Case Study: Friendly And The Restaurant Company

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In the Friendly case, the board of directors (BOD) is the main direct stakeholders influencing the corporate governance. We can see that Smith as the chairman and CEO of both Friendly and The Restaurant Company (TRC). However, Smith did not improve the effectiveness of the BOD and regardless of the shareholders’ interests in Friendly. The leadership is not clear and terrible. As the top management team in Friendly Smith and the other four persons in BOD plan the critical role in selecting and implementing the firm’s strategies. The problem is that the other four persons in BOD didn't take cautious attention to the company and lead Friendly has bad management. When the CEO has a great deal of power, the
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Pros: the director of the board should have listen to the other concerns that can help them understand company’s point of view in case to create more concise and better goal for manage. Evaluate board of directors because in some way they are overconfident so they should have given the right thought over his ideas whether they are feasible. But at some point some situational is unclear, not afraid to argue against a proposal that to encourage boards and top executives to discuss.
Cons: Even though the CEO and directors may hear the voice from others but they did not make any motivation to do. CEO may still take their own opinion to make decisions. In the other hand, we cannot ascertain that which opinion from them is the great one for the company. So the CEO may still consider the idea by
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It is undeniable that Donald Smith, the CEO of the company is the big problem. He was not focused on protecting the interests of other Shareholders. , He misusing the company's fund and through condemn the board of director in public to cover up his mistake. He plays a negative influence to the company. Because of he only has 10% shares of Friendly Company so he is not very pay attention to operate and manage. In the other side, he is more interest on TRC since he has 70% shares of the TRC. Therefore, he tends to transfer all the benefits from Friendly to TRC and share the TRC expenses to Friendly. CEO re-election may complexion the company. Other board of directors and shareholders will unanimously adopt this option to abolish the CEO and re-elect new CEO. To avoid the worst situation come they should make action to defend company and their own

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