CHAPTER- 3

CORPORATE GOVERNANCE

IS IN

THE

Y Of THE

STAKEHOLDER

Shareholders/ Investors

If the Shareholders are owner of the company they have certain responsibilities & rights to react against directors actions. They usually refuse these responsibilities & rights.

They are interested short term gain than long term performance.

Bearle And Means

The owner of a horse is responsible if the horse lives he must feed it if the horse dies , he must bury it , no such responsibility attaches itself to a share of stock.

Shareholders- Two Options

They accept a lack of control over the investment & the companies activities which is undesirable. They change their attitude to investment & use their existing rights & protect interest of other stakeholders.

Institutional Shareholder Activism

Case: Hermes CODE OF CORPORATE GOVERNANCE Non-executives should receive half their remuneration in shares instead of cash. The chief executives should not move on to become chairman without a break.

Private Shareholders
Limited Not

liability

losing more than they invest

Transferability Free

likes

to sell out whenever

Chapter-3

Employees

Customers

Case Study: HP WAY

Employees
Staff have a much greater stake in the company than most of the shareholders.
For Example:

On the continent: the company gives employees the scope & space to develop & to live useful, fulfilling & rewarding lives.

Northern European Co. Emphasized to involve the Staff in the Company.

Deutsche Bank takes great care to cooperate with employee representatives In staff council.

 German

companies take care to honor their retired staff.

Pension

Fund: Check & control of the pension funds is a fundamental part of Corporate Governance.

Case Study: Employees as stakeholders

THE HP WAY

Business success included:

A focus on fields of interest in which innovative, meaningful contributions were possible A dedicated, fairly compensated workforce that fostered intense individual creativity. A company wide commitment.

Principle of HPs personal policies:

Sharing

Responsibilit y

Profit

Ownership

Oppurtu nities

Customers
Complacency

in customer relations is the first nail in the coffin.

Frequent

contact with all customers is what is needed to keep existing clients from deserting, through asking them if they feel happy with the level of service, quality & price

As far as Corporate Governance is concerned, consumer-orientation goes beyond the realm of using geodemographical information to arouse needs & affect purchasing behavior.

The company & its corporate partners

Companies can not exist alone. Companies work within a business network of alliances & partners. The nature of partnership is different from the old-fashioned relationship with suppliers & dealers.

Suppliers/Trading Partners

Purchasing Links
There

is a growing trend in certain industries for products to be purchased within the framework of partnerships.

Buyers

are organizing networks of contractors & subcontractors among their suppliers.

relationships have to involve in circulation of information among partners.

These

Other Types of Links

A network of partnerships is seen as enabling it to broaden its market access & make it possible for R & D to be shared.

Community & Environment

Social Impact

Environmental Impact

Case Study: Ignoring public opinion

SHELL: A STATE WITHIN A STATE

The State
The

company must have a twoway relationship with the State.

is difficult to maintain a completely positive attitude towards the spirit of the law.

It

Conclusion
In

a well-run organization, good stakeholder relationships should naturally & equally form.

Chapter -3

END

HANK YOU