Corporate Governance Theory 'Normative Approach'

[Name of the Institute]Corporate Governance Theory 'Normative Approach'

Introduction

The corporations in the contemporary era have an exponential span of influence on the global economic affairs. The companies are no longer bound to the limited national markets of one country, as they have become multinational giants. These companies have successfully reached to majority of the markets of the world, and have a considerable influence on the affairs of various nations. The governance of the modern multinational companies not only influences the economies of various countries, they also mould various aspects of the national social landscape. The phenomenon of the globalization process as had multi dimensional impacts on the global corporate environment. On one hand the globalization process has enabled the companies to exponentially increase their reach to the widest corners of the globe, and on the negative sector the fierce level of competition, has made the corporate environment very volatile. The customers in this environment have a huge influence on to the governance of the corporate entity. These customers have access to all most limitless knowledge and they can easily avail any information regarding the operations of the businesses (Lazonick & O'Sullivan, 2000). These customers also have become highly involved in their buying process, and are no longer loyal to a particular brand for an extended period of time. The impact of this scenario on the organizations has led to the adaptation of highly customer centric strategies by the organizations, as they look to offer a unique and personalized product to the global consumers.

The result of the high level of corporate competition caused by the globalization phenomenon has led to various drastic changes in the structures of the organizations. These companies now have to take more risk and diversify their operations to be able to maintain their market share. The stakeholders of the companies in this environment have become very skeptical regarding the operations and the future of the business entity. Although in the contemporary times the companies are able to offer a relatively increased level of overall returns the risk associated with the operations has also increased exponentially. The giant companies no longer possess a stable global market which is bound to stay loyal to their products and services. Several companies in this environment have to take innovative actions to diversify themselves, and enhance their global markets. The corporate governance is now a very interactive and highly paced process, where the companies must make several significant decisions in a short span of time. The managers play a vital role in this regard where they must synthesize their knowledge of the business environment and the competition, and formulate a sustainable strategy for the organization. The organizational strategies adopted by the company must have the element of sustainability as they should reflect the long term objectives of the company. In the modern business environment the companies cannot rely on only short term goals which serve the immediate objectives of the company, rather they must focus on the long term perspective ...