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Ch02.ppt Ch02.ppt Presentation Transcript

  • STRATEGIC MANAGEMENT & BUSINESS POLICY 10 TH EDITION THOMAS L. WHEELEN J. DAVID HUNGER CHAPTER 2 Corporate Governance
  • Corporate Governance
  • Corporate Governance The relationship among the board of directors, top management, and shareholders – determining the direction and performance of the corporation
  • Corporate Governance
    • Role of Board
      • Monitor
      • Evaluate and influence
      • Initiate and determine
  • Board of Directors Continuum
  • Board of Directors
    • Members --
      • Inside directors
        • “ management directors”
        • Officers or executives employed by the firm
      • Outside directors
        • “ non-management directors”
        • Executives of other firms not employed by the board’s corporation
  • Board of Directors
    • When Outsiders can be considered Insiders
      • Affiliated Directors
      • Retired Directors
      • Family Directors
  • Agency Theory
    • Agency Problem –
      • Objectives of owners & agents in conflict
      • Difficult for owners to verify agent performance
    • Risk Sharing Problem –
      • Owners & agents risk assessment in conflict
  • Stewardship Theory Executives more motivated to act in best interest of the corporation than their own self-interests. Theory that over time, senior executives tend to view corporation as extension of selves.
  • Board of Directors
    • Codetermination
      • The inclusion of a corporation’s employees on its board of directors
  • Board of Directors
    • Interlocking Directorates
      • Direct Interlocking
      • Indirect Interlocking
  • Board of Directors
    • Nominations & Elections
      • Traditional Approach
        • CEO invitation to membership
        • Shareholders approval in annual proxy statement
        • All nominees usually elected
  • Board of Directors
    • Nominations & Elections
      • Staggered Board Approach
        • Staggered terms of service/election
  • Board of Directors
    • Sarbanes-Oxley
      • Code of Ethics
      • Audit, Nominating, and Compensation Committees all outside directors
  • Board of Directors
    • Organization of the Board
      • Size
        • Charter & Bylaws Determination
  • Board of Directors
    • Corporate Governance
      • Review & shaping of strategy
      • Pressure for corporate performance
      • Demand for executive stock ownership
      • Outside directors increasing
      • Impact of Sarbanes-Oxley
  • Board of Directors
    • Transformational leaders
      • Change agents through vision for change
  • Board of Directors
    • Successful CEO’s
      • Strategic vision
      • Passion for the company
      • Strong communication
      • Charisma
  • Board of Directors
    • Executive Leadership
      • Strategic vision
      • Role model
  • Board of Directors
    • Executive Leadership
      • Communication of performance standards
      • Demonstrates confidence in abilities of followers
  • Strategic Management Process
    • Strategic Planning Staff
      • Supports top management & business units in the strategic planning process
      • Identify & analyze company-wide strategic issues
      • Generate strategic alternatives
      • Facilitate business units in coordinating activities related to strategic planning process