Friendly And The Restaurant Company Case Study

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YIFEI XIAO CASE#4 ASSIGNMNET 1. ANALYZE 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…show more content…
In the case we can see there has a problem that independence of the board of directors at Friendly, as they were unable to control the activities of CEO and chairman. So If the CEO doesn’t want to change behavior, shareholder can give rights to make decision instead of let CEO make own opinion making decision to avoid the mismanagement. Cons: It is unsure that is good to give the shareholders big rights to make the decision for the company because not all shareholders have the intention to help and improve the company. In Friendly, board of directors did not have unity among each other’s, so the company should to balance the power of each…show more content…
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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