INSTITUTIONAL STRUCTURE

Question 1

WHAT ARE THE RIGHTS AND DUTIES WHEN GOVERNING AN ORGANIZATION?

Answer 1

RIGHTS: TO MAKE DECISIONS AND BENEFIT FROM RESIDUAL INCOME.
DUTIES: TO ASSUME RESPONSIBILITY AND BEAR WITH POSSIBLE NEGATIVE RESULTS

Question 2

EXPLAIN THE INSTITUTIONAL STRUCTURE

Answer 2

IS A COMPLEX COMBINATION OF THE STAKEHOLDERS, THE CONTRIBUTIONS THEY BRING, THE REWARDS THEY RECEIVE, THE INSTITUTIONAL GOALS AND THE GOVERNANCE STRUCTURE MECHANISMS

Question 3

EXPLAIN GOVERNANCE STRUCTURE

Answer 3

IT’S HOW POWER AND WEALTH ARE ALLOCATED WITHIN THE COMPANY

Question 4

WHAT ARE THE TASKS RELATED TO GOVERNANCE STRUCTURE?

Answer 4

SETTING DOWN OBJECTIVES, STRATEGIES AND POLICIES
SELECTING THE PEOPLE THAT WILL CONTRIBUTE WITH THE ECONOMIC ACTIVITY
MONITORING THE ECONOMIC VIABILITY OF THE ORGANIZATION

Question 5

WHAT ARE THE BENEFITS OF CORPORATIONS?

Answer 5

LIMITED LIABILITY ( INDIVIDUAL IS NOT PERSONALLY RESPONSIBLE FOR ORGANIZATION’S DEBTS)
LEGAL PERSONALITY ( INDIVIDUAL CAN ACT LEGALLY )
EASY TRANSFERABILITY OF SHARES ( SHAREHOLDER CAN SELL ITS SHARES AT ANY TIME)
CENTRALIZED MANAGEMENT ( EXECUTIVES MAKE DECISIONS, SO IT’S MORE EFFICIENT FOR THE ORGANIZATION)

Question 6

WHAT ARE THE CONDITIONS OF EXISTENCE OF A CORPORATION?

Answer 6

HAVE ECONOMIC VIABILITY (BE PROFITABLE)
HAVE LEGITIMACY ( RESPECT LAWS AND REGULATIONS)