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Major Issues of Bellamy’s Australia Limited

Question:

Discuss about the Corporate Turnaround Of the Bellamy’s Australia Limited.

This essay covers the corporate turnaround of the Bellamy’s Australia Limited which is driving maker and wholesaler of Australian fabricated infant items. Bellamy's Australia Ltd is an organic infant formula and a producer and distributor of baby food.  It is the completely owned subsidiary of Bellamy’s Australia.  There are many factors that led to the downturn of a well operational company (Armstrong, et al., 2015). Moreover, the disorientation of the company in regards to the compliance with ASX Corporate Governance Principles is considered as a matter of study in this essay (Bell, Filatotchev & Aguilera, 2014).

The major issues that the company has been facing are regarding the drastic decrease in its sales which was most predominant in China. It was further observed that the online sales of the company were also restricted in New Zealand and Australia. Berger, Imbierowicz & Rauch, 2016 said that it has been directly associated with the limited stocks of the company which had direct implications on the sales (Berger, Imbierowicz & Rauch, 2016).

The company had penetrated in China and was planning to go further into South-East Asia.  As per Bushee, Carter & Gerakos, 2013, the share price was shockingly decreased which also had major implications on the revenue. Moreover, the regulatory changes in the China had made the matter worse as compared to the company’s anticipation of an oversupply of the infant products and the expected sales (Bushee, Carter & Gerakos, 2013).

Form the regulatory point of view, the misinterpretation of the market done by Bellamy’s is supposed to be the most likely method of reasoning behind the usage of the administrative changes of the legislature of China (Agrawal & Cooper, 2017). 

The company is also considered to have missed understanding the set of new regulations which caused it to make incorrect evaluations regarding its sales and revenue especially in the market of China. According to Filatotchev & Nakajima, 2014, the company also failed to pay a much required amount of attention to the purchasing preference of the customers in China. Bellamy’s failed to have establishments of enough traction and awareness through the promotion and marketing prior to the entry in the market that would have assisted in getting aware of the feasibility (Filatotchev & Nakajima, 2014).

The effectiveness of the most plausible solutions in regards to a dress the issues that the company has faced in terms of downfall in the shares and stock prices along with  the declines in both the deals and stocks would start with the suggestions as per ASX Recommendation 4.1 that expresses that means Bellamy's Board to build up the Audit, Finance and Risk advisory group in the nation like China with key reason to help the Board in directing the outer review, money related announcing and frameworks for the administration of dangers alongside the control of the interior structure of the business that was led in China (Ginena, 2014). The organization ought to include a Committee having controls and recognition on the Audit, Risk, and Finance operations. This committee should consist of three directors of non-executive nature along with the Chairman heading the committee (ArAs, 2016). This would have controlled the utilization of the financial and other aspects in regards to the advancement of the Bellamy’s in the form of business expansion in a country like China.  It needs to comply with ASX Recommendation 4.2 which would include the farming of the financial statements for a particular time period from the CEO and COF (Joseph, Ocasio & McDonnell, 2014).

Regulatory Changes in China and Misinterpretation of the Market

In order to identify and manage the risk in a much better way, the company needs Bellamy's Australian Limited needs to establish an effective risk management framework within the business in the other market where it is intended to have its business expansion. For this respect, it has to comply with the ASX Recommendation 7.1 which refers to the formation of the board to have for overseeing the risks.  As per Larcker & Tayan, 2015, the board will have a minimum of 3 members, a major part of which would be comprised of independent directors and would be chaired by an independent director (Larcker & Tayan, 2015). The ASX Recommendations 7.1 should be gathered by Bellamy's Australian Limited and ought to unveil the contract of the board alongside the individuals from the board. The organization should also mention the number of times the board had meetings throughout at regular intervals and attendance of the individuals associated with risk management (Mason & Simmons, 2014). 

The organization ought to likewise reveal the procedures and certainties that it needs to utilize with the end goal of directing the structure of the hazard administration in the worldwide market. The subtle elements of the gatherings and participation of the representatives must be accounted for in the Annual Report of the organization which would help the organization recognizing the dangers that could occur in the universal market including the dominance of the international retailers’ over the product manufactured and distributed by Bellamy’s Australia Limited (Misangyi & Acharya, 2014). 

Bellamy’s has to effectively employ the process of current risk management in communication with the Finance, Audit and Risk council in the global branches or having successful surveys and examination couch the systems of hazard administration in the worldwide market (Peters & Romi, 2014). This would assist the company in having the much-required turnaround.  Complying with the ASX Recommendation 7.2, the company, through the renewed board or committee would assist in identifying, monitoring, assessing and managing the risk associated with the sales and the prices in market like China (Armstrong et al., 2015). 

The disclosure of any materialistic changes associated with the risk profile in the conduction of business would be assisting Bellamy’s in having a turnaround in business.  Bellamy’s should intend to furnish the disclosure of the matters contemplated by the requirements of ASX Recommendations 7.2 in its annual reports which would assist in assessing various factors that could pose much risks in market like China.

Plausible Solutions for a Turnaround

Bellamy’s should comply with  the  ASX Recommendation  6 due to which it can build good relationships with the share or security holder by providing them with suitable facilities for allowing them with exercise  the right in an effective manner. The ASX Recommendation 6.1 would incorporate the arrangement of data with respect to the administration of the organization to the financial specialists and investors situated in the worldwide market like China through its site which would help the organization n having compelling and clearness in regards to its prerequisites shapes the investors (Starbuck, 2014).


The ASX Recommendation 6.2 needs to be compiled by the company through which it can structure out and execute a program for the investor relations for facilitating mutual communication with the shareholders and the investors effectively that would assist the company in making the business operation easier (Tricker & Tricker, 2015). Through the compliance Of ASX Recommendations, 6.3, the company needs to disclose the processes and policies that it conducts so as to enhance and facilitate the role of security holders for effective conduction and regulation on the sale prices of the products of the company.  Complying with ASX Recommendations 6.4 would assist Bellamy’s  to provide the security holders the choice to be at the receptive end of the communication to and from the company in an electronic way which would enhance the channeling of communication regarding business.  This would assist the company in having effective control over the market prices along with the inventory of its products (Yermack, 2017).

The genuine inquiry that the organization is looking for this situation is with respect to no power over the stock and stock in the worldwide market. Once the results of Bellamy's have been delivered, to the partners and customers which are the retailers, the evaluating and the deals have not been under the control of the Bellamy's. The actualities and conditions which have been incorporating the case are with respect to the slicing down of the stocks and the cost of the infant results of the organization. The conceivable arrangement that must be joined by the organization is investigated subsequent to considering the entre situation, the game-plan that Bellamy's have to consolidate is the correct and successful control on the whole store network administration and stock control in the International market. The best game-plan that the organization needs to take after is to shape an advisory group or board in the universal market to which it is shipping its items which would be accountable for directing the whole procedure of offers and stock control. The reason of picking this system is to increase better control over the business operations of Bellamy's Australia Limited in the worldwide market which would influence the organization to have compelling turnaround. This would also enhance the success of the company and prevent it from facing such grave issues in future.

Compliance with ASX Recommendations


The strength of the paper is in the recommendation that is provided to the company for having effective turnaround. The implementation and compliance with ASX Recommendation 7 regarding the “ Recognize and Manage Risk” by Bellamy’s would assist the company in devising ways and strategies that are required for having effective control on the business operations and supply chain management in the international market.  The quality of the divulgence of the yearly report in regards to the Finance, Audit and Risk components would encourage the organization in distinguishing the escape clauses that happened beforehand and can devise routes in having appropriate control on the costs of the items that are sold in the universal market. However, the limitations of this approach would be the risk that completes disclosure of the finance and audit strategy would be increase the vulnerability of the company regarding prices as the shares were slumped in the recent past. The restrictions of the investigation are that the wellsprings of data for leading the exploration are essentially from the sources on the Internet and diary article.

References

Agrawal, A., & Cooper, T. (2017). Corporate governance consequences of accounting scandals: Evidence from top management, CFO and auditor turnover. Quarterly Journal of Finance, 7(01), 1650014.

ArAs, G. (2016). A handbook of corporate governance and social responsibility. CRC Press.

Armstrong, C. S., Blouin, J. L., Jagolinzer, A. D., & Larcker, D. F. (2015). Corporate governance, incentives, and tax avoidance. Journal of Accounting and Economics, 60(1), 1-17.

Bell, R. G., Filatotchev, I., & Aguilera, R. V. (2014). Corporate governance and investors' perceptions of foreign IPO value: An institutional perspective. Academy of Management Journal, 57(1), 301-320.

Berger, A. N., Imbierowicz, B., & Rauch, C. (2016). The roles of corporate governance in bank failures during the recent financial crisis. Journal of Money, Credit and Banking, 48(4), 729-770.

Bushee, B. J., Carter, M. E., & Gerakos, J. J. (2013). Institutional investor preferences for corporate governance mechanisms.

Filatotchev, I., & Nakajima, C. (2014). Corporate governance, responsible managerial behavior, and corporate social responsibility: organizational efficiency versus organizational legitimacy?. The Academy of Management Perspectives, 28(3), 289-306.

Ginena, K. (2014). Shar? ‘ah risk and corporate governance of Islamic banks. Corporate Governance, 14(1), 86-103.

Joseph, J., Ocasio, W., & McDonnell, M. H. (2014). The structural elaboration of board independence: Executive power, institutional logics, and the adoption of CEO-only board structures in US corporate governance. Academy of Management Journal, 57(6), 1834-1858.

Larcker, D., & Tayan, B. (2015). Corporate governance matters: A closer look at organizational choices and their consequences. Pearson Education.

Mason, C., & Simmons, J. (2014). Embedding corporate social responsibility in corporate governance: A stakeholder systems approach. Journal of Business Theics, 119(1), 77-86.

Misangyi, V. F., & Acharya, A. G. (2014). Substitutes or complements? A configurational examination of corporate governance mechanisms. Academy of Management Journal, 57(6), 1681-1705.

Peters, G. F., & Romi, A. M. (2014). Does the voluntary adoption of corporate governance mechanisms improve environmental risk disclosures? Evidence from greenhouse gas emission accounting. Journal of Business Theics, 125(4), 637-666.

Starbuck, W. H. (2014). Why corporate governance deserves serious and creative thought. The Academy of Management Perspectives, 28(1), 15-21.

Tricker, R. B., & Tricker, R. I. (2015). Corporate governance: Principles, policies, and practices. Oxford University Press, USA.

Yermack, D. (2017). Corporate governance and blockchains. Review of Finance, 21(1), 7-31.

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