Corporate Governance

MBA 245 Louise Sally

Corporate governance is a set of processes, laws, rules, policies, international customs and establishments influencing how a corporation is controlled. It includes the association involving shareholders, the goals governing the corporation and also a system of structuring, operating and regulating corporations, the outcome of corporate governance is to attain long-term strategic goals in order to satisfy shareholders, employees, customers, suppliers, creditors while adhering to regulatory requirements.

There are nine concepts of corporate governance that applies to its systems:

1) Honesty -Truth should never be misleading as the companies' moral character would be a problem.

2) Responsibility -The roles that all are responsible for should clearly be defined. Everyone should take credit and blame for decisions made and rules.

3) Independence - Free from control and conflict of interest and decisions.

4) Integrity - Executives should have strict adherence to moral values and maintain high professionalism.

5) Fairness - There should be respect of views and rights of shareholders such as employees, customers and suppliers.

6) Judgment - Decisions that are good for the organization.

7) Transparency - No disclosure of facts and keeping open and clear communication.

8) Accountability - Directors, executives and employees have to be accountable for all their actions and decisions that can affect the organization.

9) Reputation - A good name affects the business entity, how trustworthy the company is for its shareholders, customers and employees.

Power in an organization needs to be balanced to ensure no one individual has the ability to misuse the company's resources. By delegating responsibilities between board members, directors, and other individuals makes certain that each person's responsibility is defined within the organization.

Keiretsu is used in Japanese business culture which gives the suppliers and business a guaranteed customer and price structure, because the Keiretsu grouping ties them into exclusive relationships with firms involved in Keiretsu. In a Keiretsu there are fewer external directors and non-executives directors included representative's bank leaders, suppliers and/or customers. In the United States there are auto companies and military branches that utilize the Keiretsu format, for example an auto company and a branch of the