Introduction
Businesses have many separate groups to be aware of and that they are responsible to and for. These groups of people are called stakeholders. Government bodies have implemented regulations to ensure that business act in the best interests of these stakeholders. The governing body of a business is their appointed/elected board of directors, and this group has the legal obligation to ensure the company follows through on their obligations.
Purpose
The purpose of this exercise is to develop the ability to recognize stakeholders, realize their interests, and ensure a business is performing in those interests.
Group
You are members of the Board of Directors at a major automobile manufacturer. The company just fell to its worst year on record. Sales were down considerably, investments for future growth missed their profitable projections, and employees have lost their faith in the business’ ability to compete and fairly compensate its employees. Competitors have taken a considerable amount of your market share because of their ability to be more efficient. Without a turnaround, the company could come to bankruptcy, which is the worst case scenario for all stakeholders.
At the last shareholders meeting, vocal investors declared that they believe a new structure and controls are required to regain a competitive advantage and turn the company around. The Board agrees and now you must develop a 10-slide presentation of organizational structure and controls to present to the CEO how the company will be restructured in a way that will prove to all stakeholders that the company can be efficient and prosperous again.
Step 1: To begin, your team will gather to discuss what each member knows about organizational structures and controls. Why are they important and how they can help businesses? Select a carmaker from anywhere in the world to use as your case and assume they have fallen into the financial troubles described above.
Step 2: Analyze who the key stakeholders are in this situation and the claims that they may have on your company. This should include shareholders, employees, the community and suppliers. During this stage, you should account for the fact that not all stakeholders’ interests can be fully realized. It is your duty to prioritize which group or groups need to be the focus of your reorganization strategies.
Step 3: Analyze different scenarios and discuss how each group of stakeholders would be affected. (E.g. layoffs, cuts on quality, pay decreases, etc.) How will the different scenarios benefit certain groups? How will others hurt certain groups?
Step 4: Develop controls that will ensure your car maker will become profitable and that will also motivate the management team and employees to become active in the company’s turnaround. What governance mechanisms could you employ?
Step 5: Times of turmoil within a company can also be times of temptation to cut corners. Discuss one potential ethical issue the company could face as it considers strategies. Then recommend a method for counteracting this unethical behavior.
Step 6: Work collaboratively to create the group’s slide presentation, using the slide presentation software of your choice (PowerPoint, Prezi, etc.). Include slides that cover the following topics: Stakeholders, Agency, Governance Mechanisms and Ethics. Remember that your Board is going to present this to the management team and in the future may address the vocal shareholders and should address all of the concerns raised by stakeholders.