OLD (Pre-Period 35) Topic 17 Corporate Governance – RESUBMISSIONS ONLY

@Trephena ,

Is it allowed to use more tha 1 competitor for topic 17 at the same time ?

I mean for instance, I have compared M&S number of board meetings with Debenehams , Gender diversity with both Debenhams and Next Plc ,Diversity policy with Next Plc and Financial performance of M&S in relation to shareholders returns with TESCO .

Will I be penalized doing it ?

Thank you

@Allen – most directors are shareholders and some directors have contracts that technically make them employees both of which are stakeholder groups. However I would probably deal with as a separate stakeholder group.

@Eena – You should choose a company in a sector that interests you. Many students from Malaysia choose Malaysian companies and use the Malaysian Code and also elements of the UK Code for benchmarking – is this not an option you want to consider?

Of course you can go with Tesco or any other UK company but you need to read many business articles so try the (UK Daily) Telegraph and BBC business page websites for background and also reuters and forbes. You will also of course need to access company info from the company Investor Relations part of their website. I recommend that you use https://www.applied-corporate-governance.com/ for some background information of other areas of CG that you need to consider

For Parts 1 and 2 use the search facility with ‘RAP Objectives’ / ‘RAP Aims’ as your key words as some mentors discussed these in detail about 8 months ago and this could be useful to you if you are struggling there – or is it mainly just Part 3?

Is Miss Tan still a mentor at Sunway? – if so get yourself down as one of her mentees as she has an excellent reputation and I am sure she will be able to help you. (That is not to say other Sunway mentors are not good – but Miss Tan is simply legendary!!!! 😀 )

@Eena – thanks for the explanations. I am sure Mr Goh if he teaches P1 is very capable (but if you do find out if Miss Tan is there please let me know – my contacts at OBU always said she was the epitome of a good mentor – so very great praise indeed!).

If you go right back to the beginning of this forum topic you will see how I talked a student through producing a T17 RAP from scratch. “alfred” managed to pass at the first attempt with a grade B. Read through my advice to him and note down (or print off and highlight) the main points and use those to guide you.

In part 2 you need to do a brief (emphasis on the word brief) outline of the development of CG to put your RAP in a context. In Part 3 I suggest that you use graphs as much as possible and you could tabulate some of the more routine information (you do not have to comment on absolutely everything in the Code – perhaps the Applied Corporate Governance website can help you in this respect to select the important issues). I particularly like their stakeholder model so you could use this (cite it as Kendall & Kendall) so you could use that (or Mendelow)

I will PM you an article that an OBU mentor has produced on how to pass T17. Yes there is a lot of information out there but keep in mind you are looking at the QUALITY of a company’s CG so focus on providing information that may demonstrate this.

@Eena – The most important thing about doing any project is that you need to show ‘critical thought’ (see the assessment criteria). This means that you have thought about the topic and are not just producing facts without reflecting on their significance. So for T17 making comparisons (with the Code and other companies) and commenting on this is usually the only normal opportunity to do this.

I suggest that you do some of these routine comparisons but with Tesco there is much more scope to really discuss aspects of its actual governance in practice -something that is of much better significance in relation to T17 and getting not just a pass but a good grade.

There is a lot of discsussion in articles and by various organisations about the relevance and composition of boards. You should try to consider this. So do your comparisons briefly but mention board problems. Here are a few leads to help with this discussion – the first one is particularly relevant to the Tesco scenario:

https://www.lfhe.ac.uk/en/governance-new/resource-bank/previous-news-alerts/Governance-issues-at-Tesco.cfm

https://www.oecd.org/corporate/boardrooms-in-transition.htm

The following is a very long article from Management Today – if you can try to skim the first part but then focus on the section from 2014 onwards:
https://www.managementtoday.co.uk/news/1281576/what-tescos-250m-septimana-horribilis-says-boards/

You can also bring in some of this info in the second part of the RAP impact on Stakeholders when looking at shareholders (think: – has the Tesco board served small shareholders well? How much had Tesco felt pressure by Institutional shareholders to keep the share price rising?). There is also the separate issue of the way Tesco have been treating its suppliers. Finally the effect of the last few years has had on customers – who after all are the reason that Tesco exists – and who have now become disillusioned. Starting with the horsemeat scandal and now the various ‘dirty tricks’ in the way the company has been run (as well as been lured away by the discount stores). As the articles explain – with social media reputations and brands can be damaged very quickly worldwide.

So overall in my opinion, Tesco is a much better choice for T17 in 2015 than M&S as if it is done well offers the potential to get an A grade 🙂

@Sonu – The Guide it is not so relevant perhaps to Tesco, a company that has fallen down so spectacularly in CG, as it would be for the ‘average’ company. It was written by an OBU moderator as a general guide on how to approah this topic e.g. the way you should try to be objective and provide reliable valid evidence. (Unfortunately i am unable to reproduce it on our homepage as I do not hold the copyright but I probably have covered most of the important points already in this T17 forum – except there is a section on using a charity or UK local authority as the chosen organisation). I shall however PM a copy of it to you as soon as I can.

If using Tesco then you should follow my specific advice to Eena above as well as the general suggestions I have made elsewhere about the way to tackle T17

@trephena my first objective question was to compare tesco plc with Uk cg code and as I am beginning this do I need to benchmark it with the 8 principles? And I want to get your feed back on my research questions is it possible to email it to you instead of writing it down here?

@trephena
I discussed with my mentor and he also advised me to stick to the company I have chosen. I think I am overwhelmed with the headlines Tesco has made and thus doubtful on 1) How much I should use these headlines or what events I should focus on for my submission period.
The objective is definetly clear to analyse CG and impact on stakeholder so the beginning or first part of my part 3 is to compare CG of Tesco based on information in its annual report and with UK CG code 2012. 2) So I am assuming the format would be to go principle by principle and see if Tesco has done this or that? But my biggest fear is how to account for the various problems they have been facing or how and where to incorporate the accounting scandal?
I tried beginning my part 3 yesterday and under principle A, the role of the board a.1.1, tesco showed how many annual meeting they had so I have to just say that they had this amount of meetings and so on and compare it with competitor? What my concern was whether I do have to mention this sub principle at all?
My apology that this is sounding bit too much but I would very much appreciate it if you could help me anyway possible.

@alfred – thank you for your contribution and nice to know that you are still visiting our Forum although you have passed and are willing to help those struggling with T17 🙂

@Eena – I suggest that cover the principles but when you do the routine comparisons regarding the Board you then immediately follow this with a brief discussion about the problems there have been with Tesco’s board (I posted a link to an article on p.9 so use this to help you). This then shows that you are taking an all round view of Tesco’s CG.

Most of the other serious problems with Tesco’s CG could be dealt with in the stakeholder section e.g. when discussing shareholders you can bring how the pressure (particularly from institutional shareholders) for improved earnings etc may have contributed to the misstatement of earnings and under Suppliers bring in the issue of the way suppliers have not been getting a fair deal always. With customers again you can bring all of these threads together by commenting that by trying to increase margins to retain market share (and thereby please shareholders) there was pressure to squeeze suppliers unduly in order to beat competitors like Aldi and Lidl, However all of this has back fired: the adverse publicity from the CG scandals has now alienated Tesco from its customer base and its share price and market share have both fallen.

@Eena – The title and focus of T17 is the Quality of the organisation’s CG. Tesco ‘s fall in profits was complex and probably due to many factors – in some respects they just go too big in the UK that the public ‘fell out of love’ with them as when they moved into a new area they tended to take away the livelihoods of many small retailers, the company had a disastrous foray into the U.S. market and they did not recognise the threat of Lidl and Aldi until it was too late. All of these can ultimately be put down to strategic management failures but largely due to a lack of retail experience at Board level. So really it would come in the section when discussing the composition and skills of the Board and the capabilities of the Nominations Committee – so leadership and effectiveness.

Whistleblowing is usually due to a lack of transparency – a person recognises that malpractices are being covered up and often even if they try to draw attention to these the issues are ignored or worse still the manager takes retaliatory or intimidatory action against the whistleblower. This emphasises the need for and importance of an anonymous whistleblower programme so that matters can be brought out in the open without fear of reprisal.

The Board members stood down for several reasons as (a) the strategic failings were their responsibility (b) they knew the shareholders would try to remove them (c) they recognised that there were serious failings in CG and it was better to go quietly than try to weather the storm. It is possible that once the Serious Fraud Office has finished its investigations that some of the Board will stand trial and face imprisonment for fraud if found guilty of false accounting. This is ultimately a failure of CG and the primary duty of a director to maintain accurate records. This may also impact on their auditors as they signed off the accounts.

Given the background the quality of Tesco ‘s CG In practice was appalling but how it has subsequently dealt with the various issues is also important. T17 requires an assessment of the available information on this so for balance a little commentary post Sept 2014 is required rather than just stopping then as clearly the new Board members and chairman had to be seen to try to introduce integrity back into the company. So the remedial action taken should be summarised.

I wanted to ask as well, i work in an accounting and audit firm, i love to do some investigative work. I am intrigued by research and fact finding, could that be a good enough reason to choice this topic.

@tshepo123456 Please bear with me while I explain my rationale and then discuss your proposals… As with most of the RAPs T17 is largely an attempt to apply theory in a limited practical scenario. For most students they will meet the assessment criteria if they follow the approach I have outlined on the forum but I will admit this is a bit of a ‘rote’ manner and not necessarily the ideal way one might apply CG in a real life situation and it is more suited to the choice of large corporations for this RAP. And yes your mentor is right CG Codes are not necessarily relevant to smaller companies.

As you will have read, many students unfortunately don’t have much of a clue about how to conduct a survey and on the basis of remarks and feedback made from markers and moderators I advise that unless you can do a survey and questionnaire well then you are better off not doing one at all! (A few students have corroborated this with their comments).

HOWEVER…. If you would like to do a survey and have the knowledge to do one properly, yes it can add value to the stakeholder section. In fact my colleagues at Applied Corporate Governance will testify that in order for an organisation to fulfil its corporate governance obligations properly and have proper strategic direction it MUST have goal congruence with its stakeholders and for most this would mean that they need to survey their various stakeholders regularly.

The sad reality is that for most companies CG has become a tick box exercise: do we have sufficient NEDs? Tick. Do we hold regular board meetings? Tick. Do we have a risk committee? Tick etc. etc. Whereas governance should really be about stewardship – are we taking the organisation in the right direction? Are we acting responsibly towards our stakeholders? Are we safeguarding and making the best use of the company assets that have been entrusted to us? (or are we as a Board really putting self-interest first and in reality have lost interest in our shareholders, who should be happy just as long as our profits are increasing? And do other stakeholders deserve much of a say in how we run the company or bothered about it anyway?)

Your suggested company would be suitable if you can identify specific stakeholders to interview and/ or survey, however my only reservations are that the listed company will probably be more likely to enforce a tick box approach on the CG framework, so you would need to get in their quick!

With questions it is fairly pointless asking general questions “do you think that the company practises good CG?” without defining what you think good goverance is and equally pointless asking the same questions to customers as you would employees as they have different interests. So my advice is first to look at the Applied Corporate Governance website

https://www.applied-corporate-governance.com/

They have lots of articles and resources on their site so spend some time reading and researching (which you said you like to do) to get a good overview of actual applied CG. There is some information about surveys there but remember you need to tailor the questions to the specific organisation and its particular stakeholder groups:

https://www.applied-corporate-governance.com/stakeholder-survey.html

Note: ACG will be willing to answer some of your questions but are not familiar with the OBU RAP so may be prepared to assist you with CG advice but not in the specific context of how to pass the assessment criteria for your OBU degree.

Another good article to read is:

https://knowledge.insead.edu/leadership-organisations/measuring-the-effectiveness-of-corporate-governance-114

This questions some of the ‘traditional ‘ ways of measuring corporate governance and would help you with adopting a ‘critical thought’ approach in your discussion of board effectiveness and perhaps it may help you design some appropriate questions to ask in your survey.

@tshepo123456 – I suggest just to keep the markers happy that in part 2 you mention the Mendelow matrix and then look at various stakeholders and put them in the appropriate boxes. (I am being a bit cynical here but Mendelow’s seems to be on most of the marker’s tick lists so just put one in then they won’t be disappointed!!!)

You can then go on to use your 6 principles and consider how the relevant stakeholders are affected as appropriate.

Regarding your surveys though: Please read Prof Phil Clarke’s article on p.39 of the latest Info Pack on Primary data collection (suck up to the markers and tell them you have read it in either your methodology section or SLS – or both !! 🙂 ) but most importantly apply the advice. Make sure that your questions are clear and unambiguous and most importantly that they are expressed in non-technical terms so that they can be understood and answered correctly. I really advise that you test your questions out on colleagues/friends/family to see that they make sense (apparently some student surveys are so bad that questions don’t!!) Set out a full methodology – the purpose of your research, how you designed your questions, whether you tested them, who you surveyed, how you chose them, how the survey was conducted and if you sent out surveys what your response rate was and whether you think your sample was sufficient and representative. Discuss any limitations. The thing to remember is that your survey and results should be based on a firm rather than flimsy foundation and if you design and conduct it correctly you will have created this firm foundation.

In the appendices include a full copy of your questionnaire(s) and all your raw data on a spreadsheet. Stick with the results – even if you don’t like what you find, don’t fudge them – the markers are not really concerned with what your overall results show as long as the survey was relevant and conducted correctly and the conclusions you draw from it are logical and make sense. When discussing the results in your analysis use graphs/ bar charts/ pie charts so that you don’t have to repeat figures (I have seen comments from markers saying that they don’t need the student to tell them what they can readily see for themselves as they are perfectly capable of understanding a graph!) – instead focus on the importance of what your results are showing in terms of the CG.

This way you will be showing that you understand how to do primary research properly and why it was relevant to your research and you should be fine. Believe me if you don’t do it properly those markers will tear your work to shreds (the reason I discourage students who know nothing about operational research methods and statistics to steer well clear of surveys). 😀

You can research further on primary data collection by using a few key words on a search engine and on Google Scholar if you need further help. Good luck!