International Corporate Finacial Strategy Case Study

International Corporate Finacial Strategy - Case Study Example The role of businesses in society these days has been emphasized particularly due to their sensitivity to social, ethical, and environmental issues. Issues like environmental damage, improper treatment of workers, or even faulty production that inconveniences or endangers customers are highlighted in the media. Reputation that can be built over a number of years can be ruined in hour through incidents that compromise social, ethical, and environmental standards. In some countries government regulation regarding environmental and social issues has increased. Even investors and investment fund managers have begun to take account of a company's Corporate Social Responsibility policy into investment decision-making, commonly known as ethical investing. The primary objective of Signet Group is to be a jewellery retailer of choice for a majority of the population in the countries where it has a footprint. Moreover, the primary financial objective of the Group is to be profitable in its operations and deliver an acceptable growth in value to shareholders, which is sustainable. In achieving its aforementioned objectives, Signet Group faces concerns regarding social, ethical and environmental matters. These matters, if not dealt with efficiently and effectively, may hinder the Group from progressing and achieving its objectives. These concerns are outlined below: Accountability to stakeholders Human rights Labour standards Health and safety; and The environment In recent years, expectations of stakeholders of public companies have increased. It is imperative that the companies manage and respond to these changing expectations so that business viability is not questioned. The success of Signet Group, for that matter any company, is dependent on the strength and effectiveness of its relationships with its various stakeholders: shareholders, customers, suppliers, and employees. Stakeholders have varying expectations from the company. For instance, shareholders or investors have an insatiable expectation of a competitive overall return from the company. They demand that the company maximize shareholder wealth. If Signet does not have a strong social, ethical and environmental (SEE) framework in place, there is a possibility that the company's reputation can be compromised which, in turn, may hurt its operations and finally, its revenue potential and profitability. Signet Group has a no-tolerance policy for unlawful discrimination. In respect of people with disabilities, full and fair consideration is given to employment. Unfair employment practices can potentially put the reputation of the organization at stake which may lead to losses. Signet Group actively participates in the Association of Jewelers of America to implement the SEE standards set by the industry across the organization. This is to ensure that SEE risks at the mining, trading and secondary processing phases of the supply chain are managed through effective cooperation within the industry. Whilst the direct

Agency Theory and Corporate Governance Research Paper

Agency Theory and Corporate Governance - Research Paper Example The objective of this paper is to evaluate the definition of corporation as a ‘nexus of contracts’ for interpreting its compatibility in the present modern business and thus to examine the importance of corporate governance. For verifying the assumption of the agency theory, the insights of the definition towards the theorists have been researched. It was discovered that there are various critics to this notion of the agency theorists in the modern world. The critics determined that the factor of morality has been ignored by the definition of the agency theorists. Moreover, for measuring the characterization of the definition towards importance of corporate governance, research was done and its was found that the definition has been termed as ‘misleading’ by various critics because of the fact that it incurs legal enforcement of the shareholders while at the same time shareholders hold the least power of legality among all the stakeholders. Introduction The agency theory in relation to the corporate governance represents a two-stage mode of controlling the firm. The two levels are those of the managers and the owners. This research paper is aimed towards discussing the various significant issues related to the existence of agency theory in a corporation. The paper will focus on the interpretation of ‘nexus of contracts’ in relation to the agency theory and corporate governance. ... The use of the phrase, ‘nexus of contracts’ provides a new dimension to the corporation definition. Under this term, the problem of conflicts within a firm is observed as a unit of the contract enforcement. Agency costs are determined as the contract enforcement costs on the basis of the assumption that corporation often acts as ‘nexus of contracts’. Under this definition, the structure of the corporation is defined to be adapting to an attempt aimed towards profit maximization by way of trading among the different parties of contract that meets within the corporation (Maloney, 2003). Relationship between Nexus of Contracts and Agency Theory The definition of the firm ‘nexus of contracts’ has been provided by the agency theory. The nexus of contracts has been defined among various suppliers of a firm’s resource. The nexus of contracts presume two central parties to the agency theory. These are the principals and the agents. Principals are those who supply the capital to the firm and agents are those who manage the operational functions of a firm. Agency costs are encountered by the organization because of the reason that the interests of the two parties do not coincide. The costs of contract enforcement under this presumption consists of the cost of observing the agents’ behavior inclusive of the practices of compensation, restrictions of budget allocation and also the profit and loss because of the rules of operations and that of management restrictions (Proffitt, 2000). Insights of ‘Nexus of Contracts’ for Agency Theorists Under the assumption of the agency theory that defines a firm as a nexus of contracts, it is taken for granted that it is the self-interest of the parties which acts as a