Identify and discuss the fundamental concepts of effective governance and accountability that are applicable to the aeronautical company.

Address the Scenario corporate governance and accountability:

You are an external consultant for a medium sized aeronautical company with approximately 7,000 employees, that mostly
manufactures components and parts for civilian and military satellites, as well as components for ballistic and cruise missiles. The company has a typical corporate structure, with a Board of Directors, headed by the Chairman of the Board. The Chief Executive Officer (CEO) reports directly to the Board, the Chief Financial Officer and the Chief Operating Officer report directly to the CEO.

You normally report directly to the Board of Directors.

In recent years the company has been struggling financially. As a result, the CEO was recently fired. The new CEO was recruited from outside the organization. He is highly respected and very technically competent. He is determined to turn the company around and wants to understand more about the management side of the organization. He is aware of a few recent corporate scandals and doesn’t want his company to be next on the list of companies involved in scandals. He has lots of concerns, but he is not sure if he is concerned about the right things.

The CEO has become aware of your expertise in corporate governance and accountability, so after discussing it with the Board and the Chief Operating Officer, the CEO asked you to assist him in understanding all the fundamental concepts and principles of effective corporate governance and accountability. He also wanted to know the major advantages for the company to make improvements in this area, as well as any anticipated issues or barriers to improving corporate governance and accountability.

Instructions:

Summarize the fundamental concepts and issues related to effective corporate governance and accountability. Based upon what you learned, you inform the CEO that you will assist but your report must include any issues involved with the Board of Directors as well. The CEO understands and you both agree that the report will be presented
to the Board of Directors with your findings and recommendations.

Using and choose terminology and concepts like:

1) Agency Theory

– Agency theory has its roots in economic theory. Agency theory is the relationship between the principals, such as shareholders and agents such as the company executives and managers. The agency theory shareholders expect the agents to make decisions that represent the best interest of the principal’s.

However, if the agent is motivated by self interest, they may not necessarily make decisions in the best interests of the principals. An agency dilemma exists in circumstances where agents are motivated to act in their own best interests, which are contrary to those of their principals.

2) Stewardship Theory

– Stewardship theory has its roots from psychology and sociology. Stewardship theory is a theory that managers, left on their own, will act as responsible stewards of the assets they control. Stewardship theorists assume that given a choice between self-serving behavior and pro-organizational behavior, a steward will protect and maximize shareholders wealth through firm performance. This theory suggests that stewards are satisfied and motivated by organizational success.

3) Stakeholder Theory

– The stakeholder theory has its roots in organizational management and business ethics. This theory addresses moral and ethical values in the management of a business or other organization.

Touch on topics like:

CSR Reporting
Transparency and Accountability
Business Ethics
Organizational Governance and decision making

The paper must do the following:

1. Identify and discuss the fundamental concepts of effective governance and accountability that are applicable to the aeronautical company.

2. Discuss some of the major governance theories that you think both the CEO Board should be cognizant of and discuss how these theories apply to the aeronautical company.

3. Highlight the opportunities/benefits that the company might receive for improving corporate governance and accountability.

4. Identify the likely challenges/barriers to effective organizational governance.

5. Elaborate on any other issues that you think the new CEO and Board should know prior to deciding if the company should
devote resources to improving governance and accountability.

6. Include at least 5 scholarly references in your bibliography

7. Your paper must have a thesis statement and conclusion that are both supported by research and analysis

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