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Corporate Governance

Q: Corporations are not really run by their owners

Ans: Corporations are not really run by their owners because this mainly depends on the size of the organization. Meaning, the bigger the corporation, the less likely it is for the owners to run it. It is nearly impractical for the owner as a single person to run the entire organization. Here is where the role of other people like managers comes into play and the owner just takes the responsibility of a director and takes important decisions and does not get involved in day to day operations of the business. The bigger the corporation there will be a large number of shareholders and with their assistance the corporations are usually run effectively and efficiently. The most important thing here is to have a clear cut chain of hierarchy and a person or a group of people those who will be responsible for the firm’s actions. So essentially, corporations are not really run by the owners alone and are run by everyone who works for it, without which the corporation will not be able to generate revenue.

Explain the evolution of corporate governance

Ans: The theory of corporate governance has been existing for centuries but the term corporate governance was coined only in the 1970’s and the term was in use only in the United States. The main issue here has been the topic of balancing the authority and the issue of decision making authority between board of directors, stockholders and management. Corporate governance is necessary and is beneficial for every organization for a effective unity between the stockholders and directors. The nature of the corporate governance’s problems is mainly based on the country itself and keeps changing from time to time.  The primary issue has been the ownership structure and the nature of the issue can be well known from the problem itself. There has been a recent insistence on corporate governance and the following are the recent trends in corporate governance, intrinsic economic balance, stockholders responsibility, the firm’s main focus turns to performing well, managerial, director and auditor entrenchment are kept in view and right pay for the right performance.

Is it ethical for companies to avoid certain segments?

Ans: Advertising and marketing are ethical only when the companies provide the complete information. Ethical target marketing occurs when companies research and study the market and buyers to know what the targeted segment of buyers expect from them. So it is ethical when the companies target only a particular segment of the population for marketing their product. Since marketing is very crucial for a product to reach its consumers avoiding certain segments of population if proven fruitful for the company to reach its target audience is absolutely ethical.

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