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How to decrease the possibility of having financial crisis - Essay Example

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Financial Crisis Table of Contents Table of Contents 2 Background 3 Aim and Objectives 4 Methodology 6 Result 7 Analysis and Conclusion 8 References 9 Background Financial crisis takes place in the business industries because of some unfavourable decisions taken by the managers…
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How to decrease the possibility of having financial crisis
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The financial crisis in a company is an unplanned burden which may affect its resources, capabilities, the values and the goodwill of the company. Lack of corporate governance and business ethics is one of the reasons responsible for the financial crisis in an organization. Acemoglu and Johnson (2003) have said that managers should change their way of thinking by disregarding that mismanagement of the macroeconomic policies is responsible for the lack of corporate governance. They should plan for strategies to overcome crisis in an organisation.

The business leaders should focus on the policies like the legal framework of the organisation and protection of the interest of the stakeholders and investors. A good relationship between the shareholders and the managers help to achieve corporate governance within an organisation. Lack of business ethics in an organisation is responsible for weak corporate governance. Business ethics help an organization to frame a corporate governance strategy consisting of values, principles, a good work culture and proper decision making ability of the organizations.

Wood (2002) and Lagan (2006) have said that organizations need to set the business ethics with strategic objective which can provide scope for achievement of corporate governance. . The purpose of this research is to provide a methodology by which an organization can achieve proper corporate governance required in order to reduce its financial crisis. The main objectives of this research are: To achieve transparency and fair operations within an organization. To provide proper decision making ability in order to achieve the goals of an organization.

To protect the interest of the customers, the shareholders and the investors. To understand the needs and demands of the stakeholders. To prevent the occurrence of unethical behaviour within an organization. To understand the liability of the directors to the managers and the liability of the managers to the shareholders, also known as accountability. Methodology According to Joseph and Tobin (2006) research philosophy is a procedure of collecting data, analysing it and then interpreting the result in order to work on a particular research.

Research philosophy mainly consists of two approaches. One is the positivist style and the other one is the phenomenological style. Positivist research model focuses on analyzing the interdependency of the external variables and internal variables. Positivist style is selected for this research, as this style deals with understanding of the internal affairs related to a business. Positivist style of research will also help to understand the reasons behind the lack of corporate governance in an organization.

There are two types of research strategies, namely quantitative research methodology and qualitative research methodology. The research strategy chosen for this research is qualitative methodology. Qualitative research model is used for descriptive research. Qualitative research can be analysed in terms of culture, ethics and behaviour. Qualitative

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