Corporate governance is related to strategy in

  • No School
  • AA 1
  • 10

This preview shows page 2 - 4 out of 10 pages.

are aligned, thereby setting the organisation on the road to sustainable success. Corporate governance is related to strategy in several ways: The organisational vision and mission should be reflected in its strategy – by doing so an organisation sets the scene for responsible business aims, practices and general conduct. Economic, social and environmental objectives have to be formulated as part of the organisational strategy – this ties in with a balanced view of profitability and performance. The execution of strategy should be monitored and controlled by management and the board of directors. The board should ensure that executives are appropriately penalised for failure or rewarded for success. Corporate governance and ethics in the international arena One critical element of governance in organisations is that of ethics. Recent moral lapses in international businesses such as Enron and WorldCom led to a new wave of government legislation (discussed below), which is geared towards holding Chief Executive Officers (CEOs) and Chief Financial Officers (CFOs) accountable for the actions of their colleagues and guarding ethical business practices. The realm of strategic management has traditionally been concerned with ethical principles and the cultivation of a certain level of integrity within the organisation. Ethical principles are ‘not subjective measures that vary with cultural, social, and economic conditions; they are objective statements that transcend countries, religions, and times. They are the basic rules of first principles that have been proposed to ensure a “good” society.’ 4 2 Carpenter and Sanders, 2009: 442 3 Carpenter and Sanders, 2009: 467 4 Hosmer, 1994: 20
Image of page 2

Subscribe to view the full document.

35 Reading 4 Corporate governance in South Africa Business ethics should be considered within the governance of an organisation, with specific focus on strategy; ranging from protecting shareholder wealth or developing governance systems, to sustaining environmental performance and social responsibility. 5 From a corporate governance perspective, one of the critical responsibilities of top management is to create and maintain a positive moral environment. Unfortunately corporate scandals seem to feature in the media all too often. Due to the collapse of some prominent European and American organisations, specific guidelines were needed to focus governance issues. The Cadbury Report 6 (Committee on the Financial Aspects of Corporate Governance) was published in December 1992 and the Financial Reporting Council study was published in June 1995. The Cadbury Report highlighted the desirability of corporate governance and argued for a clearly accepted division of responsibilities at the head of a company. The report stated this would ensure a balance of power and authority, such that no individual had unfettered powers of decision.
Image of page 3
Image of page 4

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern