CG Group Ass
CG Group Ass
CG Group Ass
Group Assignment
1. Executive Summary...................................................................................................1
2. Case Study..................................................................................................................3
2.1 Question............................................................................................................3
2.3.3 The trade unions to which the home country workers belong................9
3. Conclusion................................................................................................................11
4. References................................................................................................................12
1. Executive Summary
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governance which are agency cost, residual loss and agent bonding cost.
In corporate governance, from the principles in the Combined Code, the key roles
and responsibilities of the board of directors are include decide on a formal schedule
of matters to be reserved for board decision; select and appoint the CEO, chairman
and other board members; ensure that company’s management is performing its job
correctly and more others duties. An effective board in corporate governance should
demonstrate the capabilities of clear strategy aligned to cabalities; vigorous
implementation of strategy and sharp focus on the views of key stakeholders. For a
good director should fulfil some characteristics such as motivated, proactive and
experienced, and also the skills such as listening, leadership and questioning.
In corporate governance, shareholders are the owners of companies. A small
business may have just one shareholder, the founder, while a public company may
have thousands of individual and institutional shareholders, such as mutual fund
companies, pension funds and hedge funds. Shareholders play an important role in the
financing, operations, governance and control aspects of a business. Shareholders
have rights to vote on company decisions. They can vote on a variety of corporate
matters including voting in officers, company acquisitions and mergers or liquidations
of company assets. Voting on these matters generally take place when corporations
have their annual meetings. Shareholders also have rights to inspect their
corporation’s financial information. Inspecting the books gives shareholders a chance
to view how their corporations are performing.
A family business is a commercial organization in which decision-making is
influenced by multiple generations of a family — related by blood or marriage or
adoption — who has both the ability to influence the vision of the business and the
willingness to use this ability to pursue distinctive goals. They are closely identified
with the firm through leadership or ownership. Family business continuity plans
commonly establish a governance structure for the family and for the family business.
The purpose of those structures is to improve strategy and control mechanisms of the
family business and, to organize the communication and relationship between family
owners and business executives.
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2. Case Study
2.1 Question
Goaway Hotels is a chain of hotels based in one country. Ninety per cent of its
shares are held by members of the family of the founder of the Goaway group. None
of the family members is a director of the organization. Over the last few years, the
family has been quite happy with the steady level of dividends that their investment
has generated. Directors are encouraged to achieve high profits by means of a
remuneration package with potentially very large profit-related bonuses.
The directors of Goaway Hotels currently wish to take significant steps to
increase profits. The area they are focusing on at present is labour costs. Over the last
couple of years, many of the workers they have recruited have been economic
migrants from another country, the East Asian People’s Republic (EAPR). The EAPR
workers are paid around 30% of the salary of indigenous workers, and receive fewer
benefits. However, these employment terms are considerably better than those that the
workers would receive in the EAPR. Goaway Hotels has been able to fill its vacancies
easily from this source, and the workers from the EAPR that Goaway has recruited
have mostly stayed with the company. The board has been considering imposing
tougher employment contracts on home country workers, perhaps letting number of
dismissals and staff turnover of home country workers increase significantly.
In Goaway Hotels’ home country, there has been a long period of rule by a
government that wishing to boost business and thus relaxed labour laws to encourage
more flexible working. However, a year ago the opposition party finally won power,
having pledged in their manifesto to tighten labour laws to give more rights to home
country employees. Since their election the new government has brought in the
promised labour legislation, and there have already been successful injunctions
obtained, preventing companies from imposing less-favourable employment terms on
their employees.
An international chain of hotels has recently approached various members of the
founding family with an offer for their shares. The international chain is well known
for its aggressive approach to employee relations and the high demands it makes on
its managers. Local employment laws allow some renegotiation of employment terms
if companies are taken over.
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Required
You are acting as an advisor to the board, specialising in negotiating changes to
employment conditions. Using Mendolew’s matrix, analyse the importance of the
following stakeholders to the decision to change employment terms of home
country’s workers in Goaway Hotels.
Professional skills marks are available for demonstrating evaluation skills in assessing
the importance of the different stakeholders.
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2.2 Mendolew’s Matrix
As the conclusion, from Corporate Governance class, we learnt about that it is the
system by which companies are directed and controlled in the interests of
shareholders and other stakeholders. In this subject, we realize that Corporate
Governance plays an important role in managing company’s activities. A successful
organization is not only deal with customer but it is also all of the stakeholders who
can affect or be affected by the organization's actions. They have a duty to care for
their stakeholders and comply with ethical and legal. In this process, we can
understand different agency problem and principles which may happen in the reality
working condition. Therefore, different actions or solutions would be taken by
organization to avoid from getting worse. They can also be classified according to
their power and interest as Mendolew’s matrix. The members of the organization can
make the most suitable decisions through understanding the shareholder and
stakeholder role in operation and strategy especially upper-level management.
Hence, after finish the analysing the case study, we can know that the founding
family shareholders and the trade unions has high power to decision to change the
employment terms of home country’s workers in Goaway Hotels, while the board of
directors and the migrant workers has low power to the decision to change the
employment terms of home country’s workers in Goaway Hotels. Although the level
of interest for each of the stakeholders may be different, but their power still can
affect the decison to change employment terms in Goaway Hotels. Through
Mendelow’s matrix, we will be more understand about the power and interest for all
stakeholders invloved in corporate governance. In Mendelow’s matrix, the
stakeholder mapping is used to assess the significance of stakeholders. This has
implications for the organisation which are the framework of corporate givernance
and the direction and control of the business should recognise stakeholders’ levels of
interest and power. The key blockers and faciliators of change must be identified. The
stakeholders mapping can also be used to establish future priorities. The Mendelow’s
matrix is the best approach to analyse the stakeholders and know their position and
importance.
4. References