Random notes:

Supply risk:
- The risk that a company would not be able to obtain the inputs needed.
- Associated with underdeveloped supply chains and weaker companies in poorly
regulated countries

Political risk:
- Potential failure on the part of the state to fulfil all or part of its functions
- Can relate to the potential governmental influence on the business.
- Ex to regulate, enforce laws enforcing building and safety regulations
- Stability and effectiveness of the state

Social footprint:
- Footprint - refers to the impact or effect that an entity can have given a set of
concerns or stakeholder interests
- Social footprint - the impact on people, society and the well-being of communities
- Effects can be positive (providing jobs) and negative (becoming sick from plant
emissions or the use of product)

Corruption:
- Departure from the highest standards of integrity in the operation of an organisation
- Offering and acceptance of bribes
- Costs businesses, and in government corruption, taxpayers, a great deal of money in
lost earnings as contracts are awarded based on the size of the bribe rather than the
value for money for the taxpayer or the shareholder
- Keeps people in poverty and country remains undeveloped
- How to defeat corruption
o Recognition by all that corruption is wrong – change in ethical norms of
country
o Need support from senior management to set the tone of the company
o Diversity within company – open to more scrutiny and opinions
o New legislation

Corporate governance:
- System by which organisations are configured, coordinated and controlled
- Involves characteristics of leadership, structures particularly at board level to help
facilitate desirable outcomes and the behaviours of senior management in the
pursuit of those outcomes

Agency relationships
- Separation of ownership and control of an organisation
- 2 parties:
o Principal – shareholder (public co.), taxpayers (public sector organisation)
o Agent - director responsible for company’s performance, fiduciary
relationship
Contrast between public and private sector corporate governance:
- Private sector
o Aim: delivering acceptable long term economic returns to investors
o Public listed co. - Agency issue may arise
o Concerned with the alignment of agency rewards with shareholder priorities,
the enforcement of professional behaviour to maximise investor confidence,
and the ethical behaviour with those entrusted with the management of the
company’s assets
o
- Public sector
o Concerned with the configuration and coordination of activities but it is less
likely to be concerned with the delivery of long term shareholder returns.
o Strategic focus – balancing quality and effectiveness of service delivery with
cost constraints

A CEO of a public sector service provider is more likely to have less rewards than a CEO of a
large listed company:
- Company’s income is restrained by government spending budgets – political and
economic pressures
- Company is relatively small and simple
- A public sector CEO does not require significant entrepreneurial skills
- Less competitive labour market
- CEO has a public sector ethos and is comfortable with her pay
- Political pressure to moderate executive pay in firms relying on public sector
contracts

How creating a code of ethics improves reputation

- Promote company’s values and ethical priorities
- Promotes company’s responsibilities towards its stakeholders
- Ability to control and regulate individual behaviour and guide employees’ actions
- Communicate company’s values to stakeholders
- Forms an important part of the company’s strategic positioning with regards to
ethical issues
- Serve as a barrier to entry for competitors

Big Data: extremely large data sets which may be analysed to reveal patterns, trends and
associations relating to human behaviour.

Uses of big data:

- Data mining - identifying trends
- Predictive analysis
- Text analytics – analysing text on social media to identify opinions of participants of
those sites
- Statistical analytics

If in question he says make a case – focus on advantages

If he asks for an evaluation of potential application – balance both pros and cons
E-procurement
Procurement is concerned with purchasing goods or services for the organisation. It is
concerned with sourcing items are the right price, delivered at the right time to the right
place, in the correct quantity and from the right source
- Automation of setting re-order level based on a predetermined re-order level
o More advanced system – predicts sales trends
- Inventory records of each store are linked to a central system
o Central warehouse would be immediately aware of when inventory needs
replacing
- Electronic data interchange – placing orders automatically with suppliers when
inventory levels are running low
- Competitive bidding – posting requirements for goods and services on the
company’s website and asking potential suppliers to big

Information system risks

- Lack of focus on IT/IS strategy
o Outcomes
 Lack of business opportunities
 Poor decision making process
 Threat to long term survival
 Inefficiencies and increase in costs
o Recommendations
 Employ IT director
 Formalise procedures
 Link IS strategy to corporate strategy

- Cyber and data security breaches

o Outcomes
 Loss of data
 Loss of hardware
 Reputational risk
 Data breaches
 Viruses
 Loss of business (webpage down)
o Recommendations
 Data backups
 Antivirus
 Cyber security stress test
 Train employees on cyber security awareness
 Strict authorisations or access procedures (passwords change
monthly)
 Internal control testing
- Business continuity threats
o Outcomes
 Temporary suspension of business
 Loss of income
 Reputational damage
 o Recommendation
 Contingency plan – business continuity plan
 Evaluate business continuity risks – strategy in place

Principal-agent relationship of NGO – 2 tier board

- Unitary board
o Principal – shareholders
o Agents – board of directors
- Trustees represent the different stakeholders
- Principal – board of trustees (represents shareholders)
- Agent – management board (runs the company – fiduciary duty)

Advantages of a 2-tier board

- Separation of duties between monitoring function and those executing day to day
tasks
- Supervisory role – safeguard against management inefficiency, fraud
- Increases public confidence and trust
- Supervisory board considers all the stakeholders in the management board’s actions
- Transparency

Financial analysis
- When analysing income – you can look at a particular income compared to total
income to see how powerful that income is
- Check I there was any new income from prior year example a sale of property and
see with regards to net income if it was the sole reason why you made a profit this
year