HERMES

Hermes Fund Management, Total and Premier Oil



Hermes Fund Management, Total and Premier Oil

Introduction

In Business environment, a company has to take several strategic decisions in order to survive. In a large company, there are many stakeholders, which have an interest in the performance of the company. These include; owners, investors, government, customers, competitors, suppliers and so on. The strategic purpose of any company is influenced by its governance structure, stakeholder's expectations, social responsibility and ethics. The governance of a company is accountable to define the strategy, structure, culture and overall operations. It is their utmost effort to make happy all those stakeholders who have a legitimate stake in the company. They are also in charge to address the failures, scandals and like other issues.

In modern times, the importance and responsibility is increasing day by day. In most of the companies, there is separation of management and ownership. In large organizations, it is not necessary that the owner of a company is also the Chief Executive Officer (CEO). There are various stakeholders who elect the board of governors and CEO of Company.Institutional Investors can intervene in the strategy of Company?

In Hermes Fund Management case study, we have learned that it was basically an investment company on behalf of the pension plan companies. The company is independent of any other financial institutions or bank. In this way, company was free from any controlling authority and took several decisions in order to win the loyalty of customers. This is the reason; it is one of the most influential companies of UK with a portfolio of £ 40 billion.

Basic Philosophy of Hermes

The basic philosophy of Hermes is not to intervene in the internal affairs of any company in which it is investing. However, in the case of Premier Oil it has intervened on the basis that there is strategic hole. Hermes claimed that the company is working in Burma/Myanmar where violation of Human Rights is the norm of the day. In addition, Premier itself is not a corporate social responsible and caused environmental and communal losses. Moreover, Hermes said that the company has no clear strategy and its board of director is not defining how to cope with the risk which is associated in Burma.

In this way, Hermes approached the Premier for the social, ethical and environmental issues which are causing low profit to the clients of Hermes. The discussion was held in two groups. ...