Key Reasons Why Dick Smith Failed When Others Survived?

Because of this rapid growth several challenges can present themselves. A primary challenge that can present itself is the lost of the boutique feel because of the hundreds of locations. Even though each boutique is different and personalized, opening too many locations may cause the retailer to lose its niche in the market. Another challenge is the many changes the company has gone through in upper level management. Because of the changes investors have been discouraged, as mentioned before, and shares were down 16% after the changes.

The company’s increase in inventory (illustrated on the statement of cash flows) rose after 1970 and culminated by a drastic increase in 1973. This increase in inventory (especially in 1973) appears to be heavily financed by short-term and long-term borrowing rather than the typical accounts payable. This is a bit unusual and in 1973 (when they acquired the greatest amount of debt equity, their accounts payable decreased. Their sales were not sufficient to offset the large outflows of inventory related costs. Furthermore, Grant’s decentralization was also a cause of their financial woes because rather than corporately controlling credit extension and credit terms, they allowed each store manager to set their own policies (and manipulate them as they desired). This disastrous policy imploded in 1975 when the company had to make a $155.7 million provision for bad debt expense. So not only did the company have substantial debt and bad debt to equity ratios, they were forced to write off about 8.8% of their total sales from 1975.

Corporate governance is a set of actions used to handle the relationship between stakeholders by determining and controlling the strategic direction and performance of the organization. Corporate governance major concern is making sure that the strategic decisions are effective and that it paves the way towards strategic competitiveness. (Hitt, Ireland, Hoskisson, 2017, p. 310). In today’s corporation, the primary objective of corporate governance is to align top-level manager’s and stakeholders interest. That is why corporate governance is involved when there is a conflict of interest between with the owners, managers, and members of the board of directors (Hitt, Ireland, Hoskisson, 2017, p. 310-311).

However, the process was unstructured: there were no annual terms for the board members and no formal election process. Bob and Rex should have put in contractual agreements with the board members, which defined their roles and responsibilities on the board. Additionally, they should have put in performance based incentive plans for the board members to further incentivize them. Furthermore, a formal selection plan should have been drafted to select the board in future: how many members, their expertise, tenure, etc. This plan would have been very useful if someone on the board decided to leave or if they would have wanted to add a new

Such an intense focus has been placed on quarterly earnings as an indication of a company’s success by everyone from analysts to executives that ethics have for the most part been thrown out the window, sacrificed to the all important number, i.e. earnings per share. This is the theory in Alex Berenson’s book “The Number: How the Drive for Quarterly Earnings Corrupted Wall Street and Corporate America.” This number has become part of a game to be played, a figure to be manipulated – beat the number and Wall Street all but throws a parade, miss it and a company’s stock may be abandoned. Take into account the incentives that executives have to beat the number and one can find plenty of reasons to manage earnings.

Common stockholders are the basic owners of a corporation, but few stockholders of large corporations take an active role in management. Instead, they elect the corporation’s board of directors to represent their interests. Board members seldom get involved in the day-to-day management of the company. They establish the basic mission and goals of the corporation and appoint

As Gill has stated “A committee's function is to bring the experience, expertise and judgement of a group of interested and informed individuals to bring a specific area of the corporation's responsibility,” (Gill, 2005). The boards would each research and gather informations, analyze data, come up with affirmative action plans and present these finding, plans and suggestions to the board, the board will then discuss the suggestions and decide on the best course of action. The three committees I would suggest would be financial and risk management committee. a fundraising committee and a program/ service committee that also handles quality assurance. Each of these committees would ensure that key areas of governing is constantly paid attention to. These committees would give board members a sense of purpose as it would utilize their best talents and have them focus their areas of expertise to create strategic plans for each

Members of the Society appointed a thirty-member Board of Managers. Meeting weekly as the policy making section, an Acting Committee, consisting initially of five and later seven Board members was also implemented. Appointed by the Acting

Like several companies, Nortel stipendiary their executives with stock choices (Collins, 2011). This compensation solely inspired the tendency to be but honest regarding the company’s finances. author closely-held stock choices that solely inspired his actions to fulfill or beat the benchmark set by analysts. If Nortel’s earnings showed to be higher than the benchmark, Nortel’s stock costs would rise creating the stock closely-held by management to be even a lot of valuable. By tweaking the books to indicate the road earnings price as critical the allowable accumulation price he created the stakeholders assume that the corporate was creating extra money than it had been. “Nortel ne'er incomprehensible a benchmark over the sixteen quarters (Collins, 2011).” it had been too tempting to bump the numbers up so the stocks gave the impression to be value over they were. “Nortel’s accounting practices junction rectifier to AN investigation by AN freelance review committee, that found that insubordination with accumulation and accounting fraud were undertaken to fulfill internally obligatory earnings targets (Collins, 2011).”

To better understand their declining performance, the company then launched an internal review of their operations and determined that the main reasons for their recent struggles were: a decline in department store sales, the rise of fast fashion retailers, the company’s own out-of-date supply chain model, and that the company’s focus was diluted over too many brands and too many initiatives. (“The

The executives are accountable to the board of directors. Instead of protecting the investors, the board enticed the culture of financial fraud in the company for selfish gains. It failed in its duties in keeping the executives in check.

Usually in corporations there is a clear distinction between the people who take critical decision – Board of Directors – and the people who actually execute the decisions – management. In FBM, many managers were also part of the Board. This arises conflicts of interest. This should be avoided.

In order to become a member of this committee, an individual who meets the qualifications would be nominated by the Board, upon the recommendation of the Nominating Corporate Governance Committee; this process occurs annually. Members of this committee are Gregory D. Brenneman, Albert (Al) Carey, Armando Codina, Helena B. Foulkes, and Bonnie G. Hill.

In light of the recent scandals that rose around big multinationals such as Enron and WorldCom, it has become evident that reform in the traditional corporate operations and objectives was to be encompassed in the organisations corporate strategies. Indeed throughout the years, companies main objectives were defined primarily as being economic objectives, Multinationals developed with sight of profit maximisations regardless to the other incentives, Friedman considered that to be the foundation for a well-managed company, it was further considered that the financing of any other sort of social corporate activities rather unnecessary. The expenses were regarded as expenditures for the owners and investors; this was a time where shareholders rights were regarded as conflicting with other constituents namely the employees, creditors, customers or the community in general. However this interpretation is seen as rather inadequate due to the nature of the amalgamated relation between both constituents. Stakeholders in modern corporate doctrine are considered as a core apparatus for the well functioning of a business. It is however often argued that the only way for a corporation to achieve better results and maximise its profits is to include other people in the process, individuals or organisations with direct or indirect interest in the well performance of the company, that is the reason why modern regulations and codes include a number of stakeholders other than the

According to Milton Friedman, "stockholders are the owners of the corporation, and hence corporate profits belong to the stockholders. Managers…have a moral obligation to manage the firm in the interest of the stockholders" (Friedman 45). Adelphia was managed in such a way that it was not in the stockholder's interest, in fact, it was only managed in the interest of the Rigas family. It is wrong to harm the stockholders because they have entrusted the company with their money with an expected return and maybe an