Corporate Governance: Principles, Policies, And Practices Essay

Question:

Discuss about the Corporate Governance for Principles, Policies, and Practices.

Answer:

Introduction:

As per the case study, it has been observed that Japanese culture tends to provide more priorities on personal relationship. According to Mr. Woodfords, the British CEO of Olympus, Japan chairperson Mr. Michael Kikukawa sometimes takes partial decision at the time of taking any kind of management decision. Personal relation can never get the first priority at the time of taking any kind of management decision (Morellec and Erwan 2012). Woodfords considers it completely unethical. As per case scenario, it has been founded that most of the Japanese companies highly rely on the personal intermediaries rather than skills and talents.

On March 2011, the level of profits of Olympus had been declined to 41 percent from the previous year due to the implementation of ineffective leadership style as well as management decision. After being associated with the company for more than 50 years, Michael Kikukawa decided to resign from the post of chairperson due to the serious downfall of Olympus. Corporate management style should always be participative where both managers and the employees would be able to make equal decision-making regarding the success of business. Here, personal relationship should never get first priority in case of business relation.

As per the Japanese leadership style, the decision of Boss is the supreme. Not a single person tends to raise voice against the decision of the boss. Company managers or the business experts tend to impose their entire decision on the employees. As a result, the employees do not get immense opportunities to share their point of views regarding the business goal. This kind of leadership style is otherwise known as autocratic leadership style. Autocratic leadership style is the cause of employee de-motivational factors.

On the other hand, British tend to maintain Participative leadership style or democratic leadership style at the workplace. With the help of democratic leadership style, employees are allowed to share their point of views regarding the success of business. Leaders never tend to impose their entire decision on the workers (Tricker and Bob 2015). At the time of making any kind of business strategies British companies like to involve both the participants and the managers for taking a collective decision making. As a result, employees like to show their interest for providing best services towards the business organization. Employee performance is the key pathways for rendering the success of an organization.

Corporate governance is the set of rules and practices followed by the business organizations based on which the employees are controlled and directed. In order to survive within the business industry, the employees have to follow this kind of corporate governance ethics (Velnampy 2013). One of the most effective reasons of Olympus declination is corporate governance issue. As per the corporate governance practice, employees should be judged based on the skill and competency, rather than maintaining any kind of personal relation at the workplace.

On the other hand, Kikukawa was much concerned about maintaining personal relation within the organization. As a result, some of the employees lose their motivational factors for performing well towards organizational services. On the other hand, Japanese culture never allowed an individual to raise the voice against the director or the boss. This is one of the most important reasons, due to which employees are showing their reluctance for providing an effective service for the organization like Olympus. In addition, Olympus after facing the serious decline in 2011, failed to pay the employee regularly. These factors are completely against the corporate governance practices.

The perception of Woodfords and Michael Kikukawa are different from various angles. Woodfords believes that individual relation should never get the first priority in order to run an organization successfully. Under the leadership of Kikukawa, the employees were unable to express their own point of view regarding the business growth. The verdict of growth was the ultimate (Walls and Judith 2012). In this kind of situation, employees in general lost their interest to perform well for enhancing the revenue growth of an organization. As per the demand raised by Woodfords, Kikukawa never wanted to make a participative relation with the employees at the workplace. That was one of the most important reasons, due to which Olympus had to face immense difficulties for running their entire business process.

In 2011, the profit margin of Olympus had faced a disastrous consequence and 41 percent of the profit has been declined in comparison to the previous year. Woodfords on the other hand, always appreciated on collective decision making before preparing a business strategy and policy. The irregular payment policy would be taken into the matter of serious concern under the power of Woodfords. Therefore, the views and perception of two different eminent businesspersons are completely different from each other while running a business organization effectively.

The business growth of Japan Olympus had faced the peak of success initially being occupying a predominant place in the realm of manufacturing industry. Woodford after occupying the place of chief executive officer of Japan’s Olympus intended to raise some of the major problems that Olympus had faced at the time of running their organization successfully. As per the scandal raised at the particular period, it has been observed that the fees that Olympus paid was for an unknown group of people. Moreover, the advisory fees that were more than 30 percent cannot be traced even.

The personal intermediaries and relation on the process of business had been taken as the first priority as per Japanese culture and believe. As a result, immense dissatisfactions had to be received from the employees. The entire progress of business growth had been affected highly. Employees failed to perform well as they are getting deprived of receiving the remuneration time to time. In addition, existing workers did not feel free to share their point of views regarding the business goal due to the implementation of autocratic leadership style at the workplace. As the consequence of Olympus conflict, the former chairperson as well as president was arrested due to the corporate governance issue in the year 2012 of February.

Reference List:

Morellec, Erwan, Boris Nikolov, and Norman Sch?rhoff. "Corporate governance and capital structure dynamics." The Journal of Finance 67, no. 3 (2012): 803-848.

Tricker, Bob. Corporate governance: Principles, policies, and practices. Oxford University Press, USA, 2015.

Velnampy, T. "Corporate governance and firm performance: a study of Sri Lankan manufacturing companies." (2013).

Walls, Judith L., Pascual Berrone, and Phillip H. Phan. "Corporate governance and environmental performance: is there really a link?." Strategic Management Journal 33, no. 8 (2012): 885-913.

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