For this week’s forum, launch the week six lesson and read Chapters 12 and 13 in the textbook.
We focus on the need for both shareholders (the owners of the corporation) and their elected representatives – the board of directors – to actively ensure that management fulfills its overriding purpose: increasing long-term shareholder value. As noted by Robert Monks and Nell Minow, two of the leading scholars in corporate governance, the primary participants in corporate governance are: (1) the shareholders, (2) the management (led by the Chief Executive Officer), and (3) the board of directors. In recent years, there have been many instances of poor corporate governance. Corporate governance can be defined as the relationship between the various participants in determining the direction and performance of the corporation. There are several internal and external mechanisms that can serve to align managerial interests and shareholder interests. The internal mechanisms include a committed and involved board of directors, shareholder activism, and effective managerial incentives and rewards. The external mechanisms include the market for corporate control, banks and analysts, regulators, the media, and public activists.
After reading this week’s material, select ONE (1) of the questions below to answer. Use your own words and do not copy or quote from the book.
1 – Review illustration 12.3 in the text. “An incrementalist view”. Discuss the two questions at the end of the illustration in your forum. LINK – Illustration 12.3
Aligning of managerial interests, stakeholders’ interests and biased decision making are examples of political activities that affect strategy formulation and development. Managerial and shareholders’ interests tend to crash. Aligning these interests is a political aspect that requires mediation and illustration of how both parties’ interests will be achieved (Ozer, 2010). In case these interests are not satisfied, strategy development will be negatively affected where barriers will be continuously created to prevent the management from performing their tasks. Decision making between shareholders and management in an organization is another political activity that affects successful strategy development…
2 – Review illustration 12.4 in the text. “Boardroom battles at Hewlett Packard”. Discuss the two questions at the end of the illustration in your forum. LINK – Illustration 12.4
Relationship with company pioneers and integrity of one’s policies are the main bases of political influence that executives may use to spark a disagreement. Relationship with a firm’s pioneers is a great foundation of disagreements. Executives who have direct relationships with pioneer executive members often have the ego to..
3 – Review illustration 12.5 in the text. “The development of the microprocessor business at Intel”. Discuss the two questions at the end of the illustration in your forum. LINK – Illustration 12.5