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Corporate Structures and Governance Arrangements - Coursework Example

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Corporate Structures and Governance Arrangements Course and code Date Introduction It is important to study the way corporations are structured and governed to avoid possible cases of mismanagement. It is possible to note that even in a country; there are many differences in terms of the corporate administration and management…
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Corporate Structures and Governance Arrangements
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Download file to see previous pages In the pre-bureaucratic corporate structure, there is a centralized structure with the role of strategic decision making left to the top management leaders, which is the best for solving very simple problems. This system is very common among the small corporate and mostly communication is done on one-on-one basis. Though, it lacks a fundamental role, that is, standardization of roles and responsibility, the consequences of this structure on managerial accountability is that it helps the strategic director to influence and control development and growth of the corporate organization2. How Appointment Rights and Removal Rights Differ and Their Consequences Having looked at the Hampel Report, one comes to consensus that corporate structures and governance arrangement vary from one country, an individual can use the same rights differ across the jurisdiction. The main explanation for this is that the structure of a particular and how it is governed would define how decisions and appointment rights come about in that particular corporation and as a result each decision comes about with its consequences3. It is how rights are allocated that would ensure that the corporation gives quality performance. For example, in a corporate structure where decision rights and appointments are left in the hands of the shareholders, there is a common tendency that the organisation would experience some positive effects in its operations. That is, the shareholders are at times driven by the desire to reap the highest revenues and profits from the company4. Therefore, it would make sure the appointment and removal of directors from the corporation is done in a transparent way and the appointments done based on merit. In countries where decision making and appointment rights are left to the chief executive officer because he/she has broader business knowledge than the shareholders. The main argument for the proponents of this structure is that the chief executive officer knows how effective the mangers are in their daily business operations. In fact, they know when and how to make strategic decisions. However, the consequences of this structure are that it takes a lot of time to transfer certain decision making information to the rest of the organisation. It is also tedious to make all the decisions by oneself, and in case of the appointment and dismissal of directors, then one can consider the action taken to be personal and bias, and this can bring about some unnecessary, tension, conflict and tension in the organisation5. Another different structure is that which foresees all the decisions and appointment rights based on the management, especially if the corporation is a family enterprise. This method is always considered cheaper in terms of experts/employees hiring costs. However, this structure and governance arrangement has its own demerits. Despite the savings on expenditure, decision making in this case is guided more by emotions and this out rightly affects the corporation negatively6. It also seeks to over centralize powers and rights to make decisions to the family members, this would mean that there might be lack of relevant information flowing down to other stakeholders of the corporation. However, it is important to note that decision rights and appointments have their own effects. Therefore, one should not be ...Download file to see next pagesRead More
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