Theories And Concepts Of Governance †Free Samples For Students

Question: What Is the Theories and Concepts of Governance? Answer: Introducation Corporate governance can be defined as the policies, processes, system, rules and relationship imposed by the business origination to conduct the business. The attributes of governance in the company is guided by range of internal and external factors. The internal factors related with corporate governance include the organizational policies, structure and culture (Bevir, 2008). The external factors related with corporate governance include regulation, laws and expectation of the local communities. The corporate governance philosophy of the company is shaped by the board of directors. To have the best governance framework is the common goal of many companies so that the individual needs and situation are met effectively (Bevir, 2008). It helps to met the twin objective of achieving improved performance in the company along with ability to meet different requirement such as the organizational structure, policies and culture. In this report the corporate governance of Wesfarmers and it s impact on the performance is examined. It also understands the affect of corporate governance on the business structures and strategy. Company chosen Wesfarmers Wesfarmers Limited is leading business Conglomerate of Australia established in 1914 with the head office in Perth. The company is related with the different businesses such as retail, coal mining, chemicals, fertilizers and industrial safety products .In the financial year 2016 the company generated revenue of AU$ 65.98 billion and became the largest company in Australia in terms of revenue replacing Woolworths (Wesfarmers.com.au. 2011). It is also the largest company in the country in terms of human resources with 205,000 staffs working in the company. Corporate governance at Wesfarmers The board of directors of the company works with the commitment of giving to the shareholders a satisfactory return on their investment and meeting obligation and responsibilities of corporate governance so that it serves the interest of the stakeholders as well as the company (Osborne, 2010). Roles and responsibilities of the board of directors and management The role and responsibility of the board of directors of the company is to give approval to the group in terms of strategic direction, provide guidance and monitoring of the activities of the management and its business operation. This is done so that the strategic plan is achieved and the good governance is practiced in the company (Farrar, 2008). The aim and objective of the board of directors is to protect and improve the interest of the shareholders as well as taking care of the interest of stakeholders such employees, suppliers, customers, and the society. The board of directors of Wesfarmers in performing their role maintained corporate governance of high standard and promoted a culture of compliance. This culture was based on the concept of ethical behaviour, personal value, accountability, corporate integrity and respect for each other in the workplace. The board of directors of Wesfarmers has a charter that defines the role and responsibilities and explains the maters exclus ively reserved for the determination of board and delegation of matters to the management (Farrar, 2008). The managing director of Wesfarmers is entrusted with the responsibilities of managing day to day business of the company and gets the support from the leadership team. The details of the leadership team of the company and its membership are explained in the leadership team profile available in the section on corporate governance. But it is the board of directors who has the ultimate responsibility for planning of strategy and control of the company and its operation. Governance and its impact on Wesfarmers Risk management framework The risk management framework is an integral part of the corporate governance and it is reviewed every year by the board of directors. The risk management framework explains the principles and risk control techniques implemented in the process, reporting system and procedures (Bhimani, 2009). It also explains the division of key function of risk management between board of directors, finance director, managing director, audit and risk committee, group assurance and divisional management. The corporate governance enables the risk identification in the operation of the company with the help of the risk management framework. The key impact include The code of conduct of the group The reporting lines, established group and divisional structures, suitable authorities and responsibilities. It also defines the procedures and limits with respect to approval of expenditures and it include capital investments and expenditure and contractual commitments. The framework for operation that explain the board of directors, board committees and activities of divisional board and the reporting system (Bhimani, 2009). A formal program for induction of director and annual site visits program of director with the objective of monitoring the operation of the company and improve the understanding of the board about the key and emerging risks of business. A corporate planning process that demands trend assessment of each division to find out the possible impact and how it can influence the industry. This can be done with the help of SWOT analysis and undertaking scenario planning (Zhihua, 2007). Undertaking group policies and process for better management of financial risks and operation related with treasury like movements in the interest rates and exposures to foreign currencies. A reporting program related with group compliance and it should be supported by the approved guidelines and standards of safety, environment, information technology, legal liability, risk identification, taxation compliance, and financial reporting controls (Zhihua, 2007).. A risk financing program that is comprehensive and it include transfer of risk to external insurers and reinsurers. Monthly reporting systems and annual budgeting for all operation of business that enable the evaluation of progress by comparing with the standard and target and analyzing the trends Developing due diligence procedures that are appropriate for the process of acquisition and disinvestments (Beasley, et al., 2005). Designing crisis management system for all key operation of business managed by the conglomerate. A well defined internal and external assurance program Thus the management of Wesfarmers can implement the risk management framework to improve the corporate governance that enables safety of operation and people in the workplace. The key effect of the framework is assessed above and its impact on the operation of Wesfarmers. It is evident that it helps to promote ethical behaviour in the workplace and reduce the risk in the operation and safeguard the safety of people as well (Beasley, et al., 2005). Diversity The corporate governance philosophy of Wesfarmers promotes the concept of diversity in the workforce as it adds social and commercial value. The management of the company accept the significance of working as inclusive employer. Thus the human resource policy of the company promote a work environment that provide equal opportunity of employment to people irrespective of age, gender, race, religion, disability, cultural background, sexual orientation, family responsibilities or other element of potential difference (Aoki, 2010). The company gives due importance to all areas of diversity of as part of corporate governance policy with special focus on gender diversity and the inclusiveness of local people in Australia. Wesfarmers consider the value created by diversity in the corporate governance and the key impact include Widening the skill and experience of the workforce and it help the company to attract and employ best talent in the human resource. It helps to offer alignment in terms of meeting the needs of customer improving the customer satisfaction (Francoeur, Labelle, Sinclair,2008). It promotes the culture of innovation and creativity. It enables the development of responsible corporate citizen model. Thus diversity in the workforce as part of the corporate governance philosophy helps Wesfarmers to improve the productivity and performance within the company and it also affect the image of the company externally by being responsible corporate citizen (Francoeur, Labelle, Sinclair,2008). Governance and business strategy domestic and international Stake holders value enhancement is one of the strategies of the corporate governance Australian multinational Wesfarmers. In order to do so the organisation put strength in the area that can offer competitive advantage to the company. Mining is one of the areas in this regard. The organisation is gaining revenue from this part of the business. Mine management of Wesfarmers are effective and one of the tools of competitive advantage from it. In the present context the government of the country has published certain legislation (Bingham, Nabatchi, O'Leary, 2005). It has developed the legislative frame work for the mining industry out of this. From the perspective of Wesfarmers in can be treated as the major domestic factor that can influence the organisation to form the corporate governance strategy. Australian economy is one of the important factors for the organisation such as Wesfarmers. The growth of the service sector economy is one of the significant developments in this regard. In the country like Australia the service sector has grown 71%. The organisation harbours intention for the long term shareholder value creation (Treib, Bhr, Falkner, 2007). This strategy is the pert of the corporate governance plan of the organisation. That is the reason the company gets engage in the process of reviewing the plan of operation for the each division on the regular manner. In this case it can be treated as one of the domestic factor that can generate influence over the corporate governance strategy of Wesfarmers. In the context of international aspect, the corporate governance helps to develop a brand image that projects the responsible corporate citizen in the international market. The four objective of Wesfarmers that help the international business of the company and they are foster an inclusive culture, improve talent management, enhancement recruitment practices and ensure equal pay (Pollack, 2005). The objective of fostering an inclusive culture aims to leverage the unique skills and experience of each individual in the company and it is supported by the diversity culture of the company in terms of human resource employed by the company in the various international markets. The objective of improving talent management aims to embed the gender diversity concept in the talent management with the objective of developing better taken in the international market (Pollack, 2005). The objective of enhancing recruitment practice aims to hire the best talent in the workforce to promote workplace diversity in the international market. The objective of ensuring equal pay promotes the concept of equal pay for the equal work without any discrimination on the basis of gender. Thus from the above discussion it is evident that the corporate governance philosophy of the company is integrated into the domestic and international operation of the company. This promotes the culture of responsible corporate citizen both in the domestic and international operation of the company (Virgoe, 2009). This culture was based on the concept of ethical behaviour, personal value, accountability, corporate integrity and respect for each other in the workplace. Thus it can be concluded the corporate governance of Wesfarmers plays significant role in business structure and strategy. References Aoki, M. (2010). Corporations in evolving diversity: Cognition, governance, and institutions. 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