Corporate Governance Framework – Harvey Norman Assignment Help
Kirby (2012) in his online article says that Harvey Norman’s stock price in the recent months has fallen down to a quarter to what it was in the last five (“5”) years. While the market value of the company is less than its building valuation yet Mr. Gerry Harvey says that those who believe The market value of the entire company is less than the valuation of its buildings, yet Gerry Harvey says those who believe that internet holds the all the answer to any empire are duped.
Although MURDOCH (2008) in her articles in The Wall Street Journal explained the reasons for fall in the prices of the stock yet the controversies as well as economy held it back.
Harvey Norman Holdings Limited with its subsidiaries i.e. Harvey Norman is world’s leading retail as well as property company has is operating in Australia, New Zealand, Singapore, Malaysia, Irelands and Slovenia while our company of discussion Harvey Norman, is a brand name and a retail icon in Australia with almost 185 franchisees. The company aims for the following mission for the coming years:
- To be recognized as leaders in delivery of retail services in the fast moving consumer goods.
- Better return for the stakeholders
- To develop an inspiring workplace
- Have a good name in the community in which the company operates
As per Mentis (2008, pp. 3-8) Corporate Governance Framework at Harvey Norman has different stakeholders locally within Australia and in different other countries as well and there are different issues related to it. The stake holders list starts from the directors moves on to employees, contractors and consultants. This list of stakeholders is for maintenance and enhancing Harvey Norman’s reputation but also as a guide line for acceptable behavior.
CORPORATE GOVERNANCE STAKEHOLDER & THEIR ISSUES
Independent Directors of the Company:
Pasros and Seamer (2002, pp. 13-19) elaborate that Harvey Norman is supervised by Australian Securities Exchange Corporate Governance Listing rules and regulations. As per the said regulations, under principle 2 of Structure the Board to add value. There are five (“5”) sub principles as follows:
Principle 2 – Structure the board to add value
- As explained by www.asxgroup.com.au n.d, a majority of the board should be independent directors.
- Assessing the independence of directors
- The chairperson should be an independent director.
- The roles of chairperson and chief executive officer should not be exercised by the same individual.
- The board should establish a nomination committee.
- Provide the information indicated in Guide to reporting on Principle 2.
All the companies which are listed at Australian Securities Exchange have to follow all the rules set but in this particular case, Harvey Norman has been unable to follow the Independent Directors principal. The Audited Financials of the company for the year 2012 have tried to justify in the following paragraph:
Harvey Norman (2012, pp. 33-40) explains that The company doesn’t have many independent directors in its panel and majority of them are executive directors. The board understands that it is mandatory for any company registered under Australian Securities Exchange to have board which has independent directors. The board believes that all the executive directors are capable enough to bring quality and independent judgment to all the relevant issues which come under the scope of the executive directors and the company on the whole gets benefit from the expertise of all the directors due to their experience.
Beekesa and Brownb (2006, pp. 422-450) talks about corporate governance in Harvey Norman and say that they also recognizes that the Corporate Governance Council’s recommendation that the Chairman of the company should be independent director while the company also realizes the fact that Mr. Gerald Harvey does not meet the definition of independence. The board believes that Mr. Harvey with his expertise and experience can always make best possible decision as an independent director in his capacity and these decisions are always in the benefit of the company
EMPLOYEES OF THE COMPANY:
As per rules and regulations set in KPMG (2012, pp. 16-35) by Australian Securities Exchange for listing of a company, it is mandatory for any company to disclose in each annual report the proportion of women employees in the whole organization including the women in senior executive positions and women on board.
Clarke, T. and A. Klettner (2010) says that the company in 2012 started publishing women employee’s details in Annual reports 2012. Moreover, the Company has also instituted a Board Diversity Policy and Employee Diversity Policy during the current financial year 2012.
G.J. (UWA) (2006, pp. 100-120) explain this relation, the board and the management both understand the fact and importance of having employees with diverse backgrounds, experience and perspectives which they bring with themselves to the organization. The company The Company views that increased diversity at the board level is very essential for value addition in the field for its shareholder’s as it helps the company to become innovative, responsive productive and competitive at the same time.
Workforce Gender Profile (2012)
As at Harvey Norman (2012, pp. 41-45) document dated 30 June 2012, in total field of approximated 5,000 employees, women represent 41.23% of total employees of the Company where around 31.18% of employees are in the senior executive positions and round 10.00% of the Board have females.
CUSTOMERS OF THE COMPANY:
As per the regulations and recommendation set in ASX Corporate Governance Council (2008, pp.4-5) by Australian Securities Exchange (“ASX”), the company should properly design a communication policy and Companies should design a communications policy to communicate with the shareholders and should also encourage the participation of the shareholders in the meetings held and disclose their policy or a summary of that policy.
The above mentioned rule is principle number 6 as per the ASX, the objective of this principle is to effectively promote communication with the end customers who are shareholder of the company at all times.
As per Harvey Norman (2012, pp. 40-42), the company is trying and is committed to:
- Provide prompt information to the shareholders and the financial market about the activities of the company.
- Disclosure of any information which is necessary for the ASX listing rules and the Corporations Act 2001 in Australia.
- Two way communications between the customers and company made easier.
- Release of information to the market through ASX
- Distribution of the annual report
- Notices of Annual General Meeting
- Shareholder meetings
- Posting relevant information on website & via letters of communications.
Business Dealings with customers (Suppliers End):
Harvey Norman Holdings Limited (2008, pp. 5-6) explains that all the employees through code of conduct have been guided to comply with high standards of ethical conduct as per the agreement in business dealing with the customers, consumers and suppliers and everyone must comply with all the rules and regulation set by Harvey Norman operations for example:
- Prohibit any misconduct like price fixing, boycotts, resale price maintenance, third line forcing and misuse of market power
- protects consumers from prohibiting misleading conduct and establishing minimum standard for goods and services
The company has been receiving many complaints and these complaints were from incomplete delivery of the goods to bad behavior of the staff in the franchise. Few of the complaints which were promptly resolved are as follows:
- com(2013) talks about No Delivery of washing machine or informed of that it would not be delivered,
(b) Complaintsboard.com (2010) provides detail on Wrong parts in box
(c) Complaintsboard.com (2011) talks about problems faced in Electronics department
(d) Complaintsboard.com (2013) discusses Dishonest Sales staff at Moorabbin
Harvey Norman (2012, pp. 49) says that the company has been resolving these issues promptly which are related to local as well as international market and has made strict guidelines to be followed by all the franchises whether they are working in Australia or in any other country and incase the franchise is unable to follow the guideline the company has closed the franchises which were problem accounts. In only 2012, the company closed down around 25 outlets and franchises.
CONSIDERATION OF ETHICAL CHALLENGES
Heenetigala and Armstrong et al. (2011, pp. 45-55) explains that every big company has to face different issues and especially ethical ones which most of the time damaged the brand equity of the company. Harvey Norman is not an exception and has to go through the same trail. 2013 has been a really difficult year for the management as they had to face biggest controversy of destruction of threatened Koala Bear.
Harvey Norman, Boral and Boambee Forest:
Market for Change (2012, pp. 1-2) claims that since 2011, the company has been facing difficulties with respect to the wood logs which are used for Harvey Norman branded flooring products and killing of koala habitat. Markets for change, has carried out a full research that Boambee State Forest had the last few species of Koala bears and due to large cutting of the logs in the said forest, the specie is losing life too and hence a complaint was lodged against Harvey Norman in the compartment of 602 in late 2011.
Harvey Norman procures logs for manufacturing of Naturally Australian Flooring Range from Boral Limited; the supplier of Boral Limited is Boambee State Forest which is considered prime koala habitat. On the contrary, Harvey Norman can acquire timber or log from any Australian native forest as it doesn’t have any publicly available procurement policy which doesn’t allow the company to purchase wood/timber from this forest. The company also justifies its case by saying that the timber provided is not labeled properly and hence it is impossible to know the origin of the timber.
Market for Change (2012, pp. 3) explains that Market for Change management is protesting against the Harvey Norman claims that its Naturally Australian flooring products are manufactured from “sustainable and renewable natural resources” while the company originally is a great contributor towards distraction of native forest and killing Koala habitat.
Purchase Complete Assignment Solution
