Strategy and Governance Flashcards
Audit and finance committee – Composition and duties/responsibilities
Strategy/Governance
Core – Level B; Elective – Level A
Audit and finance committee – Composition and duties/responsibilities
• Purpose – to assist the board of directors in fulfilling its oversight of the company’s financial affairs and to liaise with the independent auditors.
• Composition
o Majority of member should be independent from the company.
o All members should have basic knowledge of finance and accounting.
o At least one member should have expert knowledge of finance and accounting.
• Duties/responsibilities
o Review and discuss with management and independent auditors any issues arising from the audit of the financial statements.
o Review and discuss audited financial statements with management and independent auditors.
o Oversee compliance with legal, tax and regulatory authorities.
o Monitor effectiveness of internal control processes and risk management systems.
Case: King Street Theatre
External analysis – Porter’s Five Forces
Strategy/Governance
Core – Level B; Elective – Level A
External analysis – Porter’s Five Forces
The key considerations in Porter’s Five Forces include:
• Bargaining power of buyers, considering
o Concentration of buyers
o Ability to purchase from another supplier
• Bargaining power of suppliers
o Are there many or few suppliers?
o How costly is it to switch suppliers?
• Threat of substitution
o Are there readily available substitutes?
• Threat of new entrants
o Consider barriers to entry – economies of scale, product branding, capital requirements, government policies
• Competitive rivalry
o Consider – number of competitors, industry growth, unutilized capacity, exit barriers, etc.
Case: Atlantic Shellfish, Ferguson Real Estate
External analysis – SWOT Analysis
Strategy/Governance
Core – Level B; Elective – Level A
External analysis – SWOT Analysis
SWOT Analysis (Strengths Weaknesses, Opportunities, and Threats) scans the internal and external environments to provide a comprehensive understanding of the business context.
A SWOT Analysis is designed to tell us where
• external opportunities potentially align with organizational strengths and vice versa,
• where threats loom and
• where we lack competence.
A SWOT Analysis can also help us identify the strategic drivers of the business. With this understanding, you can have more confidence during strategy development.
Case: Atlantic Shellfish, TankCo, Ferguson Real Estate, World Wide Windows, Solar Panel Solutions
Governance structures
Strategy/Governance
Core – Level B; Elective – Level A
Governance structures
Organizations will have different corporate governance practices depending on:
• Their size (e.g., number of directors, the number of committees);
• Ownership structure (e.g., privately owned or publicly held);
• Nature, scope and complexity of operations (e.g., individuals with relevant expertise).
Different governance systems are acceptable as long as the system in place is effective for the organization to fulfill its mission, vision, and objectives.
Case: Ferguson Real Estate
