Critical Element A.
A corporate structure enables a company to maintain the separation between its owners and its management through the implementation of corporate governance. Corporate governance provides companies with monitoring changes in corporate hierarchy as well as ensuring the protection of shareholder interests. Most corporations break down its hierarchy into two tiers. The first tier is made up by shareholder elected officials called the Board of Directors. The board of directors is further broken down into three distinct categories: the chairman, the inside directors, and the outside directors. The Chairman is chosen by the Board of Directors and acts a liaison between the company and the shareholders. Inside directors can either be members of higher-level management or corporate shareholders. Also known as executive directors, inside directors oversee internal corporate affairs. Outside directors are external parties that provide unbiased viewpoints to corporate decision making. The second tier includes the executives who provide the corporation with executive, financial, and operational support. Popular examples include: the Chief Executive Officer, the Chief Financial Officer, and the Chief Operations Officer. Both tiers correlate efforts to ensure that shareholder interest is maximized (The Basics of Corporate Structure 2015).
Like most companies, Wal-Mart uses the two-tier corporate structure. The company currently has a Board of Directors containing twelve
One of Walmart’s strengths is its board composition. Ideally, board members should have industry and consumer knowledge, financial and technological expertise, and CEO experience according to page 30 of the Nadler text (Nadler 10). Walmart’s board has each of these components. Their members have extensive experience in accounting, investing, technology, strategy, law, and international business. Many
The global market has shown exemplary contribution to the growth of the world's development until recently where financial crisis have been bombarding most economies. As a result, the cost of livelihood had been unaffordable to many who live below the dollar. The monetary crisis has led to the lowering of many currencies against the dollar, hence advancing the economy crisis to most worldwide nations. This turn of events has been attributed to the lack of exercise of business and management ethics in many multinational companies, firms and investments. Financial scandals have been the order of the past twenty years leading to the sweep over of the flourishing global market. The scandals, especially in larger companies and multinational, are spurred by inter and intra-conflicts in their organizational structures.
1. Does the board comprise a majority of independent directors? Ensuring that a majority of independent directors to monitor the actions of executive directors helps to address the potential for, or perception of, conflict of interest of executive director involvement in board decisions. A good corporate governance structure would encourage the board to regularly assess whether each non-executive director is independent.
ITC Ltd.’s strategy plan for compliance with the current acceptable standards or norms relative to social responsibility today is well thought out, especially for a company that sells potentially dangerous products, and try to meet and listen to all demands and laws in place since the start of their business. Even though in 2014 a new bill was passed for the majority of companies to build accountability and also have the government looking over the private sector (Banerjee, 2013). “The CSR provision requires affected companies to spend at least 2 percent of their average net profits made in the preceding three years on CSR” (Banerjee, 2013). Even though this bill has caused a lot of uproar for companies, ITC has actually already been
The Oxford English Dictionary defines ‘governance’ as ‘the act, manner, fact or function of governing, sway, control’. ‘To govern’ is ‘to rule with authority’, ’to exercise the function of government’, ‘to sway, rule, influence, regulate, determine’, ‘to conduct oneself in some way; curb, bridle (one’s passions, oneself)’, or ‘to constitute a law for’.
Walmart is an American multinational retail corporation that operates a chain of hypermarkets, discount department stores and grocery stores. Wal-Mart controls over 11,500 stores in 28 countries around the world. It was founded in 1962 by Sam Walton. Walmart’s CEO is Doug McMillon and the Chairperson of Board of Directors is Greg Penner. Walmart as we know it today evolved from Sam Walton’s goals for great value and great customer service. He
Joshua Kennon (2007), stated that “The board of directors is the highest governing authority within the management structure at any publicly traded company and is usually made up of the directors who are elected for a specific number of years by the shareholders”. According to Wikipedia,” A board of directors is a body of elected or appointed members who jointly oversee the activities of a company or organization”.
This was a very interesting article, in my opinion it brings to mind the derived phrase, which came first the chicken or the egg. Meaning, is corporate governance an attempt to control the results of unethical practices of corporations or is it meant to deter them. In reading this article, it is clear that certain corporations practiced unethical business behaviors for self-interest, but the questions this author have are: 1. Should corporate governance be regulated by the legislature as well as the organization and to what degree, 2. Is corporate governance, there to protect the shareholder or the stakeholder, 3. How effective is corporate governance on a global level. The need for a governance system is based on the assumption that the separation between the owners of a company and its management provides self-interest executives the opportunity to take actions that benefit themselves, with the cost of these actions borne by the owners (Larcker & Tayan, 2008).
The Wal-Mart was founded by Sam Walton in 1962 in 719 Walnut Avenue in Rogers, Arkansas. Today there are 706 stores that are running in the USA offering competitive prices and good shopping experience to millions of Americans across the USA. The size of and average store, according to Wal-Mart Corporate (2011a) is 108,000 square feet and has an employee base of about 225 people.
Wal-Mart Stores Inc. operates under a formal bureaucratic structure that consists of three operating division real estate, logistics and store operations which are control under a unified leadership team. This unified team is organized into three distinct geographic business units: Wal-Mart west, south and north. The benefit of Wal-Mart organizational structure is that it helps each division unit to focus on specific goals. Therefore increasing the company effectiveness
The Chairman and four other directors are independent non-executives, and the CEO and one director are non- executives.
The rise and fall of the Royal Bank of Scotland is characterized by poor corporate governance which allowed for the complete dominance of the executive management over the board of directors and a massive principal-agent problem. Positive social dynamics and the power of weak ties allowed for compliance while intimidation and bullying tactics silenced questions, concerns and opposition. The board’s utter compliancy and borderline negligence enabled rampant, unchecked empire-building at the cost of shareholder value and led to a spiral of unaccountability and gross incompetence. Stakeholders’ loss of confidence from misinformation and misdirection was an inevitability that sealed
A)Corporate Governance is a structure of the company by balancing all the individual, corporation and society interest. It also helps to create relationship between company board, shareholder and stakeholder and have proper functioning of organization to prevent fraud. Board of director in the company is being appointed by the shareholder and was been audit by them if the director managing and operating the business well by reporting or having general meeting. The responsible of the board of director are achieving the company objective, provide leadership and supervising the management and reporting the shareholder about the achievement and problem. All action of the board are subject to laws, regulations and shareholder. There are various theories that underline the development of corporate governance which include Agency theory, Stakeholder theory, Stewardship theory, etc.
Sole traders have unlimited liabilities,meaning that in terms of law there is no separation between them,hence the sole trader is also liable for the debts incurred within the business, which makes it very risky to run for a long-term.
Chinese companies are characterised by the structure composed of a dominant or block shareholder who owns a majority percentage of shares, which definitely has more influence over the operation and decision-making (Xu 2004). The major shareholders of China Primary is listed in the table below, modified from its official website.