Strategy and Governance

Question 1

Types of strategy

Answer 1

• customer value proposition
• cost leadership (low cost)
• differentiation strategy
  
  • customer intimacy
  • product leadership
• focused or niche strategy

Question 2

Governance issues

Answer 2

• Independence of the Board
• Conflict of interest
• Reporting structure
• experience (relevant industry, accounting, legal…)
• other board committees
• meeting frequency, location, attendance
• board selection process
• member term
• roles and responsibilities
• policies and processes (approval for sr mgmt bonus, sig. commitments, budget)

Question 3

Board of Directors

Answer 3

• Act on a fully informed basis taking into consideration the best interest of the company and its shareholders
• Independent
• Regular meetings
• Diverse skill set
• Key functions:
• review and guide corporate strategy,plans, risk policy, budget, set performance objectives, monitor implementation and corporate performance, oversee capital expenditure, acquisition, divesture
• monitor the effectiveness of governance practice and make changes
• oversee key executives
• formal and transparent nomination
• integrity of accounting and financial reporting systems-

Question 4

Audit Committee

Answer 4

Oversee audit
Independent
Duties:
- Review FS
- Review audit
- Understand estimates
- Monitor compliance with regulations
- Oversee internal controls
- Understand external advisors
- Direct access to audit regarding issues

Question 5

Other committees

Answer 5

Compensation
- CEO and key executives
Corporate Governance
- governance issues
- regulatory issues
Nominating
- board members