Page 15 - BA1 Integrated Workbook STUDENT 2018

The process of strategy formulation

Responsibility for strategic planning

3.1 Director responsibility and corporate governance

Directors are responsible for developing strategies that will further the interests of
shareholders. They also have a duty to exercise due care and skill in their roles, as
well as consider wider stakeholder needs.

Corporate governance is ‘the system by which companies are
directed and controlled in the interests of shareholders and other
stakeholders’.

For E3, corporate governance has several key aims:

 ensuring no individual can dominate the board and force through weak
strategies

 improving diversity on the board to improve generation of new strategies

 ensuring adequate internal audit and control systems to ensure that the board
has accurate information about the company

 enabling the company to continue attracting investors.

Illustrations and further practice

Now review TYU 9 and 10 in Chapter 1 of the text.

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