The Friendly Case: 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. Obviously, we can see that Smith as the chairman and CEO of both Friendly and The Restaurant Company (TRC). Smith had 70% shares of TRC and 10% shares of the Friendly Company. However, Smith did not improve the effectiveness of the BOD and regardless of the shareholders’ interests in Friendly. 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
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Friendly performed well when managed by the founder, Blake brothers. But it is regrettable that the performance began to become worse when the company is sold to the Hershey under its management. Then the Friendly was soled to the Smith through leveraged buyout in 1988, with his bad management the company was aggravate worst with the high debt of $260 million in 2000. Smith holds 70% of TRC and 10% of Friendly, he misusing the company 's fund, then he had publicly badgered the board of directors to turn things around. Smith as the CEO is overconfident and situation ambiguity. Smith was not focused on protecting the interests of other…show more content…
Pros: revised the statues can help to reduce the power of CEO and give the large shareholders more power to make the decision and changes for the company. 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. Like board of directors in Friendly did not have unity among each other’s, so the company should to balance the power of each participant.
 Listen the other people’s voices: it good to CEO and board of director listen outside opinion may control and change the decision-making when they have different situation viewpoint.
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

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