Corporate Governance is the system by which business corporations are directed and controlled ( Cadbury Report, U

K)
Corporate Governance is the process, structures and relationships through which the board of directors oversees
what its executives do
A primary objective of corporate governance is to ensure that the interest of top level managers are aligned with the
interest of the shareholders.
Corporate governance means maximising long-term shareholder value in a legal and ethical manner ensuring
fairness, honesty and dignity in all transactions within and outside the company- with customers, employees,
investors, partners, competitors, the government and society.
Effective Corporate Governance
• generates a sense of direction, values to live by or work by and well understood and accepted policies that
tell organisation members how they should behave or what they should do in certain circumstances
• brings the right people together at the right time to discuss the right things
Three components of Corporate Governance:
• Shareholders
• Board of directors
• Management (CEO)

The Board of directors:

• The board must ensure a future oriented culture with in the corporation
• The board must be independent of management
• the board cannot be independent and future oriented if it has on it management members other than
CEO

Activities and Responsibilities of the Board:

- Board is responsible for business strategy development. It must monitor the implementation whether on schedule,
on budget and producing effective results.
- Board is responsible for getting high caliber CEO and his management team.

Board should see that the company has adequate information, control and audit system in place to tell it and senior
management whether the company is meeting its objectives. Audit Committee should be given greater powers to
investigate financial reporting

Success of Corporate Governance

• the board must understand that selecting a
CEO is major responsibility.
• The board must help the CEO set realistic performance expectation
• The board must develop a deep understanding of the company’s strategic position

Disclosure to shareholders:
- Division and business-wise financial information
- Accounts of subsidiaries and associated companies
- all investments
- risk exposures
- Foreign company losses
- Credit ratings
- acquisitions

Good Governance Guidelines

- Audit Committee
- Remuneration Committee
- Compliance Committee
- Board-level committee for
- senior managerial and
board appointments
- stock-options
 - board evaluation
- success planning
- employee responsibility
- environmental responsibility

Corporate Governance Norms are of three kind:

- things which are mandatory and must be done by companies such as audits, annual reports, committee of
the boards etc.
- things which are prohibited to be done such as loans and advances to directors, investments in group
concerns beyond certain limits, disproportionate dividends, financing the purchasing of its own shares etc.
- things that should be disclosed to all concerned such as major borrowings, major project decisions etc.

BSC

BSC
Some Questions:
 How should a multi product firm choose the product line to launch it into the global market?
 What factors make some markets more strategic than others?
 What should companies consider in determining the right mode of entry?
 How should the enterprise transplant the corporate DNA as it enters new markets?
 What approaches should the company the company use to win the local battle?
 How rapidly should a company expand globally?
IMPLEMENTING STRATEGY

Identify Strategically Critical Activities

Wal-Mart: Coordinating daily logistical and purchasing efficiencies
Motorola: R & D and new product
development
Coca-cola: Distribution activities, advertising and retail support

to its bottlers
Exerting Strategic Leadership
A leadership should be visionary
Six Leadership Roles
- Staying on Top of How well things are going.
Technique of “ managing by walking
around (MBWR)
- Fostering a strategy-supportive climate
and culture
- Keeping the internal organisation
responsive and innovative

Three Factors contribute to the development of strong values

- Strong Leader
- A sincere , long-standing company
commitment to operating the business according to established
tradition
- A genuine concern for the well- being of the organisation’s three
biggest constituencies- customers, employees and shareholder

Leadership Qualities
• Principled-centred person
• Bring coalition
• Continuous Learning
• Utilise Local resources
• Respect every insignificant contributions
• Spot Talent
• Be precise
• Act of Motivation
Low-Cost Strategy

, Differentiation Strategy

Low-Cost Differentiation Strategy

Niche-Low-Cost Strategy

Niche-Differentiation Strategy

Multiple Strategies