Corporate governance - Essay Example

Answer The major aim of all businesses is to create value for its various stakeholders and shareholders through products and services that meet the needs and requirements of people. It can broadly be defined in terms of value realized by the end user or buyer when monetary exchange takes place for the goods and services bought (Felin and Hesterly, 2007). Indeed, the perceived and expected performance of the product must correspond with the level of satisfaction so that purchase or buying behavior is repeated.

The value protection ensures that the quality, reliability and performance of the product and services are sustained and improved so that firms are not only able to retain existing customers but also attract new consumers. Thus risk management through effective governance, innovation, knowledge management and value addition become critical elements for protecting and sustaining the value of the products for consumers.Answer 2 All people directly or indirectly associated with the company are called stakeholders.

Thus, customers, employees, shareholders, creditors, debtors, suppliers, regulators action groups etc. all become stakeholders in the company as they are, one way or another, affected by the business’ activities (Solomon, 2007. The identification of various stakeholders is important they are linkages that significantly impact the performance of the firm and promote development of society in general. In the contemporary environment of competitive business, the firms are not only motivated by financial benefits but play wider roles in the development of the society as a whole.

Various stakeholders ensure that the business is having positive impact on the wider imperatives of social causes like environment, better HR practices, effective CSR practices etc. The analysis of stakeholders also helps the firm to proactively support the community welfare and at the same time, meet the changing preferences of the customers, thereby significantly impacting it productive outcome and improving its image and credibility amongst the stakeholders.Answer 3 The corporate governance gatekeepers are people who are in position to influence the decisions and activities of the management for improved and ethically delivered objectives and goals of the company.

The main gatekeepers of the firm are: independent and competent board; independent and competent auditors; objective and competent legal council; and competent financial advisors. The responsibilities of different gatekeepers is to ensure that board is given the right advice regarding various aspects of business activities so that correct and ethical decisions can be made for the wider interests of all its stakeholders. The various financial statements are regularly audited by internal and external auditors to maintain credibility and facilitate better decision making tools to identify and evaluate the disparities between the productivity and financial outcome, projected or otherwise.

Parker (2003) asserts that it is the responsibility of auditors and other gatekeepers that disclosure of pertinent information is made to boost the confidence of various stakeholders. Indeed, effective corporate governance is mandated under the guidelines of Sarbanes-Oxley Act of 2002 that promotes accountability of action and safeguards the interests of the various stakeholders.ReferenceFelin, T., and Hesterly W. S. The knowledge-based view, heterogeneity, and new value creation: Philosophical considerations on the locus of knowledge.

Academy of Management Review, 32: 195–218, 2007.Parker, Christine. The Open Corporation: Effective Self-regulation and Democracy. NY: Cambridge University Press, 2003.Solomon, J. Corporate Governance and Accountability. 2nd ed. John Wiley & Sons, Ltd., 2007.