Governance and Related Theories like CSR †Myassignmenthelp.Com

Question: Discuss about the Governance and Related Theories like CSR? Answer: Introduction: Corporate governance has emerged as an important area which draws theories from several areas like stakeholder theory and CSR. The assignment is study of corporate governance in the light of Bunnings Warehouse as an example. The first section discusses the theories and related concepts of corporate governance. The next section deals with the key figures and the impact of them on Bunnings in case of labour wage issue. The last section has contextual factors and their impact on the company. The defination of corporate governance: Corporate governance can be defined as the rules, policies and practices according to which companies operate. Corporate governance aims towards controlling the ways organisations function to meet the requirements of the different stakeholders like management, employees, shareholders, customers and government bodies. The companies today act in way to maximise the value of the wealth of stakeholders. Their operations, revenues, profits, market positions and so on impact the stakeholders. Thus, this group manages operations of the companies closely so that they can meet their demands. For example, the government bodies frame laws according to which companies should act. The employees see that the company earn high revenue and their compensations increase. The consumers want high quality goods at affordable prices. The companies are social members which necessitates them to contribute towards social development. The investors who invest in the capital of the companies want them to earn more profit and pay them more dividends on their investment. The management of Bunning should try to benefit the stakeholders including its employees and management (Ayuso et al., 2014). Defination of stakeholders: The stakeholders are the groups which have strong impact on the operations of the organisations and are impacted by them in return. The stakeholders consists of key stakeholders like governments and financial institutions, customers, suppliers and shareholders. The competitors today have profound impact on each others policies and are counted as stakeholders. The stakeholders have so important impact on the organisations today that they are parts of the stakeholders theory which is discussed later. Concepts of corporate governance: The concepts of corporate governance as discussed emphasises on responsible operation of the companies to meet stakeholders requirements. The companies are also needed to act in responsible ways so as to bring about social developments being responsible members of the society. They are again required to earn profit and maximise the capital of the investors. Thus, the theories relating to corporate governance embrace theories relating to stakeholders, shareholders and corporate social responsibilities. Corporate scandals and unethical practices have resulted in dissolution of hundreds of companies. This has led to growth of the expectations of the society that the firms should act in legitimate and ethical ways to maximise the shareholders fund and protect stakeholders interests. This strongly points out that corporate governance is heavily dependent on stakeholders interest and CSR (Chan, Watson Woodliff, 2014). Bunnings Warehouse should act towards benefitting the stakeholders and meeting the expectations of them. Here, the company is not paying its employees who are important internal stakeholders. It should increase the wages of the employees and not only concentrate on capital maximisation of the shareholders. The theories of corporate governance: The corporate governance theory: According to Mason and Simmons (2014) corporate governance is the creation and application of modes of operations to bring about capital maximisation of the shareholders and satisfying the legitimate demands of the stakeholders. The theory of corporate governance is an attempt to look at organisational functions in a way that meet the demands of both the investors and the stakeholders. The vast literature on corporate governance shows that institutional investors prefer corporate governance of the companies before financing them. It is a well known fact that the big companies like Bunning are dependent on institutional investors for their funds. The theory of corporate governance necessitates companies to act in ways to benefit stakeholders as well. This helps in creation of goodwill of the companies which attract both revenue from consumers and investment from investors (McCahery, Sautner Starks, 2016). The stakeholders theory: The stakeholders theory as discussed by Harrison, Freeman de Abreu (2015) states that all firms have to maintain healthy relationship with stakeholders which reciprocate the firms by generating revenue for them. For example, the investors get high return and inject more investors, the customers get high quality products at affordable rates and buy products again and again and so on. The importance of the stakeholders theory lies in the fact the firms and the stakeholders are capable of affecting each other growth. The theory aims to harness the positive attitude from stakeholders to fulfil the organisational goals. It helps the firms to sustain through complex and turbulent economic situations because stakeholders have the power to help the firms to tide over challenging situations. Firms which have positive relations with stakeholders have more capability to face market challenges (Mitchell et al., 2015). The theory of shareholders: The shareholder theory states that business organisations should work towards maximisation of wealth of the shareholders. The theory emphasises on increasing the value of cash flow of the shareholders instead of spending resources in supporting unprofitable charities. The theory of corporate social responsibilities: The theory of corporate social responsibilities states that the organisations are members of the society and should work in responsible ways to benefit the society. The shareholders theory states that the organisations should solely act towards profit maximisation of the shareholders. However it has been pointed out that organisations like Bunnings should not be profit earning machines but responsible corporate citizens. Following CSR creates stronger image of the organisations which generate higher revenue and profit the shareholders in the end. CSR helps the companies to contribute towards social development activities like providing vocational training to people in villages. They according to the practitioners should be more responsible because they obtain their resources from the society itself. The customers who generate revenue and suppliers who provide raw materials to them are part of the society (Tai Chuang, 2014). Specific Contextual factor, key details and its impact on Bunnings Warehouse: Specific contextual factor: The contextual factor in the study is low wages to labour at the Bunnings Warehouse, the Australian hardware company based in Victoria, Australia. The company is present in Australia, New Zealand and the United Kingdom. The factor is very serious because the employees it affects the morale and motivation of the workers. The workers have emerged as one of the key elements to achieve strategic management of operations and competitive advantage. Key details: The employees are among the internal stakeholders whose motivation is very critical to the very success of the organisations. A newspaper article from one of the most circulated Australian dailies gives key details on low wage rate in Australia (Lannin, 2017). The article highlights the misery of the workers in Australia due to low wage rate. The employees play crucial role in strategic management of operations. They use their talents and expertise to work in a way so that the companies can gain competitive advantage. Low wages will affect the motivation of the employees that will affect their very performance. It will in the long run affect the competitive advantage of the company. The main competitors of the company are Home Timbers and Hardware, Mitre 10 and the other small retailers. Hence, it is evident that Bunnings should raise the wages of its employees (Pearce, 2014). Impact on Bunning Warehouse: The issue in the report is low wages at the Bunnings which will have deep impact on it. Burbano (2016) in his work state that wages are parts of the corporate social responsibility pointing out to the significance of legitimate wages for the labourers. Connelly et al., (2016) in their work state that disparity between the top level manager compensation and the lower level worker has been on the rise. These two literary sources clearly point out the low wages are rampant in industries even today. The employee as pointed out in the stakeholders theory and the previous discussion are internal stakeholders. They are the ones who actually work towards the companies growth by executing operations. Hence, wage issue will like deter their motivation that will affect their efficiency. This will result in fall in performance which will have negative impact on the production and the revenue generated from it. Labour issues can affect Bunning in long and short run. There have been instances when the employees have stalled production in demand of wages causing short term loss of revenue. Such protests will attract trade union involvement that will challenge the very decision making power of the management (Elfstrom Kuruvilla, 2014). Low and illegitimate wages will attract dire long term consequences which may endanger the very existence of the Bunning. As discussed and pointed out government is one of the most important stakeholders which makes laws and takes action to see that the law is enforced. The Fair Work Act 2009 and the Fair Work Regulations 2009 provide for minimum legitimate wages and working conditions to workers (fairwork.gov.au, 2017). It is evident Bunning is doing illegal and unethical activities by not paying proper wages. Such illegal actions will attract government intervention and penalty charges imposed by the latter. The international organisations like the European Union may also take steps against the company since it has operations in Britain, a part of Europe (Schulten Mller, 2015). This will result in hamper of goodwill and eroding of capital of the company in the long run that will affect the capital maximisation of the shareholders. The company due to its newly acquired negative ima ge loose customers and investors which will stir its financial and competitive strength. Major domestic and international contextual factors and their impact on the company: Domestic factor and its impact: Increase in wages: The management of Bunning should increase the wages of the workers to avoid government and trade unions. This will have positive impact on the short and long run goals of the company. First, increase in wages will increase the motivation of the employees which will push up performance. As pointed previously wages are considered a part of CSR, hence by legitimating wages the company will be upholding its social responsibilities. This will help the company to better its image so important to attract investment from shareholders and revenue from customers. International factor and its impact: Expansion into new markets: The management should expand its operations into new markets which will help it to earn more revenue. This will help the company to diversify the financial crisis in Australia and pay its employees better wages. The impact of international expansion will result in bettering of competitive advantages of the company. Conclusion: It can be summed up that corporate governance embraces the stakeholders, shareholders and the CSR theories. The subject expands beyond mere profit motives and shareholder benefit expanding towards a bigger and stronger image building. 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