Managerial Economics and Corporate Governance in Heineken
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Abstract
This paper comprises six topics about corporate governance mechanisms and principles of managerial economics examined on the basis of a multinational corporation. These mechanisms and principles are especially actual and important today, in our changing environment when inefficient control systems, inability to minimize cost and maximize profit, foresee growing demand in international markets can ruin company’s business. On the other hand, effective strategic control and risk management and powerful and charismatic leaders, who are emotionally intelligent, professional, timely predict market changes and new opportunities can form the success story of the company which lasts for centuries.
Managerial Economics And Corporate Governance In Heineken
Heineken is one of the global leading brewers. The company is headquartered in Amsterdam, the Netherlands, and spreads its business all over the world. Below will be considered issues related to strategic control and managerial economics based on Heineken’s example in order to analyze their impact on company’s success.
Why effective strategic control system is important in strategy implementation and for overall company’s success in business
There are many examples of successful companies, which businesses suffered a lot when they failed to set efficient strategic control systems or adapt their systems to the changing environment. In Heineken’s history there were also periods when company experience significant problems due to inefficient strategic control, e.g. in the late 1980s and early 1990s when several general managers changed each other in a row. Moreover, there was the political conflict between production and marketing people, which, for example, led to a two-year delay in the introduction of beer cans (Beugelsdijk, Slangen, Herpen, 2002).
However, things changed and in the 21st century company pays much attention to strategic control and effective management of risk. According to information on the corporate site, internal policies and operational controls are periodically updated. Governance, risk and compliance activities are an integral part of the Heineken business framework. Based on the COSO (The Committee of Sponsoring Organizations of the Treadway Commission) reference model, this framework provides an overview of how company’s vision, purpose and values lie at the core of the company’s strategic priorities, organization structure and behaviors. Translating this into policies and processes, the code of business conduct, company rules and risk management process enable the achievement of Heineken’s strategic priorities while protecting the company’s employees, assets and reputation.
As Jean-François van Boxmeer says in his interview to Roger Crockett, president of R. O. Crockett Leadership Advisory, specialist in business leadership and diversity (2012), the board of directors have a task to evaluate whether they are in control. “Whether we know what we are talking about and we are not complacent, and we have a clear strategy going forward, and we have good succession plans in place for even ourselves, and that our risk management thinking and processes are well balanced so as not to jeopardize the long-term future of the company”.
How traditional family-owned company successfully implements “contemporary” control systems in today’s complex and rapidly changing environments
We know that …
