Strategic Management

Introduction

The main purpose of this paper is to analyze the conceptual framework of corporate governance and organisational structure. In this paper, key features, benefits, principles, roles, importance and concepts related to corporate governance and organisational structure will be outlined and explained to attain the key objectives of this paper.

Corporate Governance

In the context of business, corporate governance is defined as the system of guidelines, laws, rules, process and practices by which organizations are managed, operated, regulated, controlled and governed. In the present time, each and every type of companies follows and adopts a corporate governance model that reflects roles, responsibilities and rights of all participants in the organization. It is also includes both organizational internal as well as external factors that have major impact on the interests of an organization’s stakeholder including investors, customer, suppliers, management, regulators, government etc.

In a company the boards of directors are accountable for creating and developing the framework of corporate governance. This is aligned with company’s strategic goals, objectives, vision and mission. Today, corporate governance is more important for the overall success or growth of a company because a company can outline its specific processes in this. For instance, dividend policies, disclosure practices, performance measurement, executive compensation decisions, action plans, etc. are included in the corporate governance (Rothaermel, 2015).

One of best example of good corporate governance is an enforced & well-defined organizational structure that offers to everyone. It is also ensures that, the company is accept ethical standards, legal norms, and follow best practices and applicable laws. In contrast, bad or poor corporate governance can be seen in poorly structured companies. This type of corporate governance is damage the image & business reputation of a company and results in poor productivity, loss of financial health of the company etc. A strong Corporate Governance statement reflects the core purpose and objectives of the company.

A company with good corporate governance reflects the accountability and power within the company. It is also allow a company to deal with the complicated issues more successfully. It is also ensures that a company has specific and correct decision making system/process in the place that is important in balancing the interests of the key stakeholders. It is also allow a company to set specific business objectives in the context of regulatory, social, legal, ethical, and market environment. A company with good corporate governance can develop trust and confidence of stakeholders in the company.

The key features of good corporate governance are: discipline, transparency, independence, accountability, responsibility, fairness, social responsibility etc. On the other hand, it should also be noted down that, a good corporate governance policy is developed by a company based on the six pillars including: Rules of law, Moral integrity, Participation, Transparency, Effectiveness and efficiency, and Responsibility and accountability. Moreover, good governance play key role in enhancing the quality of decisions effectively. For case, a company can run and manage its business operations more successfully and create long term value. It is also ensures that each and every person within the company follows ethical & transparent decision making process in order to protect the rights of key stakeholders (Morden, 2016).

Good corporate governance is also essential for a company for the overall success, financial stability, long term investment, business integrity, stronger growth. It is also reflect responsibility, honesty and openness of the management of a company towards its stakeholders. In the present time, a company is invest millions of dollars in order to develop good corporate governance so that long term business objectives can be attained and overall performance can be improved. For case, it is also allow a company to develop trust with the community and investors and create long term investment opportunity. Additionally, it is also help attracting & retaining talented and skillful directors, effective decision making, minimizing cost of capital, strategic planning, managing internal operations, encouraging positive behavior etc (Hill, Jones & Schilling, 2014).

Principles of corporate governance: The main principles are discussed as below such as:

The primary principle of corporate governance is that all the types of shareholders should be treated fairly, honestly, and equally. They should be aware about their rights. On other hand, social, contractual and legal responsibilities to non-shareholder stakeholders must be upheld. Moreover, effective communication should be in place to convey the information to shareholders of the company. The top management of the company including board of directors should be accountable to maintain fairness, accountability, transparency and diversity. They should also have specific skills, and abilities to review overall practices. All the policies, norms, standards, and procedures must of transparent and fair. Companies should have ethical policies that define code of conduct for board members and executives (Ethiraj, Gambardella, & Helfat, 2016).

Organisational Structure

An organizational structure can be defined as a system or process that play key role in outlining and explaining how a number of business activities are directed and controlled to attain common goals and objectives. Such activities may be responsibilities, roles, rules and functions. It is also reflect information flows among the various levels of employees within a company. On the other hand, it is also important for leaders to understand the organizational structures of their organizations for the strategic alignment (Doz, 2017).

By designing an effective and appropriate structure, a company can maximize business and individual performance. Matrix, Divisional, Functional etc. are the main types of organizational structure. An effective organizational structure is essential for a company because it allow a company to make more informed and faster decisions on the regular basis. It is also play key role in improving organizational efficiency, motivating the employees, enhancing employee performance, eliminating duplication of work, reducing employee conflict, and improving communication.

Organizational structures have a direct and indirect impact on a company’s systems, polices, strategies and procedures. It is also reflect who makes the organizational decisions to set the strategic objectives and actions. It is also allow individuals to see their organization and its climate, business environment, structure, system and strategies. A company can structure its organization in number of ways but this totally depends on the corporate objectives. It is also play key role in reflecting the roles and responsibilities of individuals, teams, departments so that common goals and objectives can be attained successfully. Today, it is essential for every company to develop and adopt an appropriate organizational structure to attain overall goals and objectives by developing clear cut guidelines about how to run the business operations successfully. It is also helps the people in maintaining orders and resolving disagreements (Bettis, Gambardella, Helfat, & Mitchell, 2015).

Conclusion

On the basis of above discussion, it can be concluded that, it is essential for a company to have a good corporate governance and organisational structure in order to run business operations successfully. These helps the companies in setting of corporate vision, long term objectives and mission. Along with this, it is also analyzed that, a company can improve its business reputation and image by developing effective & appropriate framework for corporate governance and organisational structure. Finally, it can be said that, these offers a number of specific benefits to a company and allow to create more effective strategies, business procedures and system for the overall success and growth.

References

Bettis, R. A., Gambardella, A., Helfat, C., & Mitchell, W. (2015). Qualitative empirical research in strategic management. Strategic Management Journal, 36(5), 637-639.

Doz, Y. L. (2017). Strategic management in multinational companies. In International Business (pp. 229-248). Routledge.

Ethiraj, S. K., Gambardella, A., & Helfat, C. E. (2016). Replication in strategic management. Strategic Management Journal, 37(11), 2191-2192.

Hill, C. W., Jones, G. R., & Schilling, M. A. (2014). Strategic management: theory: an integrated approach. Cengage Learning.

Morden, T. (2016). Principles of strategic management. Routledge.

Rothaermel, F. T. (2015). Strategic management. McGraw-Hill Education.