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Corporate Governance (General Management)

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The main findings and the conclusions reached as a result of the research:

I found that both Spur and KFC has strong aspects of Corporate governance but that they lack governance in other areas. An incident which happened at a Spur resturant showed that they don’t always take accountability. In saying that I feel that KFC’s Corporate governance was slightly more lacking than Spur’s. The reason I came to this conclusion is that KFC seems to not put great value on transparency as it was extremely difficult to find research on their procedures, values etc. and they also fail to disclose to the public how they fix problems that arise. Their apologies for incidents which happen are the standard “same-old” apologies which make them seem insincere and may make their customers think that they aren’t accountable as they may think the apologies are just said as lip service.

Did the research done lead to recommendations for future actions?

Yes, the research showed that KFC needs to work on their accountability and transparency. The fact that I struggled to find anything on corporate governance lead to focusing on their lack of transparency and through further research, it revealed why some people were unhappy with KFC’s apologies. KFC often fail to disclose the specific action which they say they going to take but since nobody really knows what the action is and there is no follow up, the complainant is none the wiser. This lead to recommendations on them being more transparent and sincere in their apologies.

Background of Spur

Mission Statements

Spur strives to provide joyful and memorable experiences over great food for both young and old people. Spur ensures their restaurants have a warm, family-friendly environment as well as an inviting atmosphere where people of all ages can be social and enjoy healthy sized portions of tasty food, served with good service. Their warm environment includes a space where all family members will be looked after and entertained. They promise their customers and prospective customers, a constant and reliably “outstanding experience” irrespective of which franchise outlet their customers visit.

Vision

Spur’s philosophy is focusing in joining their customers together by making their burgers and their food of a good quality and deliciously tasty, this will join their customers together as it can help to create wonderful memories and create brand loyalty. They strive to draw customers in through their generosity, happy staff and customers, their hospitality and/or through the prospect of their mouth-wateringly prepared burgers, milkshakes and their other delectable foods, drinks and deserts. They concentrate on not only the taste of their burger and other foods, but also on quantity and aroma.

Background and global impact

Spur Steak Ranches is part of the Spur Corporation and is a South African fast food restaurant business. Spur Corporation is a multi-brand which is listed on the JSE Limited and is in the sector of travel and leisure. The other two restaurant brands in Spur Corporation is Panarottis Pizza Pasta and John Dory’s Fish & Grill. The group offers consumers with a sensibly priced dining experience in a family focused atmosphere.

Allen Ambor is both the founder and executive chairman of Spur Corporation. In 1967 Mr Ambor founded Spur Steak Ranches. He invested R4 000 to open the Golden Spur in Cape Town, in Newlands specifically. Thereafter he proceeded to open a second Spur restaurant (Seven Spur) in South Africa, in another strategic spot in Cape Town, Sea Point. The branches became very popular which encouraged Ambor to start franchising in order to grow the Spur business. The Spur Corporation is now a multi-million rand corporation. It quickly became well known for its taste, nutrition and value for money meals and they believe that their friendly, peaceful family orientated atmosphere is one of the main reasons for their success. The Group has become one of the most recognized brands in the country. They have also developed into an internationally recognised brand which now consists of over 292 restaurants locally and 41 restaurants around the world, in countries like Australia, New Zealand, Mauritius and in various parts of Africa.

The menu caters food and drinks for many various people, they have their renowned steaks, ribs and burgers for the red meat eaters and for the chicken eaters they offer Cheddamelt schnitzels and BBQ chicken breasts. They also offer desserts and special Kids’ Meals which are great fun. They also cater for people who don’t have a lot of money with their weekday specials that offers good value-for-money deals, like the Unreal Breakfast and the Classic Monday R50 Burger.

A big selling point for Spur resturants is for families with small children is their “play areas” in many of their main resturants or crayons and colouring in which are supplied for the children. It is a fabulous place to visit if you are hungry and your kids are easily distracted or bored. It is a one-stop shop which caters to all those needs.

Background of Kentucky Fried Chicken (KFC)

Mission Statement

The mission statement KFC franchisees unite to protect, promote and advance the mutual interest of all member franchisees and the Kentucky fried chicken system. Maximize profitability, improve shareholder value and deliver sustainable growth year after year. To sell food in a fast-friendly environment that appeals to pride conscious, health minded consumers.

Vision Statement

KFC’s parent company is Yum! Brands. Yum’s vision and strategy is committed to continuing the success realized during their first ten years and they want to grow further especially on an international level. To deliver consistently quality products customer focus. To consistently satisfy customers around the world every time they eat KFC food and do it better than any other restaurants. The unique eating experience at each of their restaurants make their customers smile and inspire their loyalty for life. Toward that end, their associates around the world are trained to be customer maniacs. They strive to build powerful brands through superior marketing, breakthrough innovation and compelling value. With a foundation built on winning food and world-class operations.

Drive aggressive unit expansion everywhere, especially in emerging markets and also build leading brands in every significant category in China and India.

They also strive to create industry returns through franchising and disciplined use of capital as well as to maximize long term shareholder value.

Background and global impact

KFC was founded by Colonel Harland Sanders. He was an entrepreneur who had a restaurant on the roadside in Kentucky. He started selling fried chicken from there during the Great Depression. Sanders decided to franchise and grow his business. The first franchise “Kentucky Fried Chicken” launched in 1952 in Utah. In 1971, KFC entered into the South African market for the first time. There are now about 828 KFC outlets in South Africa and about 90% are franchise owned.

KFC is one of the biggest fast food companies in the world. With 18,000 outlets in over 115 countries, they naturally sell many products daily. As a profit-driven corporation and part of the private sector, there are many parts of this company that create social, economic, and environmental problems in our society. One impact is social impact as most of KFC workers are payed minimum wage in countries that have a minimum wage established and in other countries KFC workers are sometimes payed appallingly low amounts of money.

Strategic importance of Corporate governance

Corporate Governance

Corporate governance is apart of General Management and Spur and KFC must be aware of issues such as transparency, interdependence, accountability, integrity, social issues, fairness, fiduciary duties and the responsibilities of the directors.

Why is transparency and accountability important for Spur and KFC to have?

Transparency is important in the decision-making process as everyone should know the who/what/when/how/why of big decisions made and this can make people feel valued and important and it also involves them in the business. This will also make employees feel that they work in a business with high moral values which makes them happy and comfortable in their jobs which will also encourage employees to work harder and try to be better in their roles which boosts productivity. If the business takes accountability, then it will lead by example and the employees should feel obliged to do the same.

Spur and KFC are both quick service restaurants in South Africa and they both mostly target families with little children. This means that competition is high and they need to gain the consumer’s favour. By being transparent and accountable, the companies creates trust between their brands and their customers and at the same time it gives the business a good brand image, showing that the business is honest, open and responsible. This will gain favour with customers and build brand loyalty.

Why is integrity important for Spur and KFC to have?

It is perhaps the most important principle of leadership. If a business has integrity, it will show customers, suppliers and employees that the business has truthfulness and honesty. In order for these businesses to have integrity they need to be honest with their stakeholders and tell the truth even if the truth is ugly. This will be beneficial to Spur and KFC as their suppliers will be more likely to trust them which will form a good and healthy relationship between them. If everyone in Spur and KFC has integrity, then colleagues will trust each other and they will know that no one is going to “back stab” them which is important for the business to function efficiently. Spur and KFC can acquire integrity by also keeping promises. This is also important because then they will between known for keeping their word and their word will mean something which could come in hand in their futures.

Why is fairness important for Spur and KFC to have?

Spur and KFC must ensure they treat people with equality. They must not be biased towards one or more entities. If the business practices discrimination, it will give Spur and KFC a bad brand image, especially since they are meant to be a family- friendly environment and parents want their children to grow up and be surrounded by good morals and values and so if Spur and KFC get a reputation for being biased, they will lose customers. Spur and KFC must make objective decisions, this will ensure that stakeholder’s interests are always considered to the best of the businesses’ ability.

Spur and KFC can achieve fairness within their businesses by ensuring that major decisions about the business is made fairly and not discriminatory. This can be done by comprised of a mix of executive, nonexecutive and independent directors in their Board of Directors and they can make sure that their directors are diverse and come from different backgrounds but that can still agree on decisions made.

Spur and KFC must give customers fair value for their money. This will also help build customer loyalty as they won’t feel cheated but instead satisfied.

Spur and KFC must have a non-discriminatory work atmosphere. This can be achieved by ensuring employees have equal opportunities and good working conditions. This will improve employee morale and therefore it will also improve Spur’s and KFC’s productivity which will in turn, increase sales and thus increase profits.

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