The UK Corporate Governance Code Coursework Example | Topics and Well Written Essays - 2750 words

The UK Corporate Governance Code - Coursework Example From the research it can be comprehended that corporate governance is the system by which companies are directed and controlled. Boards of directors are responsible for the governance of their companies. The shareholders’ role in governance is to appoint the directors and the auditors and to satisfy themselves that an appropriate governance structure is in place. The responsibilities of the board include setting the company’s strategic aims, providing the leadership to put them into effect, supervising the management of the business and reporting to shareholders on their stewardship. The board’s actions are subject to laws, regulations and the shareholders in general meeting. The Code guides the board towards more effective practice. Its underlying principles are all those of good governance, they include accountability, transparency, probity and focus on the steady success of an entity over long term. The code is continuously changing to incorporate the alterati ons in the socio-economic environment. It has been reviewed in 2005, 2007 and 2010 in the recent past. The new code applies to the accounting periods beginning on or after 29 June 2010 and is applied to all the companies whether they are incorporated in UK or not. The approach that is followed since the beginning of the Code is to comply with it or explain why it is not being followed. It is referred to as â€Å"Comply or Explain†. ... According to the latest report on UK Corporate Governance Code by the FRC, the main principles for The Code are: Leadership. The board should be led by an effectively. The responsibility of heading the board by the Non-executive directors and the responsibility of heading the company’s operations by the executive directors should be equally divided. The Chairman is the head of the board as a whole whereas the executive directors are also led by the Chief Executive Officer (CEO) of the Company. The Chairman is responsible for the effective functionality of the board. He is responsible for ensuring the clear and efficient flow of information between the shareholders and the board. As per new reforms passed in 2011, female directors will also be introduced into the board structure (FRC, Consultation Document 2011). The board of directors has the power to hire fire and compensate senior management. Their purpose is to resolve the issues, specially relating to conflicts of interest s, between the decision makers and the risk bearers. Their control resolves the issue of high agency costs and facilitates the existence of an open corporation. Recent economic theory implies that the balanced structure of the board of directors is a crucial part of good governance (Baysinger, Butler, 1985). According to agency theory, shareholders interests are better protected if there is segregation between the duties of CEO and the Chairman. Where as, stewardship theory argues that the shareholders interests are maximized if both the roles are entitled to the same person. According to the author, a few test results show that stewardship theory is supported more than the agent theory (Donaldson, Davis 1991).

BMW's Acquisition of The Rover Group Essay Example | Topics and Well Written Essays - 1500 words

BMW's Acquisition of The Rover Group - Essay Example Since the acquisition of Rover, BMW has tried many times to enforce the competitiveness of the acquired company, but with no particular result. In this context, the gains from the particular acquisition could be strongly doubted. The Resource/ Competence Matrix presented below can help towards the identification of the role of BMW in the development of Rover Group, the gains for the latter and the policies that should be applied by BMW in order to improve the performance of Rover Group not only within its market but internationally. The acquisition of Rover from BMW has been proved a wrong decision: through the years the company’s losses were severe; Rover failed to meet the targets set by the management team of BMW (at least as set in the firm’s acquisition in 1994). In 2000 ‘Rover sold to The Phoenix Consortium and Land Rover sold to Ford; BMW keep MINI brand’ (BMW, official website, 2007) The use of the Resource/ Competence Matrix (as presented below) in order to identify the possible competitive advantages gained from the alliances, can lead to the assumption that there has been no particular benefit for BMW from the acquisition of Rover. On the other hand, Rover has been benefited in terms that it has managed to be ‘alive’ until today. In the Resource/ Competence Matrix below the resources used in the particular acquisition and the competencies involved are being analyzed in order to understand the consequences of the above acquisition for both the firms involved. It should be noticed that in order for the data related with the two firms to be represented appropriately in the Resource/ Competence Matrix, the following issue should be taken into consideration: in the development of HR there are four factors that need to be taken into consideration: ‘culture management, strategic decision-making, fast change, and market driven connectivity – together comprise the HR competency domain of