Business

Role of corporate governance in strategic decision-making
Corporate governance is the process through which a company directs, administers and controls its activities, legal affairs, custom, processes and other factors affecting it. It also defines the relationship between the various stakeholders and the corporation as well as the objectives the company aims to achieve. Accountability of all the individuals involved in the activities of the organization is achieved through corporate governance. The organizational structures defines the responsibilities, the flow of authority, relationships within the organization and the decision making process (Hitt, Ireland,  Hoskisson, 2004).

Decision making is a process that requires proper management of all the available resources of the company. Strategic decision making involves putting up structures that will ensure the resources are utilized effectively despite all the constraints the company encounters in the implementation process of the decisions. The implementation of all strategic decisions made by the organization should be well planned since this is the most important stage of decision making process. Feedback about the success or failure of the decisions that the company makes should be collected to ensure that future decisions are properly made (Hitt, Ireland,  Hoskisson, 2004).

Corporate governance ensures that the strategic decision making process is effective and that the decisions made are implemented in the best way possible. Strategic decision making requires adequate and strong structures and controls to be put in place to ensure that the company achieves its goals. Corporate governance helps formulate the best structures and mechanisms to make the best strategic decisions that will contribute to the profitability of the company.  The organizational structure is important in developing comprehensive decisions that integrates all the factors affecting the organization. The implementation of such decisions is laid down by the organizational structure which shows the flow of activities and power during the implementation process (Hitt, Ireland,  Hoskisson, 2004).

The governance structure at Emerson Electric Company
Emerson Electric Company has the post of a Chief Executive Officer (CEO) who makes the overall decisions about the company. The company has a management team that is composed of individuals from all departments within the organization. The team works in collaboration with the CEO to lay down strategies and ensure that they are implemented within the scheduled time. The CEO makes the final judgment about the viability of the decisions and gives a go-ahead to all strategic decisions made by the management team (Davis  Paige 1991).

Internal governance mechanisms that the Emerson Electric Company could use
The company can use three types of internal governance mechanisms simple, functional and multidivisional structures. Simple structure is a system whereby the manager is the key decision maker and controls all the activities within the organization. The other employees are supervised by the manager and do not contribute to decision making. This system uses a few rules and simple information system. The relationships within the organization are informal and employees do not specialize in their duties. It is an owner-manager kind of management. Communication between the manager and the employees is simple and this makes the coordination of activities simpler.

Organizations operating on a single product line in a small geographic coverage are the most suitable to use this kind of structure. The structure does not favor large organizations since as growth increases, the responsibilities increase and more individuals are required to manage the organization (Hitt, Ireland,  Hoskisson, 2004).

Functional structure consists of the CEO and a few corporate managers who assist in the management process. The organization is divided into departments which are managed by departmental heads who are responsible to the management team. Specialization in tasks is encouraged so as to ensure information is shared among the professionals in each functional unit. The CEO is the final decision maker with the guidance of the management team. Organizations with few diversification levels are the most suitable to use this structure. Business strategies as well as corporate strategies are implemented within this structure of management (Hitt, Ireland,  Hoskisson, 2004).

A multidivisional structure is applicable in firms with high diversification in production lines. A lot of information is processed and this requires strategic decision making at the corporate level. The organization is divided into divisions with each division representing a profit centre. The CEO delegates duties to the divisional managers. The divisions have their own structures and management. The divisions are distinct and their performance is based individually. This structure helps the CEO monitor the operations of each division. Comparison between departments is more possible so as to improve on the allocation of resources. Divisions performing poorly are improved to avoid losses. Organizations with diversified products and operating globally use this structure to increase productivity and fulfill the needs of its shareholders (Hitt, Ireland,  Hoskisson, 2004).

Agency relationships
An agency is an individual or an organization which acts on behalf of another person or organization. The employees to an organization are agents to their employer. They represent the interest of their employers in performance of the duties. The managers are agents to the shareholders because they should ensure that the firm operates in a profitable manner. The company should fulfill the needs of all its stakeholders since it is an agent. The agency relationship exists at all levels of the organization since each party has a role that affects the others. The decisions made by all stakeholders affect everybody within and without the organization (Hitt, Ireland,  Hoskisson, 2004).

How Emerson Electric Company is using or could use an agency relationship
The CEO should represent the interests of all the shareholders to the employees by ensuring that the company is profitable. The employees should perform their duties properly since they are responsible to the management. The organization should ensure it achieves all the goals demanded by all its stakeholders (Davis  Paige 1991).

Managerial opportunism and how it can affect an agency relationship
Managerial opportunism refers to the act of the leaders of an organization to take advantage of any opportunity to maximize resources and minimize costs. The manager implements the best strategic decisions that will attain optimum resource allocation. The profitability of the company is the main focus and all activities and employees are directed towards fulfilling the goals of the company (Hitt, Ireland,  Hoskisson, 2004).

Managerial opportunism affects agency relationship in that the manager is an agent to all the stakeholders of the organizations. He should use all the resources of the organization optimally to ensure that all stakeholders get the best output from their investments. The manager should also ensure the employees are satisfied with the decisions made to avoid conflicts with the internal factors. CEOs have an obligation to balance all the interested parties in an organization to ensure the success both at the internal and external environments (Hitt, Ireland,  Hoskisson, 2004).