Museum of London: Corporate Governance, External Environment Report

This report provides a detailed analysis of the Museum of London, examining its organizational profile, corporate governance, and external environment. The report begins with an introduction to the museum, its history, and its objectives, including its mission to preserve and present London's rich cultural and social heritage. It then delves into the museum's organizational structure, funding sources, and strategic objectives, including plans to increase visitor numbers and expand its presence within the London culture. The report then explores the museum's corporate governance, discussing the role of the board of governors, resource-dependence theory, and stakeholder theory in shaping the museum's operations. Finally, the report conducts a PEST analysis to assess the external environment factors that may impact the museum's relocation to Smithfield, including political, economic, social, and technological factors, and their implications on the museum's strategic plans.

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ASSIGNMENT TITLE: HOSPITALITY ENVIRONMENT
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Table of Contents
Introduction......................................................................................................................................3
Task 1 Organisational Profile..........................................................................................................3
Task 2 Corporate Governance.........................................................................................................5
Task 3 External Environment..........................................................................................................6
Conclusion.......................................................................................................................................9
Reference List................................................................................................................................10
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Introduction
The essay provides a brief study on the Museum of London and its way of functioning since
being founded. The essay discusses on the organisational profile of the museum, its businesses
and operations. The form of corporate governance the Museum employs has also been discussed
to understand Museum's compliance with standards of good corporate practices, exhibited by the
management of the Museum. The essay further lays emphasis on the external environment
factors of the museum and uses PEST analysis to determine their future effects and implications
on plans of the Museum to relocate itself to Smithfield General Market in Farringdon.
Task 1 Organisational Profile
The Museum of London was the result of the merger between the London Museum and
Guildhall Museum and was established in 1975. The Museum is governed as per the Museum of
London Acts, 1965 and 1968. It is jointly funded by the City of London Corporation and Greater
London Authority. Museum holds information and artefacts about the first settlers in the city of
London to the modern times. The museum has sites in central London, Docklands and in
Hackney.
The Museum is a major attraction and tourist destination in the London city. It has set aims for
the year 2018 in which the Museum has suggested to increase its visitors count to 1.5 million
annually to its all museum sites. It will make itself involved in 10 most important issues
pertaining to London so that it can reach out to more people to let them know what the museum
seeks and what does it stand for. In a way, the management of the Museum wants to expand their
involvement and presence in the London culture and let people embrace its rich history. The
museum also aims for increasing use of their collections for research purposes while also
significantly taking up and promoting research activities for greater impacts than existing results.
Through this, the Museum is aiming to engage with and inspire over 850,000 school children. By
the year 2018, the Museum wishes achieve £100m in total income through various sources of
funding (Museum of London, 2017).
The Museum’s mission is driven by its infectious passion and commitment to exploring the ever-
changing story of the great heritage city, London. It wants to preserve and present every side of
the story to the world, regarding rich cultural and social heritage of London. Its vision is set to
inculcate similar passion among others and let them look and think about London in completely
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different but innovative ways. The museum seeks to get involved in everyday activities and be a
part of every Londoner’s life to contribute to its rich cultural status.
Thus, the Museum has set five strategic objectives to achieve its mission. They are to reach more
people and engaging every schoolchild, become a better-known institution, stretch thinking and
being self-dependent and sustainable. These objectives have been set to deliver the best services
and experiences to its audiences and visitors.
The Museum of London is a charitable institution which is jointly funded by GRA and the City
of London Corporation. London Museum Trust, Mackenzie Trust and Joicey Trust are separate
entities, considered as subsidiary charities to the Museum, formed to provide funds to the
Museum of London and Trustees. The public grants and donations are vital for the museum’s
functioning but it is constantly enhancing itself through commercial activities, grants and
fundraising. The Museum wants to do more with the help of increased financial resources and
deliverance of better value for money services. The museum aims to improve its financial
dependencies through the implementation of the robust and consistent framework and integrating
commercial opportunities in form of retail, catering and corporate hospitality, in all its work
activities.
The financial statement of the Museum mentions individual funds divided into distinct
categories. They are restricted funds, designated funds, general funds and endowment funds.
General funds are unrestricted funds raised and available to use by the Museum for an upgrade
and future objectives, under the discretion of the Museum's Board of Governors. The London
Museum Trust has been set as a general fund for the financial needs of Museum objectives.
Designated funds, also unrestricted funds, are set aside by same Board of Governors for expenses
of museum objectives. Restricted funds comprise grants and donations for major museum
projects but subjected to restrictions imposed by donors. This type of funds includes Joicey Trust
and Mackenzie Trust. Endowment funds like London Museum Trust and Joicey Trust have been
set up where donors disallow conversion of funds into income. The museum received restricted
funds of £400,000 in the year 2015 for funding of specific strategic activities for the new
Museum project at the site of West Smithfield, including the technical study of the site. The
museum spent £308,000 from this fund for architectural competition, the study of the site and
various other activities related to the new project.
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The financial operations of the museum also include the donation of goods, gifts and facilities.
The donated goods and objects are recognised on an issuance of receipts on the basis of the value
of gifts the charity would have purchased or the amount the goods may be sold in the open
market.
Task 2 Corporate Governance
Corporate governance refers to the way an organisation is governed. It is the guidelines
according to which companies are directed or managed. It is controlled and managed by the
Board of Directors. It is the governing technique that considers the interests of the stakeholders
of the company or institutions, such as shareholder, suppliers, financiers and customers. As cited
by Filatotchev et al. (2013), corporate governance strategies provide a framework for
management plans and business conduct for the purpose of attaining long term goals of the
companies. The management or the Board of Directors has to vividly execute governing plans
and activities to generate benefits for stakeholders and business to flourish.
The Museum of London is governed by a board of governors that comprises 18 members,
appointed by the City of London Corporation and Greater London Authority. These governors
are responsible for overseeing the management and accountability of the museum operations.
The governance strategies and methods can be illustrated with the use of governance theories,
resource-dependence theory and stakeholder theory.
Resource-dependence theory emphasises that the board is responsible for providing the resources
to executives for the meeting of the objectives. In a similar way, the Board of Governors of
Museum of London controls the flow of resources and allocation of funds for various
development and upgrade processes. They are responsible for ensuring that every of the museum
staff receives adequate and efficient support so that he or she do not fail to perform due to lack of
support of help from the higher authorities. For the prospect of the new project of the museum in
terms of relocation is also managed by the governors and they foresee and decide the funding
and allocation processes for the project. As opined by McManus (2016), the board has also to tap
into their resources and connections for gaining financial support for the museum. Resource-
dependence theory recommends for the collective decisions by the executives and given approval
by the board for good practices of corporate governance. The board functions adhering to this
recommendation and approves proposal and decisions of executives after careful assessment and
internal discussions. The board maintains the general management and control of the Museum
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operations through amendment of its annual plan that points to every aspect of processes, from
financial statements to staff recruitment and salary distribution. The Director of the Museum
reports to the Government while undertaking the responsibility of the general administration.
The board’s governance policies and principles are subjected to the proceedings of the Museum
and facilitate functioning exercises for an achievement of the objectives, such as high visitors,
increased revenue and better management.
Stakeholder theory implies that other stakeholders, besides the shareholders, are also part of the
organisation and have stakes within it. The theory makes an argument that they are also affected
by success or failure of corporations and that they should also be liable to returns for their
investments. The stakeholders in the Museum of London can be identified as the donors and
funding associations, visitors and the two parent organisations the City of London Corporation
and Greater London Authority. The board of governors is thus responsible for providing their
share of returns from the business. The board and management have to adhere to the guidelines
in the Museum of London Acts, 1965 and 1986 that outlines the methods of corporate social
responsibility and ethical manners in which the board must run. In this aspect, the governors and
Museum Director have to consider interests of all groups and take decisions in best of their
interests. The management has to follow corporate social responsibility, under which the
museum cannot raise prices and fees exorbitantly. The management has to follow a regulated and
structured manner to raise funds and seek donations which cannot be used other than the purpose
of museum expenses and needs. The board has to take into account practices of organisational
policies and sustainability within the museum environment.
The governance methods and processes in compliance with ethical manners and CSR affect the
Museum in seeking greater returns and profits. The board of governors cannot think beyond the
interests of stakeholders and have to make certain hard decisions. Compliance with standards of
good governance results to formation of more rules and strict monitoring that are held in fewer
regards. CSR responsibilities and ethical manners affect in the long term benefits for the
museum.
Task 3 External Environment
The Museum’s plan to move to Smithfield in Farringdon is a grand development plan for the
museum in terms of scale and efforts required. The target set for the move has been 2021. As the
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plan is very crucial and important for the Museum of London, it is necessary to conduct a
situational audit of the plan to identify factors that may influence the move.
The situational audit is used to make the analysis of both external and internal environmental
factors that may influence operations of the Museum of London. This process will help in
evaluating the position of Museum of London within its environment and the effects the factors
may impose on its strategic plans. Here a situational analysis of Museum of London has been
presented on the pretext of evaluating the role and impact of external environment factors. The
analysis looks at the political, economic, social and technological factors that play the significant
role in museum's plan for new business objectives. It identifies and studies all political
interventions in favour or in against to the company's strategies, social obligations in terms of
customer behaviour and human resource, economic condition and stability offered by the
government and technology favouring or disregarding the efforts of operations. PEST analysis
on the Museum of London is done to understand the impact of these factors on museum's move
for relocating to Smithfield.
Political Political factors play an important role in the success of the operations
undertaken by the company for the purpose of meeting organisational
objectives.
The city of London and the Government of England has several policies
and procedures defining the process of relocation for government
enterprises and institutions. Labour laws and extent of investments have
also been laid down under acts of government. These acts and regulations
comply for the purpose of regulations on investments made in a new
project. Political factors can also be the regulations imposed in form of
donations or funds generated.
Economic The UK and almost the whole of European economy have been
experiencing recession that can impact the plans such as that of Museum
of London. The events of Brexit and its consequences can also significant
factors impacting the business plans of the museum. Global economic
slowdown is also a factor in consideration.
Social Social factors affect organisations in terms of changes in consumer
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behaviour and adoption of latest trends. The growth in the ageing
population of England, fewer interests in culture and history with
increasing affections for field trips and vacations are some of the social
factors that may influence the museum's decision for relocation.
Increasing attacks and destruction of natural heritage can also play
hindrance to the move of the museum.
Technological Though technology is advancing at rapid rates and leading to new
methods for various business activities, the development of transportation
and relocation has been quite stagnant. Setting the plan in early 2015, the
museum set the deadline by the year 2021 which is a long period. But
developing ICT and latest security systems can also help the organisation
in making the new project more advanced and customer friendly and
interactive museum.
Political: The move to shift the base to Smithfield General Market in Farringdon creates wide
opportunities for the Museum of London and this needs a lot of investments. Since the museum
runs on funds, it will require funds higher than what it has been generating which may throw a
challenge to the museum's management. Labour laws and taxation policies may as well pose a
threat to the corporation plan for relocation. This will create a huge hole in the corporation's
coffers and may enforce them to compromise on the plan budgets. Then, the after events of
Brexit may also challenge the move, given the UK is not liable for any more grants and support
from the EU.
Economic: Recession in the UK and other parts of the world can see the museum generating
lower funds than expectations, which can create the financial burden on the management's plan.
The museum may have to compromise on certain aspects of relocation that may make its
operations somewhat below how they have been running the museum in London. Recessions and
economic disparity after the events of Brexit may affect the project in terms of generating
investments. The exit of UK from the EU can cause a problem to the museum, as UK is no
longer abide by economic policies of EU and may need to incur huge costs for availing services
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of the agencies located outside the UK. A number of visitors are likely to fall behind, making the
short of raising the cost of operations.
Social: It is likely to decrease in visitors count, considering the growing population of aged
people in England. The savings made by them will rather be spent on personal commodities than
on the museum visits. Protests and displeasure among people for the capture of a heritage site
Smithfield area are a concern for the museum. People have been opposing the museum's move
on the pretext that relocation activities may damage the brick and cast iron composite structure
of the site. In addition, people of UK have been giving preference more to the sports adventures
and hiking trips. So, the museum’s believe that relocation shall facilitate more visits is
threatened.
Technological: Impacts of the technology on the museum's plan are very limited and opaque only
in the aspect of duration the project takes for completion. The museum is taking quite a long
period for relocation, given how technology has developed but it still needs further development
in the process of relocation. As suggested by Yoshikawa et al (2014), use of latest technology
and advanced machinery may create a financial barrier for the museum, as a relocation of such a
big institution demands heavy and state of the art machinery and tools. Not all tools are available
in the UK and it may need to import them from nations with some of the best museum operations
and running procedures in the world, such as Spain or France. But the move may see fruition in
the form of integration and implementation of improved ICT systems.
Conclusion
The Museum of London’s plan to move out to Smithfield General Market that has been lying
vacant for a long time, in Farringdon area may be a strategic decision for the museum in terms of
wider space and rapid development of the location. The museum expects to increase tourist
attraction by having the museum in a heritage building and as a part of the cultural hub for the
City of London Corporation but the implications and disadvantages of the move are greater than
the plan itself. As highlighted in the essay in the perspective of existing corporate governance,
the Museum is bounded under the regulations of Museum of London Acts and comply with
ethical practices and corporate social responsibilities considerations. It functions is not governed
as private museums and this may create the hindrance for its plan to move to Smithfield location.
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Reference List
Books
McManus, P.M. ed., 2016. Archaeological displays and the public: museology and
interpretation. Routledge.
Journals
Filatotchev, I., Jackson, G. and Nakajima, C., 2013. Corporate governance and national
institutions: A review and emerging research agenda. Asia Pacific Journal of
Management, 30(4), pp.965-986.
Yoshikawa, T., Zhu, H. and Wang, P., 2014. National governance system, corporate ownership,
and roles of outside directors: A corporate governance bundle perspective. Corporate
Governance: An International Review, 22(3), pp.252-265.
Websites
Museum of London (2017). Availble at:https://www.museumoflondon.org.uk/museum-london
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