Corporate Governance's Effect on Sustainability and Profitability

This report examines the crucial link between corporate governance, sustainability, and profitability, focusing on a case study of House of Fraser. The research delves into the concept of corporate governance, its significance in shaping organizational success, and the factors influencing a company's financial health and long-term viability. The report analyzes how effective corporate governance strategies, including clear communication, stakeholder engagement, and adaptable leadership, can enhance employee performance, customer retention, and brand image. By exploring the challenges faced by House of Fraser, the report identifies key areas for improvement and provides strategic recommendations to boost both sustainability and profitability within the retail sector. The study also reviews the importance of authentic purpose, brand image, collaboration, and customer retention in achieving business success. Ultimately, the report aims to provide valuable insights for businesses seeking to optimize their governance practices and achieve sustainable growth.

Corporate Strategy and
Governance

Table of Contents
TITLE: Impact of corporate governance on sustainability and profitability of an organisation....1
INTRODUCTION...........................................................................................................................1
Background of House of Fraser..............................................................................................1
Purpose and Significance of the research...............................................................................2
Research Aims........................................................................................................................2
Research Objectives...............................................................................................................2
Research Questions................................................................................................................3
LITERATURE REVIEW................................................................................................................3
Corporate governance.............................................................................................................3
Different factors which influence sustainability and profitability of company......................4
Corporate governance affects profitability and sustainability of organisation.......................6
RESEARCH METHODOLOGY.....................................................................................................7
CRITICAL REVIEW OF THE RESEARCH................................................................................11
Analysis on the basis of primary data...................................................................................11
Analysis on the basis of secondary data...............................................................................17
Gantt Chart ....................................................................................................................................19
........................................................................................................................................................20
RECOMMENDATION.................................................................................................................20
CONCLUSION..............................................................................................................................21
REFERENCES..............................................................................................................................22

TITLE: Impact of corporate governance on sustainability and profitability of
an organisation
INTRODUCTION
Corporate strategy is considered as the business strategy which provides direction and
guidance to company through which it can maximise sustainability of company. The concept
also helps company in improving its brand image at market place in less period of time. It also
fulfils basic requirement of business organisation and its stakeholders in effective manner
(Tricker, 2015). The current research is based on House of Fraser, a UK based large scale retail
store. This company holds good position in UK and other operating country but due to some
issues and lack activeness in adoption new strategy and technology, this company have faced
many problems that negatively affected its profitability and sustainability at market place. Apart
from that, organization had not made effective corporate governance strategies which had
resulted in a conflict at the workplace. Corporate governance has a lot of importance at the
workplace. It provides strategies, policies, legislations and rules to make the environment of the
organization suitable for the workplace. This allows the companies to increase the productivity
and profitability of its employees. Thus, it can gain sustainability and profitability in the
organization.
Background of House of Fraser
House of Fraser is a popular retail store of United and was incorporated in 1849,
Scotland, UK. It is one of the fastest growing company of United Kingdom which owe around 55
stores on different locations of UK and Ireland. It has been analysed that lack management
practices and ineffective corporate governance have resulted in decline of profits and
sustainability of company (Armstrong and et. al., 2015). Major issue with House of Fraser was
that management team of this company have adopted e-commerce platform very late. This have
provided opportunity to their rival companies like John Lewis in grabbing attention of customers
from online sites effectively. In this regard, top management team have planned to conduct
research so that they can enhance their knowledge on corporate governance which will help them
in improving their sustainability and profitability effectively at market place. In order to make
the strategies effective to the organization so that it can increase its profitability and
sustainability, the company should try to improve the corporate governance strategies. These
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strategies will help the company in providing a suitable working environment at the workplace.
Apart from that, it also motivates other employees to work effectively and positively. Thus
increasing the performance of the employees and sustainability and profitability also increases
for the organization.
Purpose and Significance of the research
The main purpose of choosing this issue is to identify lack of management practices in
House of Fraser which have affected sales and also resulted negatively on sustainability as well
as profitability. This issue is highly important as it will help House of Fraser and other
companies belonging to similar field and facing some what same issue in improving their deficit
areas (Armstrong, and et. al., 2015). The purpose of this research is also important because its
will help them to prepare effective strategies for them so that they can handle any type of harsh
situation easily. In order to overcome the harsh conditions, the company should prepare all the
possibilities which can help them to get rid out of that. These strategies will help the organization
to improve their working environment and follow all of the laws and legislations easily. The
main purpose of this research also includes to understand the concept of corporate governance
within an organizational context. This type of governance allow the organization to make an
effective working environment (Cai, J., and et. al., 2015). Apart from that, this report also
includes the factors through which House of Fraser will improve its corporate strategy and will
gain sustainability and profitability. This research also includes the influence of such strategies
and policies so that its affect will also help the organizations of the same profession. Apart from
that, the impact of corporate governance on increasing the sustainability and profitability of the
organization is also discussed in details. This will help the industries to prepare effective
strategies and make their organization will good working environment.
Research Aims
The research aim for current study is “To analyse the impact of corporate governance on
sustainability and profitability of an organisation” A case study on House of Fraser.
Research Objectives
 To understand concept of corporate governance
 To evaluate different factors which influence sustainability and profitability of House of
Fraser.
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 To identify influence of corporate governance on profitability and sustainability of House
of Fraser.
Research Questions
 What is corporate governance?
 What are the different factors which influence sustainability and profitability of House of
Fraser?
 How corporate governance affects profitability and sustainability of House of Fraser?
LITERATURE REVIEW
A literature review is the writing of scholarly articles which have efficient knowledge in
the chosen area of subject. This is about the search and evaluation of the available literatures
written by the number of writers. Apart from that, further research in the same field also includes
literature review.
Corporate governance
According to the thoughts of James Chen (2019), corporate governance refers to the set
of rules and regulations through which companies are managed and controlled. It includes
management and leadership practices that helps company in obtaining goals and objectives by
balancing interest of all stakeholders like customers, government, financier shareholders and
management team. It also help the organization in achieving its aims and objectives. It also allow
the organization to implement the actions plans effectively so that controls will be measured and
objectives can be achieved easily. Corporate governance is the set of rules, policies and
frameworks which are helpful or an organisation to run its business smoothly. There are proxy
advisors and shareholders who have a great influence over the corporate governance but still the
main power of making such policies and frameworks is in the hands of Board of Directors of the
company. In case of House of Fraser, the board of directors of the company will make the
policies and frameworks for it. This will help them to state stableness within the organization.
Communication is the best way through which a corporate governance strategy can be
implemented within an organization. In case of House of Frazer, there is lack of communication
among the top management and the employees. This has imposed to be carelessness among the
employees and decreasing their capabilities. Communication will help the employees to work
effectively. The employees can discuss various strategies and polices which could help them to
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perform better at the workplace. The senior management should also provide effective training
sessions to the employees so that they will be aware about the new laws and policies framed by
the management. This will also help the organization to improve the corporate governance
strategy and increase the performance of employees also. Shareholders are the main focus of a
bad corporate governance. This will decrease the reliability, integrity or the obligation of the
shareholders. Apart from that, shareholder also refuses to the next time to invest within the
organization and this will decrease the funding of the firm. Board of directors are the primary
stakeholders of the company. They have the right to prepare the corporate governance within an
organization. Apart from that, they are also tasked with very important decisions such as
executive compensation, corporate officer appointments and dividend policy. Bad corporate
governance also affect the financial health of the firm. If the policies and frameworks are not
implemented effectively within the firm, than it could not lead a systematic form of corporate
governance. The performance of employees gets decreased and the revenue also. Thus, affecting
the financial health of the firm. Therefore, it can be said that, in order to make the firm
sustainable and profitable, the organizations should also focus on making effective corporate
governance strategies. These strategies will surely help the employees to increase their
productivity and performance. Therefore making the organization sustainable and profitable.
Different factors which influence sustainability and profitability of company
As per views presented by Hoque, (2019), it has been analysed that there are different
fundamentals which influences probability of every business organisation. It has been further
evaluated that main fundamentals which own capability of affecting sustainability and
profitability of business organisation are powerful brand image, collaboration, customer
retentions, community, flexible and adaptive leadership etc. Following is the explanation of
different factors which influence sustainability and profitability of the company.
Authentic Purpose
The other factors which can influence the sustainability and profitability of the company
necessarily required an authentic purpose. Every organization should require the answers of what
is going to be done and why it is going to be done? Without having proper authentic reason an
organizations cannot leads to success. In order to gain sustainability and probability, House of
Frazer should repeatedly examine the purpose of running the business. This will help them to
gain sustainability and profitability.
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A powerful Brand
It is necessary for the organizations to gain an emotional touch with the customers. This
emotional touch helps the organizations to gain competitive advantage and profitability. In order
to gain the emotional touch, the organizations should engage themselves with the CSR activities.
These activities provide societal assistance from the organizations to encourage the customers.
Therefore help the organisation to gain sustainability and profitability easily.
Collaboration
Collaboration is also an important attribute through which an organizations can gain
sustainability and profitability. There is nothing wrong in taking assistance in the areas where the
company is lacking such as finance, banking, experience etc. There are a lot of institutions
available which can help the organizations to gain finance, legal services and design &
development facilities. This help will assist the companies to gain sustainability and profitability
easily.
Customer Retention
Customers are the backbone of any organization. Apart from that, acquiring new
customers costs the company, therefore an organizations should try to retain its old customers.
As per the study, 2% increment in customer retention allows 10% decrease in cost of the product.
This statistics help House of Frazer to keep its elf sustainable and profitable.
Repeatable Sales
Manufacturing unique product is not necessary for the succession of the business. In
order to gain the sustainability and profitability, organizations should try to modify the same
product so that it can capture a lot of market among customers. The updated product should
match with the needs and demands of the customers. Thus it will help the company in gaining
sustainability and profitability easily.
Flexible and Adoptive Leadership
Leadership is the biggest issue of an organization which is not gaining sustainability and
profitability. In order to gain the success in a business, leader should be innovative and
adoptable. The needs and demands of the customers are variable and changes from time to time.
Therefore, a leader should be adoptable to the changes within organisation. In case of House of
Frazer, The leader should be flexible also so that it can adjust with any diverse situation. This
will surely help the company in making the organization sustainable and profitable.
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Corporate governance affects profitability and sustainability of organisation
On the basis of perception of Walls and Berrone, (2016) it has been analysed that
corporate governance of a company plays an essential role in the business growth of company. It
can be said that if an organisation holds good corporate governance then its easier for them to
sustain longer at marketplace and earn high range of profits. On the other hand, if corporate
governance of business organisation is not good then it would not be possible for it to sustain
longer and generate high profits. Corporate governance is applied to check the internal corporate
activities and the impact on society and natural environment. As per the demand of stakeholders,
they are forcing the internal employees such as board of directors and chief executives to keep in
touch with the corporate responsibilities in a new way. The board of directors and chief
executives have the right of resolving the issues of labour rights, destruction of rain forests and
other habitat. These activities surely help the companies to manage the corporate governance. In
order to manage the corporate governance, the tenures of CEOs and other senior officials are
shorter as compared to their affect of decision which are longer in future. Therefore stakeholders
always looks to hold the companies for the affect of corporate social governance for the future
use. The decision making of these stakeholders are judged on a quarterly or half yearly basis.
This provides effective judgement of the senior officials in order to implement the corporate
governance. The stakeholders activism also enhances corporate governance to keep updated.
When the environmental record is poor for the organizations, the activism role of shareholders
help them organizations to put forward the corporate governance.
Shareholders are most important stakeholder of a company therefore the issue raised by
them will surely impact on the functioning of a firm. The leader of the firm can resolve the issue
in a closed door by engaging the stakeholders in dialogue and engaging them in the general
meeting agendas. There are various issues also such as customer retention, lacking of employee
engagement, protecting the rights of employees etc. Preserving the above issue is also a work of
corporate governance. In order to make the customer retention, the board of directors of House
of Frazer should conducts meeting to make new strategy and plan. They can allow discounts to
the products which the customer is buying fluently. Apart from that, employee engagement can
also be increased with the help of taking their valuable feedback. They can provide an effective
ground report of the company which is not reaching to the higher officials. This will give them
confidence and make them feel special for the company. In case of House of Frazer, the
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sustainability and profitability also increases. In order to protect the rights of employees, the
organizations can make effective rules and laws which can help the employees to work with
effectiveness. This will help the employees to work independently and stress free at the work
place. Thus increasing the working performance of the employee and also for the organization.
RESEARCH METHODOLOGY
Research methodology is art of defining the used methods and approaches within a
specified research. In this methodology there are various methods and approaches used which
will define the robustness, reliability and confidentiality of the research (Chatterji and et. al.,
2016). Following are the methods and philosophies which will provide the necessary
information.
Research Philosophy
There are two types of research philosophy available in the research such as pragmatist
research philosophy and interpretivist research philosophy. In this research, pragmatist research
philosophy is sued which could yield better results with the use of different methods and
theories. In addition to this, this philosophy is comparatively new as compared to the
interpretivist philosophy. Interpretisvist research philosophy is not suitable for this research
therefore it is not used within it.
Research Approach
There are two types of research approaches within a research such as inductive research
and deductive research approach. In this research deductive research is taken into consideration
because its best fits with pragmatist research philosophy (Crowther, 2018). This approach is
helpful in forming the views and perception in order to get the objective of research. This is done
with the help of structured questionnaire for the respondents. The inductive research approach is
not taken as its does not allow to use a structured questionnaire.
Research Choice
There are two types of research available such as qualitative and quantitative. In this
research qualitative research is taken into consideration. Qualitative research is a scientific
method which helps in gathering information, generating for solving the problems and it is done
in-depth studies (Dignam, 2016). In this method includes individual interview, case
studies,participant observations, focus group. This type of research focuses on the quality rather
than the quantity. The main motive of this research is to give the detailed description.
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Quantitative research is the systematic process of collection of data and for performing
numerical, statistical and computation tool (Larcker and Tayan, 2015). This method helps in
collecting information from their potential customers by the sampling method through online
surveys, and questionnaire etc. which helps in making the results in the form of numerical.
Collection of data
There are two types of collection of data variable such as primary and secondary data.
Primary data is also known as raw data which is collected from various sources specifically for
the purpose of a particular research project or report. In this method of data collection, the
objective is to help the investigator to collect the original and relevant data for the research topic
outcomes. Primary data can be collected through different sources such as questionnaire,
observation, interview, Delphi technique, projective techniques and focus group interviews.
Secondary data is the already published and collected data by someone else for their own
purpose or future use. Secondary data is used by the researcher as it helps in collecting ample of
information with efficiency and consuming less time and cost. The data collected can be
moulded according to the researchers topic or interest (Cai and et. al., 2015). Secondary data can
be collected through different sources such as journals, newspapers, magazines, online articles,
books etc.
Research Sampling
In case of research sampling convenience sampling approach is taken into consideration.
This approach is helpful in identifying the potential respondents for the research. The potential
respondents are utilized in the survey questionnaire which will be used to collect the primary
data. A set of questions is prepared in questionnaire through which each of the respondents were
asked the same (Engert, 2016). The questions asked from the respondents were close ended so
that answer of the respondent will be limited such as positive, negative and no response. The
sample size selected in this research is 30.
Research ethics
In order to make research ethically right, it should be robust and relevant to the objective.
There are three steps through which a research can be ethically right such as informed consent,
anonymity and confidentiality. In case of informed consent, the respondents should be known
about the objective of the research. This will help in provide relevant data from them.
Anonymity shows that details of the participants will not be included in the research and its
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results. In the end, confidentiality shows that the research results will shown to the person who
has some stake in the research in a specific capacity. All the above three attributes will help the
research to be robust and relevant.
In the present research, investigator have used both the primary as well as secondary
sources of data collection methods in order to complete this research effectively within provided
time frame. In order to capture the primary data from the respondents here is listed a
questionnaire:
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