Business Strategy

MBA 4702 Business Strategy – Oil & Gas. Coursework 1: Governance & CSR JOHN KENNETH MONTGOMERY Student Number: JM 1670

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Index Page 3 5 7 9 10 11 12 13 14 15 16 17 Question 1 Question 2 Question 3 Question 4 Appendix A – Table 1: Advantages and Disadvantages of Shareholder and Stakeholder Governance Models Appendix B – Table 2: Total's involvement in several highly controversial issues Appendix C – Table 3: Total's Etihical Values And Pinciples And Whether They Have Upheld Them Appendix D – Table 4: Total's violations of Hermes Principles Appendix E - Table 5 Summary of the macro CSR strategies of ExxonMobil, Shell, BP and TOTALFinaElf Figure 1 - Total Share price 2004-present. Figure 2 - Premier Oil Share price 1999-present. Bibliography

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Question 1 I attempt to argue it is the role of institutional investors to influence the strategy of companies in which they invest in order to protect theirs and their clients' interests. Broadly there are 2 governance models1 employed in businesses - shareholder2 (promote shareholder value) and stakeholder3 (serve a wider range of services). There are advantages and disadvantages with both and it is becoming popular for investors to employ a mix of both. Table 1, Appendix A illustrates their advantages and disadvantages. The board of an institutional investment company is responsible for heading the business, setting strategy and direction, establishing long–term goals and, with management being collectively responsible for the success of the company in taking a long term view on investment selection, attain a steady annual dividend and a rate of return on investment higher than the cost of capital. To achieve its objectives the board will follow the governance model it believes best suits its corporate strategy to monetize the opportunities presented. It is reasonable to assume Hermes’ clients (Principles) selected Hermes (Agents)4 on the basis of their governance principles and expect they be followed as well...