of damages to the organisation. Morgan Sindall
Group plc higher management ensures that the current situation of the market must be
fully analysed before launching any new product so that it can result in the improved
penetration of the product in the industry.
 Acquisition failure- It is a risk that arises in case if an acquisition fails and it is very
common since the acquired firm may not be able to perform in a better manner under a
new name and thus causing a risk to the firm in the long run. Morgan Sindall Group plc
evaluates the market position of the company before acquisition and also keeps a tab on
the performance aspect so that it can be improved in the future (Mandzila and Zéghal,
2016).
 Monopoly of supplier- This situation arises in case of limited suppliers available in the
market and if so they can fluctuate the prices according to their benefit which can
subsequently result in the decline in the overall profitability of the company. Morgan
Sindall Group plc deals mainly in construction sector and thus the suppliers are limited in
this industry and thus the firm must make sure that the availability of the goods can be
stored in a precise way so that in case of any fluctuations in the supply chain it must not
affect the activities that are done by the organisation.
Operational risks-
 Catastrophic events- These are events that are not in the hands of a person since they are
naturally occurring phenomenon like hurricanes, floods, earthquake, etc. and thus a little
can be done by a firm in this regard. Morgan Sindall Group plc analyses the geographical
aspect of a place before locating its store in that location and thus it is one of the main
reasons that it can competition in the market that is dynamic in nature as it gives an upper
hand to the company to perform in a better way as compared to its rivals.
 Hacking- It can be dangerous for an organisation since important nature data and
information can be leaked through it which can be further used against the company in

the long run. Morgan Sindall Group plc keeps its system intact so that there is no scope of
loop holes in the operation which can be utilised by the hackers to extract important
information (Tomasic and Akinbami, 2016).
 Fraud and errors- These are things that can be done by the internal person or an
external one too and thus it is very crucial as well as important for every company to
keep a tab on all the activities so that it can cut the scope of any fraud or errors. Morgan
Sindall Group plc employs a team of experts in this regard so that any type of fraud or
error can be detected as soon as possible so that necessary measures can be taken which
can prove beneficial for the company.
2. Examination and evaluation of the stakeholders of the company that possess a lot of
importance in the present market
There are a number of external stakeholders of the company Morgan Sindall Group plc
since it is operational on a vast scale and thus all of them are explained in an elaborated manner
below-
 Customers- They are the real stakeholder of a company and this it is very important for a
firm to satisfy each and every need of them so that it can help in the increment of the
sales and further profitability in the long term. Morgan Sindall Group plc tries to give the
best quality available to its customers so that it can increase their standard of living and
can add to their growth also. Many a times there is situation of conflict since it is not
possible to give quality products at cheap rates and thus it results in the arise of various
conflicts and thus the company has to solve them in an effective manner so that it cannot
hamper the overall performance.
 Employees- They are the stakeholders which have interest in the firm with context to the
income and salary that they earn and thus a firm must try to give optimum incentives too
for good performances so that it can lead to the upliftment of the employees that can
further help the enterprise to improve its value in the industry. Morgan Sindall Group plc
gives good salary and incentives to its workers so that it can help in creating a better
work environment that can help the company itself to improve its sales and thus
subsequently growth. There are many conflicts at times because of the money issues and
thus it is very crucial to solve them with utmost accuracy so that it can lead to the
improvement of the performance (Berber, Slavić and Aleksić, 2019).

 Investors- They are the stakeholders of the company that are associated with the firm due
to the financial return aspect and thus an enterprise must give good rate of return so that it
can lead to the increase of the market value of the company in the long run. Morgan
Sindall Group plc distributes its profit in this respect only so that the investors can get a
good return on the money that has been invested. There are many situations of conflicts
too as it is not possible to give returns if a company is in loss and thus it is very important
to make them understand in a better manner since they are the backbone of the
organisation without which it cannot perform in a precise way.
 Government- The government also has a stake in the company in terms of the taxes so
that the gross domestic product of the nation can be increased many folds that can help
the company as well the country to grow and prosper in the long term. Morgan Sindall
Group plc contributes in the development of the nation as the higher management thinks
of it as a moral duty. There may be many conflicts in between also since the government
wants the corporate to work in a precise format which may be not possible all the time
and thus creates a situation of conflict that has to be solved in an accurate way so that it
does not hamper the overall performance of the firm (Zattoni and Pugliese, 2021).
3. Analysis and evaluation of the aspect of corporate governance with respect to the organisation
Corporate governance is one of the most important aspects since it can help a company to
grow and prosper in the market in which it is operational while at the same time it can damage
and destruct the market image and value of the firm if it is not implemented in a precise format.
It helps the company to achieve sustainable growth over a period of time by improving the
overall working prospects which can prove useful from the organisation’s point of view. If a
corporate is governed in an effective and efficient way it can be seen in its performance and also
from the quality of the management and the decision making ability of the team. In case of
Morgan Sindall Group plc the aspect of corporate governance is very crucial since it is a big firm
and thus has to analyse and evaluate a number of different things and factors that can result in the
overall improvement of the company in the long run and also helps the organisation to improve
its standing in the market as compared to other similar natured enterprise. The effectiveness of it
in context with the above mentioned firm is that it helps in the growth and development of the
society and the country as a whole. It also gives fair return to the investors that have invested
their hard earned money and also gives full satisfaction to its customers as doesn’t compromise

on its quality too and thus gives full value for the money that has been spend by the buyers.
Apart from that it also satisfies the employee part too by giving proper value for the efforts that
has been made with the context of the activities that are performed in the company (Smaili and
Labelle, 2016). Also it proves beneficial in maintain a balance between the development of the
firm and the country and does not mixes the two concepts. The possible impact of the
effectiveness of the corporate governance is that Morgan Sindall Group plc has made a
significant mark in the industry as it helps in improving its market position among all the other
companies that are also working in the similar market conditions. Also it helped the firm to
enhance its overall performance and the environment of the work place that is very crucial in
increasing the sales and then profitability in the long run. Thus it can be said that Morgan Sindall
Group plc has been very effective in terms of corporate governance.
4. Identification of three factors that are management of risk and stakeholders, and corporate
governance and its possible impact on the working of the enterprise in the long run
The factors of risk and stakeholders management and the aspect of corporate governance is
very important for a company and its very crucial to analyse and evaluate it in a precise format
so that it can add value to it in the long term thus all of them are explained in detail below-
 Risk management- It is very essential to manage the risk of the company so that all each
factor is examined in detail so as to get a good return and reward for the risk that has
been taken by the firm. Morgan Sindall Group plc employs a team of experts in this
regard so that they can analyse the risk involved in operation so that necessary
adjustments can be taken which can prove beneficial for the company (Mirchandani and
Gupta, 2018).
 Stakeholder’s management- Stakeholders are the ones that have a direct or an indirect
interest in the working of the firm and thus it is very important to stand up to the
expectations of them. Morgan Sindall Group plc keeps its key stakeholders happy by
providing good quality and services and also contributes in the upliftment of the society
in the long run. There are many stakeholders and thus each and every one has to be
examined in a detailed manner so that needs and requirements can be analysed so as to
improve its current position in the market in which it is operating (Garanina and Kaikova,
2016).

 Corporate governance- It is very critical as it improves the overall efficiency and
effectiveness of a company and Morgan Sindall Group plc keeps a tab on this aspect so
that it can lead to the fulfilment of all the desired goals and objectives that are formulated
at the starting of the organisation (Almutairi and Quttainah, 2020).
CONCLUSION
It can be concluded from the above that corporate governance is one of the most important
aspect and thus has to be analysed and evaluated in an accurate manner so that it can help the
firm to grow and prosper in the current market situation which is highly dynamic as well as
competitive in nature. Apart from tat it can be concluded that there are many stakeholders of the
enterprise that is discussed above and thus has to be examined in a precise way so that each one
of them can help in improving the overall conditioning and positioning of the firm in the long
run.

REFERENCES
Books and journals
Bottenberg, K., Tuschke, A. and Flickinger, M., 2017. Corporate governance between
shareholder and stakeholder orientation: Lessons from Germany. Journal of Management
Inquiry, 26(2), pp.165-180.
Pillai, R. and Al-Malkawi, H.A.N., 2018. On the relationship between corporate governance and
firm performance: Evidence from GCC countries. Research in International Business and
Finance, 44, pp.394-410.
Mandzila, E.E.W. and Zéghal, D., 2016. Content analysis of board reports on corporate
governance, internal controls and risk management: Evidence from France. Journal of Applied
Business Research (JABR), 32(3), pp.637-648.
Tomasic, R. and Akinbami, F., 2016. Effective risk management and improved corporate
governance. In Complexity and Crisis in the Financial System. Edward Elgar Publishing.
Berber, N., Slavić, A. and Aleksić, M., 2019. The relationship between corporate social
responsibility and corporate governance. Ekonomika, 65(3), pp.1-12.
Zattoni, A. and Pugliese, A., 2021. Corporate Governance Research in the Wake of a Systemic
Crisis: Lessons and Opportunities from the COVID‐19 Pandemic. Journal of Management
Studies.
Smaili, N. and Labelle, R., 2016. Corporate governance and accounting irregularities: Canadian
evidence. Journal of Management & Governance, 20(3), pp.625-653.
Garanina, T. and Kaikova, E., 2016. Corporate governance mechanisms and agency costs: cross-
country analysis. Corporate Governance.
Almutairi, A.R. and Quttainah, M.A., 2020. Foreign directors and corporate governance in
Islamic banks. Journal of Islamic Accounting and Business Research.
Mirchandani, A. and Gupta, N., 2018. Impact of ownership structure and corporate governance
on the performance: A case of selected banks in UAE. International Journal of Economics and
Financial Issues, 8(3), p.197.