Corporate Governance and Stakeholders Quiz

Matching

• Stakeholder: Individuals or groups with an interest in a company's performance.
• Corporate Governance: Mechanisms to control managers and ensure actions benefit shareholders.
• Internal Stakeholders: Employees (executives, managers, board members).
• External Stakeholders: All other individuals or groups with a claim on the company.
• Strategic Intent: Ambitious company goals that challenge the company.

Mission Statement Elements

• Vision/Mission: Overall company vision or mission.
• Values: Key philosophical principles guiding managers.
• Goals: Articulated goals that management believes are necessary to achieve the mission.

Argument for Setting Ambitious Goals

• Direction: Communicating a sense of direction within the company.
• Decision Making: Encouraging active decision making and resource allocation.
• Improvement: Forcing managers to identify and implement significant improvements in order to reach ambitious goals.

Short Response

• Define Mission: A formal declaration of the company's medium-to-long-term goals.
• 3 Dimensions of a Company: Derek F. Abell defined a company's scope in 3 dimensions: customer groups, customer needs, and distinctive competencies.
• Customer Groups: Categories of customers the company serves.
• Customer Needs: Specific needs the company seeks to fulfill.
• Distinctive Competencies: Unique capabilities of the company.
• Defining Categories: Questions to ask to define these categories.
• Satisfaction: What customers are being satisfied.

Additional Concepts

• Customer-Oriented Business: A business should be customer-oriented rather than product-oriented.
• Defining Goals: Goals should be precise, measurable, address important issues, be challenging but realistic, and have a defined timeframe.
• Short-Term Problems: Examples include cutting expenditures for research and development.
• Long-Term Focus: Companies use methods to guard against short-term failures, focusing on long-term goals.
• Corporate Governance Problem: Managers prioritize personal gain over maximizing shareholder returns (e.g., power, status, income).
• Governance Mechanisms: Examples include boards of directors, stock-based compensation, corporate takeovers, and equity for debt exchanges.
• Ethical Business Model: 4 Steps to create an ethical business model:
• Identifying affected stakeholders and their rights.
• Evaluating decisions from an ethical standpoint.
• Establishing moral intent.
• Engaging in ethical behavior.