The Contribution Of Corporations Governance Practices Commerce Essay


Based on the combine code on corporate governance, generally, individual who handled two position within a organization was not encouraged. Sir Stuart Rose and the Board of Director is the key actors in this case. Sir Stuart Rose was appointed by the board of director to holding two position in Mark and Spencer, it is chairman and chief executive. The board of director gave L&G(second largest shareholder) only one hour notices before announcing, and this decision was refused by some of the shareholders, because most of the shareholder prefer separations roles between chairman and chief executive. Based on the past decade performance of Sir Stuart Rose, he was appointed to holding the two position in M&S because he was assisted M&S earn up to 11% revenue which is $451.8m within 3 years. According to the Combined Code On Corporate Governance(2008) states "The roles of chairman and chief executive should not be exercised by the same individual. The division of responsibilities between the chairman and chief executive should be clearly established, set out in writing and agreed by the board". The combined code on corporate governance sets out standards of best practice. However, 'comply or explain' allows company to choose whether to follow the code's provision it was the reason why the action they took was not encouraged. The board of director systematically encouraged this decision. Besides that, the board of director also appointing Du Plessis as a non-executive director(advisor) to assist Sir Stuart Rose.

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Concerning the consequences, Sir Stuart rose might gained too much power and authority power if he become Mark and Spencer chairman and chief executive. Sir Stuart Rose might hard to build a reasonably decision or doubt on his judgment if he was hold dual role position at the same times, and conflict between chairman and CEO might occur, once he can't handle it well, it is able to influence the whole business, and the business might decline in the future. this is a risky decision.

In addition, the board of director decided not comply with the code provision, it will cause other companies displeased or learn from them, and breach best practice by degrees in the future. They won't take responsibility to uphold corporate ethics in the UK anymore, against the law. At the end, it bring a lot of trouble or conflict in business field of UK. When Stuart Rose appointed as executive director, many of the shareholder was dissatisfy, and trying to pressure him with condition of achieve earning per share growth of 8% and earn 400% of their basic pay as a bonus in 3 years time, therefore, it bring a huge pressure to him and it might be influence his performance.

Task 2:

(Joel Feinberg, 1970, p37) defined that "moral responsibility is a subject about which we are all confused". Confusion has occurred always, therefore evidence could judge praise or blame. The design of the Board Of Director is a problem right now, Sir Stuart Rose design the board of director more based on his friend list, is not based on their ability and experience. Viewed in conjunction with a unfair habit, it seems extremely culpable irresponsibly, and it's decision might harmless itself, but it was nocuous for M&S operation. The board of director was trying to force those shareholder who declined the decision to comply with it. It was a awful action they took, they shareholder have their own right to make the decision, they were not supposed to compel anyone of them.

M&S not comply with the combined code, Code provision A2.2 states that "the board should consult major shareholder in advance and should set out its reason to shareholders at the time of the appointment". M&S was only gave one hour inform to L&G before appointed Stuart Rose to hold the position of executive chairman. Shemakyvette, Sondra C, Andrew C(2009) defines that "Respect is commonly the result of admiration and approbation, together with deference: to feel accepted by the someone/anyone". The decision they took was not esteem and declined by L&G since they not discussing with L&G. Novo nordisk(2007) the board member are only elected at the general meetings by all the shareholders, undue selectiveness may distort the judgment, in themselves perhaps innocuous. A lot of power concern traded in one man is not a wise decision, Lord Burn might mitigate their blameworthiness through a decision, 1.13million pound salary per year of Stuart rose salary, and they might hire two new non-executive directors, and Sir David Michaels will appointed to become delegate chairman, and it will regress at the end of July 2011.Besides that, The board of director might mitigate blame, they are no choice and to provide him with this position of two roles, if not he would leave.

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(BBC,2007)Sir Stuart Rose help M&S increased the half year profits up to 11% at 451.8m in the wet summer and underprivileged consumer spending situation, and push M&S back on the map, he make a very ambitious decision even though the situation was tough, He training people to become his successor, he is admirable, that is the reason why he appointed to hold two position in M&S. In addition, Sir Stuart Rose was develop his own effectiveness strategy to secure M&S product and operation since M&S facing a lot of obstacles when he appointed to be the executive chairman. Sir Stuart Rose decision was bring benefit to M&S, and it seems extremely commendable. Company shares 700p exceed in 2007 since he launched a fair-trade clothing range, and the good performance is prove that he is eligible to hold two position, but on the time he hold two position, M&S facing financial problem, they force to cut cost, this is one of the clash on that time. He cannot blame, not everyone is perfect, it is human nature. Lastly, the letter to investors was try to justify why he has to move up to executive chairman is one of the praiseworthy.

Task 3:

William H.S(2007) defines that "Utilitarianism tells us to bring about the most happiness for everyone affected by our actions". BP claims to outperform majoritarian utilitarianism, 15 workers was sacrificed, but BP maximize their benefit to the society by offer cheaper oil prices and keep the cost be low always. Besides that, BP maximize the profit of shareholder in order to benefit for public in oil prices cutting. Maximize safety problem in order to reduce the percentages of killing the worker who working under this hazardous environment. There was keep American economic cheer, the price of oil is falling, and the job is a danger job, hence, no one to blame since they signed a contract.

Egoistic is the one who support BP, it was occur on BP chief executive, he only concern about the company profits, and how they looks in the public eye. Outright egoism is not persuasive, Lord Browne attempt to make BP appear more endearing for the public, and spent 100bills dollar promoting the idea that the company had moved away from dirty smelly refineries, erected solar panel on petrol station and yet the management and workers at TC struggled on with ageing antiquated equipment, it was showed that Lord Browne duplicity on it. Besides that, in order to increase BP market capitalization, he was lower down the cost of training course, plant maintenance and safety standard not follow the regulation of law. They didn't provide a clear contract to employee. Shaw H.W.(2007,p 278)states "the employment contract governs the employer-employee relationship and provides the framework for understanding their respective obligations"

Deontological, BP was against deontology as misleading the public since they not telling the truth, many contractors workers, injuries sustained by contractor not officially recorded as these people not on company pay roll. BP H&S figures misleading making them look like a company with fewer accidents than actually occur. Due to the company rules, the workers was forced to working 12 hour in a day even though they felt tired, it might be blame or praised, for example, if SHELL offer 14 hour a day, BP regulation might be praised under this situation. Cutting-down the cost of implement in refinery is a perilous decision, and it was declined by one of the refinery manager, but limited power has restricted him to declined it.

25% fixed spending for the company was cut and lack of maintenance spending as Lord Browne only concern on the company profit, he never concern on the employee safety standard, therefore, it lead the refinery disaster, the behavior of self-interested is not consider as virtue ethics for sure.

Task 4:

According to the (BP, 2005) website, "BP does not encourage a long-hours culture, which we believe is detrimental to the well-being of our workforce as a whole. Complying with laws, regulations and our internal code of conduct is central to our sustainability as a business. Annual compliance and ethics certification process. Yet, the workers involved at the disaster were on 29 days roster of 12 hour shifts." Besides that, in order to save most cost, the refinery manager John Marconi was ruled out investment in replacing the blow down tower with a flare stating, he refused to fixed the problem.

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Unconvincing aims to bamboozle public, the company relied on "personal injury rate statistics", which failed to provide a true picture of process safety. Additionally, contractor workers injuries are not taken into account since they are not on BP payroll, so injury figures very misleading, companies want to look good in terms of Health and safety statistics. It was bring down the credibility. Alongside, Lord Browne was apologize in this cases because he did not comply with OSHA and request to extend time for reform and settle everything's down.

BP confessing they done the wrong thing, they are take responsibility, they was enhance the management system, spend more cost for training their workers, and renovate their poor process control system in order to reduce the dangerous situation of the workers.(BP, 2005). Lord Browne claiming there was deceitful trickery with justify says he determined to reform the company, it was a paradoxical consequentiality defences, since the statistics and government inspector was found out that BP hasn't learn from past tragedy, It hasn't updated equipment, it hasn't enforced its own safety rules. It seemingly has done little to change its habits, it simply offers empty words that fall like cold, hard rain on the memories of those who died. The CSB reports conclude that critics BP was pressure as impaired safety performance. After go through the safety standard of BP, CSB has encouraged BP take care of their safety problem due they lack of maintenance and training, but BP still have a preference of save cost strategy, and less concern-trade on the safety, training, and maintenance program. At the end, refinery disaster was happened.

Task 5:

Regulations and legislation are set to prevent accidents in hazardous working areas at the working premises. Staff working hours should be taken into account because if they exit their standard working hours which stated in the contract then it will be against the contract law. Elseveir B.V(2006) In the past year, statistic for fatalities and accident in petrochemical industry has not been decreasing. Therefore BP needs to implement more on health and safety procedure measures. National Labour Relation Act (NLRA) 1935, protects employees who want to report unsafe work condition to their employers. According to the BP(2005) website, they status that "we believed that all our employees have the right to enjoy a healthy and productive work/life balance at all stages of their career". BP code of conduct which consists of health, safety, security and environment, the code outlines BP's standards and highlights fundamental rules such as the prompt reporting of any breaches of HSSE laws, or BP HSSE requirement. Virtue and rules and regulations must be balanced. Management should be able to demonstrate wisdom, courage, benevolence, temperance to encourage a good work culture amongst employees. In such a hazardous industry that relies on many people and machinery and equipment, rules and regulations are necessary in order to ensure the health and safety, and well being of the organization and those operating in it. BP have to development of process safety indicator for management, health and safety executives to reduce the percentages of explosion.

(Jonathan C. 2006)"The basic principle of Governance is enterprise and accountability". If we want to judge or value a company, we should solicit about the transparency of the company and entrepreneurial dynamic. In other words, executive management must be free and undeniably encourage to drive the business forward. We cannot prove whether the companies transparency is right or wrong as it is self-evident. It means that the premium of the M&S company should pay for keeping shareholders noses out of it market operation and the board first job is to see it is paid whatever the effects on the share-price and their own compensation. Mark and Spencer has been strong with their environment concern and their social work which is dealt with in their Marks and Start scheme (2004). They should continue to establish good CSR issues generally among the FTSE companies.

On the other hands, Entrepreneur(2009) illustrate that organisation culture in M&S is one of the important part in order to keeping better company, M&S should produce a culture that provide clear and unswerving goal for ensure their achievement, they should facilitate work/life synergy, nurtures a positive public social status and personal identify. Lastly, M&S must try to meet the affinity needs of the employees, and encourage for collaboration and co-operation, hence they have better compliance. More legislation should be adopt by M&S, because it is the efficient way to control behaviour with penalties. external regulation makes only outer limits matter.