Expand on being “the contact-person”, “the figure-head role”, “the status-provider”.
▪ Expand on being “a judge”, “the catalyst”, “the monitor or supervisor”, “watchdog role”, “confidant”, “the safety-valve”.
▪ How much do the basic companies ordinances differ in different countries? Take into consideration: laws rooted in Roman law/within the case-oriented legal structures.
▪ What is the underlying basis of power to nominate and elect directors?
▪ Who does hold the confirming power?
▪ What are the basic responsibilities of the shareholders?
▪ Expand on acting honestly in good faith
▪ What are the main duties imposed on directors?
▪ What is the nature of man in accordance with the original corporate concept?
▪ Expand on stewardship theory/Criticism on “stewardship theory
▪ Expand on the agency theory.
Task 3. Reading 2
Getting started
▪ Before reading the text, discuss in small groups what role plays the board of directors in the governing the company.
▪ Skim the he text to find out if your ideas are similar to those in the text.
▪ While reading the text, pay attention to the words in bold and try to explain them. Consult Vocabulary p. 139–140.
▪ Title the text.
The board of directors of a limited company is primarily responsible for determining the objectives and policies of a business. It is the directors who determine the direction the business is going to take. They will need to ensure that the necessary funds are available and will appoint key staff to whom they will delegate the authority to run the business on a day-to-day basis. They will need to design an effective organisation structure so that there is both a chain of command linking one level of management with another and an effective communication network so that instructions can be passed downward and information passed upward.
The directors are appointed by the shareholders, normally at the company's annual general meeting, at which the chairman of the board will be expected to account for their stewardship during the previous year. The company's accounts will be presented to the shareholders at that time so they can judge for themselves whether or not the board has been successful.
Direction in business is like strategy in a war situation. The strategic decisions determine the areas in which the company's resources will be employed. Above all it involves planning to ensure that the business first survives and then flourishes. Strategic decisions, made by the board of directors, are concerned with the disposition of resources. These contrast with the tactical decisions by means of which the senior executives (appointed by the directors) carry out in detail the plans conceived or approved by the board of directors.
The fact that boards of directors tend to meet rather infrequently, say once a week, means that part-time directors can be elected to the board. Since they will not have departmental responsibilities within the company they are often described as non-executive directors. There are arguments in favour of such directors though they may lack a detailed knowledge of the company's activities. They may bring expertise to the board. Some are lawyers, or experts in tax affairs. Some represent influential groups of shareholders whose support is necessary if the board is going to carry out its plans, while others are directors in a number of companies and are used to interlock boards within a group of companies. For example, a holding (or parent) company may appoint a director from their board to serve on the board of a subsidiary company, with a view to keeping a watching brief on the directors' activities.
Task 4. Talking Point 2
Work in groups of three, consult Speaking References p. 126–130 and discuss the following:
▪ Why delegating is used in running the business?
▪ What role do the senior executives play in the company?
▪ What happens at the annual general meeting?
▪ What is the difference between a strategic and a tactical decision?
▪ What part can non-executive directors play in the proceedings?
▪ What is meant by an interlocking board of directors?
▪ How is it that a board of directors can control a company though they only meet, say, once a week?
Task 5. Vocabulary 1
A. Match the phrases from the text (1–9) to their definitions (a– i).
B. Fill in the blanks in the text below, using the words from the box:
link, company’s, actively, coming, increase, delay, sell, company’s, capital, provided, run, spent, certain, mixture, brand, overseas, combines, course, coming, faced, benefit, appointed, marketing, financial, general, advertising, complex, buy, directors, management, post, appointed
A modern business enterprise is often a system requiring a lot of ______, which is provided by the public when they _______ shares in the company. Since they have _______ the capital, it is appropriate that they choose the people who are to _______ ________ the company for them, namely the board of directors. Many of the_______ also have executive responsibilities.
Thus, a marketing director might be a full director of the board, _______ by the shareholders at the annual _________ meeting like the other directors. Yet he might also be responsible for the day-to-day ________ of the marketing department. Most of his time will be _______ on administrative matters, organising market research, dealing with _______ and generally ensuring that the ______ sales are maximised. But he will function as a director when the board of directors meets. The _______ of managing director also ______ the role of chief executive with membership of the board and this allows him to act as a vital _______ between the board of directors and their ________ management team. The managing director is often also chairman of the board of directors.
Executive directors have the advantage that they are ______. Involved with the ________ affairs. If the board of directors wishes to move in a ______ direction the executive directors will know whether such a ________ of action is practicable. For example, the board might wish to ______ their products in a particular ________ market. The market would be profitable for the company, but the ________ director knows that his teams of salespeople lack the
