Question

Dieselgate Questions

Briefly discuss the differences between German and Anglo-American corporate governance structures. Comment on the corporate governance structure of the VW Group.

Answer 1

Briefly discuss the differences between German and Anglo-American corporate governance structures.

Corporate governance: Every country has some rules and regulations and policies for smooth process and execution. The corporate governance is the system of rules,policies and practices by which a company is directed and controlled. Its very important and crucial for every organization to form a set of rules and regulation based on their structure to run an organization in a well controlled and growth oriented way.

These are basically involves in balancing the interests of a company’s investors that may be direct and indirect like stakeholders, management,customers,suppliers and government etc.Lets discuss the differences between German and Anglo-American corporate governance structures:

German Corporate Governance Structure	Anglo-American corporate governance structures
The German system can be explained as ,stakeholder system which is mostly followed in German and Japan countries.	Where as the Anglo system shareholder system operates in the countries like the United States, United Kingdom and Ireland
The German system is narrow minded power which is only applicable to top management. Which means very few powers are allocated to top management such as managers or higher positions.	Where as Anglo-American structure assigns equal power to every level so that individual decision making system will be easy.
These governance are based on supervisory board which means the shareholders select the board supervisors and as well as the employees.	The directors are rarely independent of management. Which makes them to take individual decisions and respond quickly to any kind of issues
Later the supervisory board appoints and monitors the management board. In this system the supervisor board has a right to dismiss the management board and reconstruct the new board.	In this structure companies are mostly run by professional managers who have negligible ownership stake which means than can take ownership in dealing with any kind of issues in the organization.
In German structure the employees are one of the key role players in the management.They are the stakeholders and has a right to participate in the management of the company.These are basically called as two tier model which are again known as 1.Supervisor Board 2.Management Board.	In this method the small investors are protected and large investors are discouraged to take an active role in corporate governance.This is followed to encourage the small investors and anyways the large investors are discouraged because they are already grown in the market.Mostly encourages the small investors to earn more in these governance.

Comment on the corporate governance structure of the VW Group.

The Volkswagen is one of the most leading multi brand companies in the automobile industry.The company business activities like automotive and financial services divisions.These two divisions are operated separately. They follow these division method in order to focus more on developing,producing and selling different varieties of automobiles.

The Volkswagen AG and the Volkswagen group are managed by Volkswagen AG’s Board of management follow the rules and regulations that are issued by supervisory Board.

Which clearly means that the VW Group follows the German corporate governance structure.The stakeholder model followed by VW Group in running their company.