Unit 41 Commercial Awareness St. Patrick's College London
Unit 41 Commercial Awareness St. Patrick's College London
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Awareness is essential either in business terms or overall knowledge terms. Earth is a source of natural resources in huge quantity which sustainable use should be done by all in order to save for the future generation. Deepwater Ltd is an energy procuring organization which is concerned with corrosion and exploration of oil and natural gas from the earth surface and providing the same to other companies for further refining of these natural resources. Deepwater searches clues and explores those areas to extract oil and natural gas which could be used by other companies for further process. In this report we would incorporate certain decisions as a finance director at Deepwater to acquire a new business as well as to sell certain parts of Deepwater so as to maintain strategic position.
1. Business Structure and Corporate Governance
Deepwater founded in 2006 is an energy exploration company which is now focusing on acquiring MaxShale Ltd thereby planning to become a public limited company (plc.).
a) (i) Public and Private limited company
Owned and traded publicly with at least 7 persons.
Traded and possessed by a private owner having 2 min members (Weisbach, 2018)
Prospectus and Invitation
They are legally bound to invite public to buy shares through issue of prospectus (Mawson and Haworth, 2018)
Private owners are debarred from both the things
Start of Operations
Only after receiving both the certificates that is commencement and incorporation certificates.
Business could function with only one certificate that is of incorporation
A minimum of £50,000 with at least 3 directors.
No such limit is defined for the private organizations.
a) (ii) Deepwater's Advantages and Disadvantages of being a plc.
If Deepwater goes into public it will have an advantage of limited liability and thus no shareholder is liable for payment individually (Weisbach, 2018).
A public limited company can easily raise capital from public through issuing shares by listing on stock exchange or through debentures and bonds.
Unnecessary expenses on issue of prospectus which is mandatory and regular auditing of accounts and maintaining said regulations.
Deepwater will face huge discrepancy in controlling of its operations as no top control will be done in a public company.
b) Requirements of the UK corporate governance code for listing on London Stock Exchange.
Every public company needs to comply with the UK corporate governance code in order to list their shares on London Stock Exchange (Weisbach, 2018). These are:
Leadership - Deepwater should incorporate a team of board to carry out major operations with proper responsibilities in order to achieve long term success of the firm.
Effectiveness - Every person in the board committee of Deepwater should possess skills experience and competency.
Accountability - Every risk should be calculated and assessed thereby making strategies for managing risks by the board members at Deepwater.
Relations with shareholders - General meetings needs to be called by the board so as to enhance relationship with Deepwater's shareholders thereby satisfying them.
2. The Role Of Management
a) Role of new CEO at Deepwater.
CEO has a wide range of duties and responsibilities which needs to be fulfilled thereby planning, organizing and decision making (Weisbach, 2018). The new appointed CEO at Deepwater public limited will be responsible for making strategies with the finance as well as operations department about the acquisition of MaxShale. Taking environmental analysis and carry out cost structure to identify various changes and measures which needs to be taken as Deepwater is now a public limited company thereby complying with corporate governance. To ensure that expenditures of the Company are within the authorized annual budget and making strategies to manage risks (Mawson and Haworth, 2018).
b) Skills and Attributes required by a candidate
The candidate applying for the post of CEO at Deepwater public limited company needs to have four major attributes and skills for the position (Weisbach, 2018).
Strong communication skills - A CEO is a leader who should have strong interpersonal communication skills to motivate others to do the work in the right direction.
Building relations - Another ability that a CEO must have to work in a public limited company is a strong influence over others is maintaining relationship with clients and suppliers. Deepwater is an energy exploring company it needs to have strong bonding with its customers.
Optimistic - A CEO needs to have an Optimistic point of view as a leader he needs to motivate his followers (Reich, 2018). A confident and ready to take up challenges behaviour is required for the new CEO at Deepwater as it is a technical company.
3. Pesle Analysis Of Shale Gas Industry
PESTLE analysis is considered to be as an effective tool that can be used by Shale organisation for identifying the market situation and analysing the factors which have significant impact or influence on business activities. There are several external or macro environmental variables in business environment which has major influence on business operations. Pestle analysis is the techniques which assist business entity in eliminating the negative impact of external factors on business performance. Some of the constituents in business environment which has major effect on the Shale Gas industry are:
Political factors: There has been great opposition by the political parties which has created the major barriers in the achievement of success as well as growth by the shale gas industry. Political parties in the country has not provided the supported to gas industry. Changers in the regulation created by the political authorities have significant influence on the business decision as well as strategy of shale gas industry. These factors are uncontrollable in nature. In addition to this Geopolitical conflicts as well as Political Instability in the nation has significant effect on the routing functioning of an industry. The presence of the large amount of oil and gas reserves in a country can begin civil wars, and increase corruption
Economic factors: These variables includes increase in tax rate, economic condition of the country etc. Economic variables have significant effect on the financial performance on the industry. These constituents also have great as well as significant influence on the demand and supply of gas. Economic factors also have effect on the profitability of industry.
Social factors: These variables have significant effect on business activities of shale gas industry. As many people in the nation opposed the development of the gas industry. As people perceives that emission of the large amount of gases have negative effect on their health as well as on environment. In addition to this Increasing awareness and focus on more friendly fuels as well as decline in the usage of “dirty” fossil fuels such as oil sands, coal, and shale gas.
Technological factors: The technological forces has supported an industry in increasing the production as well as improving the quality of fossil fuels. But the some technologies are banned by the legal authority.
Legal factors: Shale gas is not at all getting the support of government. It has become challenging for an industry to maintain or increase its sustainability in highly competitive environment (Du, Bhattacharya and Sen, 2010)
Environmental factors: Shale gas exploration and production process may become air pollution source. Atmospheric emissions may come from shale gas burning and blow off and the transportation vehicle gas emission this may lead to the environmental pollution , due to which company might has to face legal obligation.
A. 1)Corporate social responsibility
Corporate social responsibility is considered to be as business approach which plays significant role in contributing to sustainable development by delivering economic, social and environmental benefits for all stakeholders. Objectives of corporate social responsibility is to ensure that an organisation conduct their business in a manner that is ethical.
A) 2. Three things that a company should do to ensure that gas industry should do to ensure that they behave as good corporate citizens
The most important activity is that an organisation is required to take the responsibilities of the consequences which has taken place due to its business activities.
Another thing is the companies operating in oil and gas industry should participate in the programme or events which are organised for the welfare of the society.
Business entities required to taker high initiatives to assess and take obligation for the company's effects on environmental and social well-being (Carroll and Shabana, 2010).
B) Identifying three ways s in which the fracking industry could communicate with potentially hostile stakeholders
Local communities: The fracking industry can communicate with public using advertising techniques, organising camp, using the social media sites etc.
Government: The fracking industry can communicate with government through written communication.
Shareholders: In order to interact with the shareholders' management team in an organisation can call meeting. Other communication channel which can be used for facilitating communication with stakeholders are via main, telephonic conversation etc.
Environmental groups: By presenting the report of ethical practices and informing them about the objective of an industry. (Gainer, 2010)
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It has been concluded from the report that there are several advantages as well as disadvantages of Deepwater of being a plc. Project has also concluded that there are some legal requirements to be fulfilled in terms of UK corporate governance code that is applied to companies listed on the London Stock Exchange. It has also been articulated from the assignment that management plays a significant role in driving firm towards objectives. Manager also makes a significant contribution in supporting business entity in overcoming the complex situations.
Carroll, A.B. and Shabana, K.M., 2010. The business case for corporate social responsibility: A review of concepts, research and practice. International journal of management reviews.12(1). pp.85-105.
Du, S., Bhattacharya, C.B. and Sen, S., 2010. Maximizing business returns to corporate social responsibility (CSR): The role of CSR communication. International Journal of Management Reviews.12(1). pp.8-19.
Gainer, B., 2010. Corporate social responsibility. In Third Sector Research(pp. 187-200). Springer New York.
Mawson, M. and Haworth, A. C., 2018. Supporting the employability agenda in University Libraries: a case study from the University of Sheffield. Information and Learning Science. (just-accepted). pp.20-40.
Reich, P. L., 2018. What Happened to Hispanic Natural Resources Law in California. Cal. Legal History. 13. p.43.
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