Corporate Governance and Organisational Structure

Question: Describe about corporate governance and organisational structure. Answer: Introduction: Corporate Governance is mainly that system according to which a company is controlled or directed. In a simple way, the Corporate Governance provides us the clearest picture of the role of the leaders of an organization that they play in the establishment of effective practices. These leaders are among the board of directors who make the long term strategy of the company in order to extract best output (Bhasa, 2015). This Corporate Governance is a very important factor behind the success of a company. At Whitbread, it covers all the business aspects. Corporate Governance and Organisational Structure: The company is maintaining the highest level of governance in order to manage transparency, loyalty and integrity within the company. Whitbread has mainly included the successful process of chairman, the Boards internal evaluation, internal, inspection of the employees role and talents, and the periodic review of the working style of board members. The company manages to review all the developments and aim for the high standard of Corporate Governance that is related to the companys growth as well. Organisational structure is a hierarchy that is used in an organization. It specifies functions, responsibilities in the organization (Abdullahi, Enyinna and Stella, 2010). Organisational structure is required to meet the companys long term goals. It defines how the work is distributed among all the employees. Whitbread has ten members in Board in which it includes the chairman, senior independent director and chief executive. Mr. Andy Harrison is the CEO of the company (Makgetlangeng, 201 0). Richard baker is the chairman of the Board. The Board of member contains diversified skills, experiences and backgrounds. Five directors pertain to retail sector, eight are from international sector, four are from financial sector, two are from travel and hospitality sector, rest is from marketing, legal, technology and human resources. The responsibility of the growth and success of the company goes to the board. The board need to ensure the effective monitoring in the risk prone areas. The chairman and the chief executives have set the rules of the duties to perform that are decided by the board. Chairman of the company is like a leader of the board. His duty is to look after the agenda of the strategy, business planning and annual budget (Kwee, 2011). Their responsibility is to maintain healthier relationships with the major shareholders of the company. He has to ensure that members of the board clearly understand the point of view of major shareholders. He ensures the open c ulture and debate around the table. He leads the annual evaluation of the board, committees and the directors. On the other hand chief executive is responsible for the performance of the company. His duty is to assure the appropriate communication with the employees and shareholders (Makgetlangeng, 2010). Chief executive focuses on the profit of the company in order to attract the shareholder value. He ensures to have a team with high competency. He ensures the placement of appropriate calibre employees to the correct place. Senior independent director supports the chairman. He also resolves the queries of the shareholders if there are any concerns and normal channels are not able to resolve the same. He is directly contactable or may be contacted through the general counsel. The executive directors devote their full time to the company. They have their own set of duties. They serve the company in their full capacity and seniority, generally on the matter of policy and key business areas (Mndzebele, 2013). The executive directors have the charge of the day to day business activities of the company. They also look after the strategy implementation and the operational activities. They are generally recruited by the Board of directors. The non executive directors are not the full time employee of the company. They do not indulge themselves in day to day running business of the company. They serve full time duties at somewhere else. They charge fees from the company for their part time services. The non executive director is responsible for the performance of the management of the company (O'CONNOR, 2012). The board is generally assisted by the committees such as Audit committee, Nomination committee and the Remuneration committee. The audit committee is liab le for the internal controls, the compliance matters, the shareholder reporting and the reporting to external auditors. The remuneration committee works upon the remuneration of the senior employees of the company. Apart from this the external directorship, insurance, training and development, evaluation, relations with the shareholders of the company also play a vital role in the Corporate Governance of Whitbread PLC (O'Regan and Ghobadian, 2010). Pest Analysis: After a great success in the UK market, Whitbread wants to expand its business in West Africa. Here we will discuss about the scope of the expansion of business in West Africa for its Premier Inn (Hotel Chain Industry). To better understand the scope for the business expansion, we will go for the PEST analysis (Parker, 2000). PEST analysis is basically a business tool that is used for the measurement of the scope. It is a brainstorming exercise which helps to find out the pros and cons for the setup of a business in a specific area. West Africa geography is a democratic constitutional republic. The region is the fastest growing in the world. There is a lot of difference between the old West Africa and the new West Africa is famous for Petrol and natural Gas. It has a huge business scope. Ghana in West Africa is the worlds largest Gold and Diamond producer and the second largest place for the production of cocoa in the world. Nigeria is also famous for its oil production (Schneider an d Fassin, 2012). Political Environment: The political issues have not greater impact on the hotel industry as its impact is very short term. The Political analysis explains that the demand of Hotels in West Africa is quickly recovered even after political instability, as it had not affected the economy, buying behaviour of consumers, servicing of product etc. Most of the countries in West Africa have political stability. It is worth to expand the Hotel chains here. However the geography is moving towards the stable political environment, but due to the poor structure, the corruption is a significant problem. Anti corruption laws are not implemented successfully yet (Sibanda, 2012). The effect of political disturbance is comparatively less from economical instability in the Hotel Industry. However the political disruptions all depend upon the diplomatic media, travelling and perception of consumers. Economic Environment: The downturn or uplift in the economic situation is one of the most challenging situations for the Hoteliers. They must need to balance the cash flow related to short term needs and price, product and services as well. As it is an on-going process for each and every location. It is no harm to start up the new chain in the continent like West Africa where economy has up and downs. West Africa was trapped with the crisis recently. Despite the crisis, the macroeconomic view is very motivational to invest in West Africa. It has managed to achieve six percent of growth in 2014 that is already the two points more from the continental average. The growth is now expected to be at 6.1 % in 2016, followed by 5% in 2015. Nigeria growth has touched the figure of 6.3%. Cote de voire is at 8.3% of GDP in 2014 (Sylla, 2014). Niger, Togo and Benin have sustainable growth. In Ghana economy is little bit contracted. The continent has some challenges ahead, but it also has the brighter prospects. Even against all the unfavourable condition it has the appreciable dynamism. Nigeria is providing free trade zones to the investors. Moreover According to The Companies Income tax Act has been modified in order to attract investors for the investment in the country. Relief in tax is also a facility for research and development in West African countries. Social Environment: The population is on a very higher side in West Africa. It may be taken as opportunity for the Whitbread as the manpower may get available at cheaper rate. The continent is facing the issues at the highest level in terms of the composition of the population. (Devereux and White, 2010). The increasing population and the trend of urbanisation are basically the reason for change in the social environment in West Africa. At the very start of the 20th century the population in West Africa was about 118 million that was 7.4% of the world population. In 1980 to 2000 it had reached to 797 million, which is 13 % of the globes population. By 2020, it is expected to grow like anything. The growth is 3.5% per annum in terms of population, which is highest in the world (Williamson, 2015). This fastest growth in population and urbanisation has resulted into the degradation of the environment and depletion of resources. The natural resources are limited while users are increasing day by day. In the last 20 years, The Africans generation has got younger. They are posing the new hurdles to the ecosystem. So, the availability of the young generation in West Africa is a positive sign for the plan of establish business of hotel industry in the region as the manpower is the primary requirement in order to setup a business. Technological environment: Most of the countries like Ghana, Nigeria are very strong via technology. Young generation is skilled enough. There is no need for the outsourcing of skilled employees for the Hotel chain. It would be smooth enough to run a business in the continent where the employees are easily available as the availability of the manpower direct affects the profitability of the business. Most of the West African countries are searching for the upcoming opportunities posed by the latest technology. The countries in the West Africa have recognised about the value for ICT, It will not only help to stimulate the economy but it is also helpful in managing the environment. The countries are also investing in the same. For an example Ghana is utilising ICT in order to facilitate the environment in the Poverty Reduction Strategy Paper (Opio-Odongo and Woodsworth 2010). The West Africa is a continent that consists diversified countries. It is enriched with the technological aspect. In Ghana, Eight public u niversities are there for science and technology, mines and technology etc (Collins, 2013). That is why in lack of the job opportunities, migration is taking place in West African countries (Cobanoglu, Dede and Poorani, 2011). Business expansion in terms of Hotel series will flourish as technology; especially in the telecom industry is very fast in West African countries Competitive Environment: According to World Bank report the regional actors mainly the community related to economy of West African countries are playing significant role. The World Bank says that the development policies are playing a critical role in bringing stability in West African continent. It includes better management of land, improve in managing the migrants. Eight global chain hotels like Marriott, Sheraton, Hilton, Radisson, Kempinski etc. are already available in the market of West Africa. The situation of the hotel in the West Africa is not so good and this can be taken as a golden opportunity for Whitbread to start a new Hotel industry in West Africa. Country Cte dIvoire is probably leading to an investment scope. It has a number of international hotels but some of them need to be refurnished and reframed (Hutchison, 2011). On the other hand the Ghanas economy is the fastest growing economy. It also possesses a large number of hotels, but some of them are not up to the level of the travel and tourism. In fact, they are considered as a lack of quality accommodation. Even some people are lending their houses to the tourists. Both the countries present opportunities to the new comers in hotel industry. Nigeria is the most popular country of West Africa (KU, 2014). It also has ample of international chain hotels. Some of them are under constructions. Still the customers demand is not getting fulfilled. They are not getting the affordable and luxurious room with the best services. The rates are on higher side for a common man. It also reflects the opportunities on the rivalry prospective to enter in the continent like West Africa. The relatively young population is continuously attracting the foreign investors. Same is the story of Togo. Togo has small hotels. Through which few are graded. Hence the Premier Inn the graded hotel series has a wider scope in West Africa. The boutique hotel concept is the biggest threat to the Whitbread. The initiative the boutique hotel is stepp ing in Ghanas sector of hotels. Apart from this the chained hotels like Radisson, Marriot; Sheraton, etc. are also a threat for the Whitbread PLC. The trend of providing the homes to the visitors on rent for a few days is also a challenging issue for the hotel industry in West Africa. The rent would be very cheap for the consumer as compare to the Hotel rooms. The Whitbread PLC is seeking to expand its business in West Africa. After attaining the target market in the UK and China, the company is exploring business in another region. There are a lot of challenges that the company has to face due to its competitors. The Hotel Industry is continuously going through instability and uncertainty for some time. It has to be operative in the consumer driven environment. A cut throat competition is prevailing in Hotel Industry now days. Hotels are called the complicated organisation that creates value for their customers and investors with the services and the latest technology. Travel and t ourism are on the high side in West Africa that is why the expansion of the Hotel Industry Premier Inn is a wise decision of Whitbread in West Africa. The performances of Hotels are not only driven by the services they offered to their clients it is also linked to the parallel sectors such as tourism, airlines, travel company, the seasonal demand, etc. For decades West Africa remained a prime attraction for the visitors due to the game reserves. The commercial countries of continent like Nigeria, Ghana lacks the number of rooms for the visitors. The demand is more than supply. Even the regional business man who visits the region for the business is paying too much for his stay. Hoteliers are even worried because they are not able to meet the demand. They are flying here and there for the tie up with others in this regard. Even Marriotts has dealt with Protea, Which later on established as the Africas biggest Chain of Hotels. Recommendations: The international hotel series face an issue of language. The continent contains a population of approx one billion people that are split into several countries. Each country has their own mother tongue, which means a number of legal systems and languages. This is a little bit difficult for the new entrant. As discussed earlier, there is incentives and even tax rebate in Nigeria for the foreign investments. In West Africa, Foreign investments are always welcomed, but some restrictions are there in selected sectors. Some Countries in West Africa are planning to develop new economic sectors in order to avoid the economical up and down. The privatization is taking place on the continent. They are creating a legal framework for the management of the wealth of the countries. Further their motto is to hedge the import and export in order to maintain stability in micro economic. In this dynamic and interconnected environment, Whitbread needs to be prepared for the upcoming business distract ions. A risk management strategy should be there to survive in a continent like West Africa. The Hotel industry is totally dependent upon the socio economic environment, political environment and other environmental factors. Preparing for an unpredictable shock is advisable to the organisation. Identification of the risk is very important for a newcomer (Barreda and Bilgihan, 2013). The company should plan how to respond to the uncertainty. Thus in order to the continuity of business the planning of frame work is very important to minimise the risk. The management should have an entrepreneurial and strategic approach to move ahead in the market in order to increase market share. The healthy relations with the Government and regulators of the continent are necessary as a part of the financial and fiscal support. In order to conclude, as per the detailed study of PEST analysis, the Corporate Governance and Organisational structure of the company, the threats by rivals and the substitu tes, being a consultant it is always advisable for Whitbread to expand its business in international market of WestAfrica (Basedau and Pierskalla, 2014). Conclusion: In the above detailed study, we have discussed about the political, economical, social and technological environment in the continent West Africa. As per economical environment now the situation is better than before. The political situation is also stable, when we talk about the technology sector. Mainly there are two types of technology companies in West Africa. One set of the company includes the relations with the traditional government sectors. The second type of companies is the high technology company that provides the services for food production, energy, health care etc. The fact is that they are comparatively less experienced company with their professional experience. About the socio economic environment, the population of West Africa is on very higher side. The mass of the young generation is suffering from HIV/AIDS. The migration is very common in West Africa. Education level is also comparatively low. This cannot be considered as a hurdle for the Hotel Industry as if th e region is losing the skilled profession due to the migration. It is also receiving unskilled manpower on cheaper rates. West Africa has become a battle ground of the new comer hotel. References Abdullahi, M., Enyinna, O. and Stella, A. (2010). Transparency in Corporate Governance: A Comparative Study of Enron, USA and Cadbury PLC, Nigeria.The Social Sciences, 5(6), pp.471-476. Barreda, A. and Bilgihan, A. (2013). 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