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Classification And Registration Of Companies1. The Companies Act, 1956 broadly classifies the companies into private and public companies and provides for regulatory environment on the basis of such classification. However, with the growth of the economy and increase in the complexity of business operation, the forms of corporate organizations keep on changing. There is a need for the law to take into account the requirements of different kinds of companies that may exist and seek to provide common principles to which all kinds of companies may refer while devising their corporate governance structure. Rigid structures, unnecessary controls and regulations inhibit the risk taking initiatives of the entrepreneurs. Private companies and small companies, who do not generally go for public issues or deposits for their financial requirements but utilize their personal or in-house resources, need to be given flexibility and freedom of operation and compliance at a low cost. Equally, public companies that access capital from public need to be subjected to a more stringent regime of corporate governance. To enable a comprehensive framework for different forms of corporate organizations, the Company Law should ensure multiple classifications of companies. It should also enable smooth change-over of companies from one type to another.Classification of Companies2. The corporate form can take many shapes in order to respond efficiently to the environment. Company Law should therefore recognize a multiple classification of companies. The Committee indicates the criteria for classification on the basis of the forms discernible today, but recognizes that such classification can never be exhaustive.i) On the basis of size: a) Small companies b) Other companiesii) On the basis of number of members: a) One person company b) Private companies c) Public companiesiii) On the basis of control: a) Holding companies b) Subsidiary companies c) Associate companiesiv) On the basis of liability: a) Limited (I) by Shares (II) by Guarantee (with or without share capital) b) Unlimitedv) On the basis of manner of access to capital: a) Listed companies b) Un-listed companies3. The law should recognize the potential for diversity in the forms of companies and rather than seeking to regulate specific aspects of each form, seek to provide for principles that enable economic inter-action for wealth creation on the basis of clear and widely accepted principles.Small companies4.1 The Committee sees no reason why small companies should suffer the consequences of regulation that may be designed to ensure balancing of interests of stakeholders of large, widely held corporates. Company law should enable simplified decision making procedures by relieving such companies from select statutory internal administrative procedures. Such companies should also be subjected to reduced financial reporting and audit requirements and simplified capital maintenance regimes. Essentially the regime for small companies should enable them to achieve transparency at a low cost through simplified requirements. Such a framework may be applied to small companies through exemptions, consolidated in the form of a Schedule to the Act.4.2 Law could also consider an integrated approach whereby a deregulated framework for private companies may be provided, which may also apply to small companies. However a definition of small companies may be considered for enabling such a regime. There are bound to be problems associated in prescribing size. In our view, size may be assessed on the basis of gross assets comprising of fixed assets, current assets and investments not exceeding a particular limit as also turnover. Since the definition of “small” may change over time, this may be done through rules.4.3 To qualify for exemptions, a small company should however neither be a holding nor a subsidiary of any other company. However, the Committee does not feel the need for providing a special internal governance and constitutional regime to small companies. This is likely to come in the way of their future growth. Instead the Committee recommends enabling of new vehicles for business, such as Limited Liability Partnerships, through separate legislation, if necessary.4.4 Associations, Charitable Companies etc. licensed u/s 25 of the existing Companies Act, should not be treated as small companies irrespective of their gross assets.4.5 The law should provide a framework compatible to growth of small corporate entities. Exemptions should however facilitate compliance by small companies in an easy and cost effective manner. These should not incentivize concealment of true size by any entity or be a barrier to growth of small companies.Private Companies5. Private companies represent a different set of relationships in terms of ownership, risk and reward as compared to public companies. Since private companies, do not access capital markets, they require less rigorous protection for their shareholders. They however represent an important organizational form for conduct of business. Therefore there is a case for lighter regulatory overhang over private companies. The existing law provides for certain relaxations to private companies on account of their nature. We are of the view that this approach should be continued and amplified where appropriate. While good Corporate Governance is equally important for success of such private companies, the obligation for dissemination of information of corporate process should be so structured that such enterprises do not lose the flexibilities in conduct of their business. In particular, the law should enable a private company to take any decision it is otherwise empowered to take, without observing the formalities of the Act if the members of the company unanimously agree. A simplified circular resolution procedure should also be considered where unanimity is not possible. Since disputes may also arise amongst the members of such companies, the costs of which may ruin the company, the regime for private companies should contain dispute resolution procedures, simplified to the extent possible.One Person Company (OPC)6. With increasing use of information technology and computers, emergence of the service sector, it is time that the entrepreneurial capabilities of the people are given an outlet for participation in economic activity. Such economic activity may take place through the creation of an economic person in the form of a company. Yet it would not be reasonable to expect that every entrepreneur who is capable of developing his ideas and participating in the market place should do it through an association of persons. We feel that it is possible for individuals to operate in the economic domain and contribute effectively. To facilitate this, the Committee recommends that the law should recognize the formation of a single person economic entity in the form of ‘One Person Company’. Such an entity may be provided with a simpler regime through exemptions so that the single entrepreneur is not compelled to fritter away his time, energy and resources on procedural matters. 6.1 The concept of ‘One Person Company’ may be introduced in the Act with following characteristics :- a) OPC may be registered as a private Company with one member and may also have at least one director; b) Adequate safeguards in case of death/disability of the sole person should be provided through appointment of another individual as Nominee Director. On the demise of the original director, the nominee director will manage the affairs of the company till the date of transmission of shares to legal heirs of the demised member. c) Letters ‘OPC’ to be suffixed with the name of One Person Companies to distinguish it from other companies;Government Companies7.1 In general, there is little justification for Government companies being provided relaxations in compliance with company law. It is even less if such companies are listed. Not only should such Government companies be able to compete in the market economy with other companies on equal terms, it would not be fair to the investors or creditors if such entities are allowed to present their performance on the basis of dissimilar parameters.7.2 Government companies may be subject to imposition of non-commercial/ commercially unviable social responsibilities. However the costs of such responsibilities should be transparently assessed and provided by the Government through the budget as a subsidy. It is not appropriate that application of the law or standards be relaxed to allow such costs to be incurred in a non-transparent manner.7.3 There may be situations where such companies may require special treatment in activities related to the security of State. There may be an enabling provision to relax operation of Companies Act for such companies. Other companies, engaging in commercial activity should compete on the basis of transparency and level playing fields. Preferential treatment to such companies would be to the detriment to the capacity of Indian companies to survive in a competitive market.7.4 A Government company should be clearly defined in law. It should be one where there is a clear majority stake held by the state- i.e. Central and/or State Government(s). There is no rationale for the definition of Government company being extended to companies set up by Government companies in course of their commercial activities.Holding and Subsidiary Companies8.1 The Companies Act should not pre-empt the decision as to what structure is appropriate for controlling businesses. Such prescriptions will make the environment rigid and put Indian companies at a disadvantage vis-à-vis their competitors internationally. Such restrictions would also not facilitate sound corporate planning, formation of joint ventures, international operations or restructuring of companies.8.2 Therefore, we are of the view that there may not be any restriction to a company having any number of subsidiaries, or to such subsidiaries having further subsidiaries. However, the Act should provide for a clear definition of both the holding as well as subsidiary body corporate. In doing so, formation of subsidiary structures through control by a holding company, directly, indirectly or through one or more subsidiaries should be taken into account, keeping in view international practices.8.3 The need to provide for transparency and to control misuse of funds through transfers from one company to another, including subsidiaries, has to be recognized. However, it needs to be recognized that the phenomenon of siphoning off funds may not be caused solely on account of holding-subsidiary structure. Companies may use other routes/structures/associate companies to siphon off funds. Isolated instances of misuse of the holding-subsidiary structure should not result in doing away with this very important business model for investment and corporate planning. Instead of prohibiting formation of subsidiaries, there should be adequate disclosure obligations as to utilization of the funds raised or loans and advances given by the company to other entities. Strict disclosure and compliance norms in respect of holding and subsidiary company structures should be provided for.8.4 The Committee is of the view that proper disclosures accompanied by mandatory consolidation of financial statements should address the concern attendant to the lack of transparency in holding-subsidiary structure.8.5 There may be further provisions that the transactions between holding and subsidiary company may be treated as related party transactions and placed before the Board through the Audit Committee, where such a Committee exists. Transactions not in the ordinary course of business and/or not on arms length basis between the holding and subsidiary company, should be disclosed in the annual report along with management justification thereof.8.6 In its examination of this issue, the Committee also considered the recommendations made by the JPC on Stock Market Scam on restricting the layers of subsidiary investment companies. The Committee noted that these recommendations were in context of the stock market / banking scams witnessed in India over the past decade. At the same time, it was argued that the creation of subsidiaries for separate manufacturing entities, joint ventures was a reality and there were no restrictions on foreign companies operating internationally. Even banks may have to set up subsidiaries for their Non Banking / Joint Venture companies engaged in insurance, asset management etc. In the present situation, when Indian companies were seeking to make investments abroad, such restriction would adversely affect their opportunities in face of international competition. During deliberations, it was felt that protecting legitimate business activity under a regime for setting up subsidiary companies would result in special carve outs and monitoring the activities of such companies would become an administrative nightmare. For these reasons, the Committee took the view that limiting the layers of subsidiary investment companies was not feasible. Instead, a regime for preventing misuse of this mechanism should be devised based on transparent Board processes and disclosures under close supervision of the regulator for listed companies.Producer Companies9.1 The administration and management of ‘Producer Companies’ is not in tune with general framework for companies with liabilities limited by shares/guarantees. The shareholding of a ‘Producer Company’ imposed restrictions on its transferability, thereby preventing the shareholders from exercising their exit options through a market determined structure. It was also not feasible to make this structure amenable to a competitive market for corporate control.9.2 If it is felt that producer companies are unable to function within the framework and liability structure of limited liability companies. The Corporate Governance regime applicable to companies could not be properly imposed on this form. Government may consider introduction of a separate Act to deal with the regulation of such ‘Producer Companies’. Part IX A in the present Companies Act, which has hardly been resorted to and is more likely to create disputes of interpretation and may, therefore, be excluded from the Companies Act.Joint Venture/shareholders Agreements10.1 Capital and Technology in the modern world move into companies through joint venture opportunities. The ability to access technology, know-how, business, trade-marks and other intellectual property or service rights is critically linked with the law on joint ventures.10.2 Over the years, several court judgments have been pronounced in India on the issue of validity of joint venture covenants. As per the judicial view, recognition to such covenants through corporate action is possible only if they are made part of the Articles of Association of a company. However, in this form, they are subjected to the overriding effect of Section 9 of the Companies Act, 1956. Thus, while joint venture agreements may take place and provide for certain exclusionary or extra-ordinary clauses pertaining to interventions by the joint venture partners, such exclusions are not generally compatible with the present Companies Act. They are, however, recognized under Contract Law. The effect of this framework is that dispute resolution in respect of joint venture provisions becomes subject to contract law provisions and is subject to lengthy arbitration. The companies however, prefer that such aspects should be addressed more speedily through the corporate processes.10.3 There is an inherent inconsistency of the joint venture form with the provision of Section 111 A of the Companies Act, 1956 also which would need to be addressed if the facility of corporate based redressal mechanism is to be made available for joint ventures. It was noted that joint venture agreements have several clauses pertaining to voting rights, additional quorum requirements, arbitration provisions ousting statutory remedies, pre-emption rights or restrictions on transfer of shares.10.4 It was represented before the Committee that there should be an appropriate exception to the doctrine of ultra vires under Section 9 of the Companies Act and the parties should have “party autonomy of contract” in their joint venture documentation. This would however imply that any third party dealing with any or either of named shareholders would have an obligation and a consequent right to seek disclosure and must verify the fullness of fact and terms contracted between the joint venture partners through shareholders agreements before dealing with the shares. Equally the Committee noted the concern that company law should not include provisions that provide “fly out” opportunities to companies seeking to evade its provisions. Nor could company law address the shortcomings of other legal regimes, the costs associated with arbitration and litigation that would need to be undergone to enforce contracts.10.5 The Committee, after considering various aspects is of the view that in the current context, it would be appropriate to provide for a framework that would enable Indian entities to access greater opportunities through joint ventures while reform of the legal system to address difficulties faced in administration of civil law must continue. A transparent modality for providing recognition to agreements between joint venture partners for corporate action should be worked out in Company Law, keeping in view the concern that such arrangements should not become a window for circumventing the essential provisions of the Law.10.6 The Committee is of the view that this conflict needs to be resolved since such restrictions under the Company Law will adversely affect the free-flow of capital and technology into the country in times to come. Therefore, a suitable provision should be incorporated under the new Company Law recognizing such arrangements between two or more substantial shareholders or joint venture partners.Public Financial Institutions (PFIs)11.1 Through the amendment in 1974, a new Section 4A {“Public Financial Institutions [PFIs]} was inserted in the Companies Act, 1956. This section defined certain institutions as PFIs and empowered Central Government (MCA) to notify, from time to time, other institutions PFIs. About 46 institutions have been declared as PFIs under this Section by the MCA. Though this term has been defined under the Companies Act, 1956, the term has been used and referred in many Acts and a number of benefits (economic as well as other) are available to such PFIs under Companies Act and other Acts/delegated legislations.11.2 In view of changing competitive economic environment and continuous reforms in financial sector, a need has been felt for review of the concept of PFI. It is being felt in certain quarters that this concept should be deleted, with suitable transitory provisions in respect of existing PFIs. Suitable steps to take care of provisions in other Acts/delegated legislations, which are using this term should also be taken. Besides, there does not appear to be any logic for addressing such a concept (relating to Financial Institutions) in the Companies Act. The Companies Bill, 1997 had, therefore, proposed for shifting of this concept to PFI (Obligations as to Fidelity and Secrecy) Act, 1983, which is administered by Ministry of Finance.11.3 They should be subject to similar regulatory provisions. There is no reason why a relaxed framework in respect of corporate governance should be provided to such institutions through exemptions in provisions of company law. Such institutions should be put through similar requirements of financial and management prudence as other FIs. Therefore, the Committee does not see any reason why the special regime for Public Financial Institutions provided under the Companies Act, 1956, should continue.Incorporation12.1 The process of incorporation through registration should be based on correct information to be disclosed by the promoters of the company with full liability towards its correctness. The information necessary for registration may be prescribed through rules. However, the contents of the Memorandum of Association should be part of the substantive law and not in the Rules. Process of registration should be speedy and compatible with e-Governance initiative taken up by the Government.12.2 The companies should be required to make and authenticate detailed disclosures about promoters, directors of the company at the time of incorporation. These disclosures should be prescribed to be made in a manner that allows for additions/changes, keeping pace with the developments in the company.12.3 The Promoters and Directors should disclose information that establishes/authenticates their proof of residence and identity through supporting documents such as Photographs, PAN Number, Passport, affidavits etc. that may be prescribed.12.4 Every company should be obliged to have a registered office and to disclose it correctly along with proof of address, in a manner that enables access physically and by service of post. The companies should also be made to register their websites and e-mail addresses.12.5 The primary responsibility for veracity of statements made should be that of promoters/ first directors. If agents or professional are empowered, this should be on the basis of suitable power of attorney and should not relieve the principals of their liability. Stringent penalties should also be provided for any professionals, if engaged, who do not exercise due diligence at the time of incorporation.12.6 Directorships by the promoters/directors in other companies should be declared at the time of incorporation. The terms ‘Promoters’ and ‘control’ should be clearly defined for avoiding any doubts.12.7 Stringent consequences should follow if it is found that incorporation has been done under false or misleading information.Shifting of Registered Office13. The present procedure requires the Registered office of a company being shifted from one state to another subject to order of CLB. The Committee expressed its concern at the delays and costs involved in the process. Besides, corporates should be afforded the opportunity of beneficial business environments if available in different parts of the country. A view was expressed that this decision should be left to the shareholders. However, the Committee also recognized that interests of other stakeholders would be involved. The Committee felt there was an urgent need for making this process simpler, faster and easier, without reference to a Tribunal/Court, ensuring that the new registered office is accessible to stakeholders for legal recourse, where necessary.Vanishing companies14.1 The Committee is seriously concerned at the phenomenon of companies that vanished after raising funds from the public, thereby cheating investors. This has resulted in a lack of credibility not only on the part of the companies but also of the institutional structure regulating such entities and enforcement agencies. We understand that the Central Government is now pursuing action against such companies through a coordinated mechanism involving both the Ministry of Company Affairs and SEBI. However, a lot requires to be done to prevent such phenomenon. We feel that such preventive action should begin with registration itself and should be sustained through a regime that requires regular and mandatory filing of statutory documents. With introduction of electronic filing, this process would become convenient to companies as well as the stakeholders. Behaviour resulting in non-filing of documents or incorrect disclosures should be dealt with strictly.14.2 Information provided at the time of registration should determine the addresses of the company as well as its directors. It should be the duty of the Company to intimate any change of address within a fixed time period.14.3 There should also be a system of random scrutiny of filings of corporates to be carried out by the registration authorities with heavy penalties for the companies found inadequate in their disclosures and filings.14.4 Inter agency coordination should be enabled to track down the persons behind such companies to bring them to book. Law should be amended to make them disgorge their ill-gotten gains by lifting the corporate veil.Incorporation- Allied Issuese-Governance15.1 The Committee takes note of the e-governance initiative launched by MCA and recommends that it be implemented speedily. It recognized the immense potential of this programme to bring about ease of compliance at a lower cost. However, the Committee observes that e-Governance should be cost-effective to companies, including Small and One Person Companies, easy to use and accessible to all stakeholders and general public and enable the process of registration and filing for disclosures and retrieval of data efficiently and at a low cost. Further, the system should have adequate capacities to handle the likely growth in the corporate sector in India in the years to come as well as the increase in disclosure requirements that may be mandated by the legal and regulatory framework.15.2 All statutory filings should be made compatible to e-Filing by devising suitable e-forms. Such filings should be kept securely and should be identifiable through digital signatures.15.3 The e-Governance system should enable quick disposal of the registration and incorporation processes with the use of self operating e-systems, minimizing physical interface and use of discretionary statutory powers by registering authorities. 15.4 All companies should be required to specify authorized signatories with authority to sign and authenticate filings digitally.15.5 On-line filing and levy of charges etc. should be made easy. Once the system has established its effectiveness, it may be made mandatory for all the companies.15.6 An effort should be made to resolve stamp duty issues between the Central and State Governments so that in times to come, law may recognize the concept of single national registry.15.7 The Companies Act should provide a suitable legislative frame work for levy of user charges. Such charges should be reasonable to enable the operation of the e-governance initiative in a sustainable manner.Name allotment16.1 Other incorporation processes such as name allotment etc. should be made simpler and amenable to be completed through automatic e-systems. The Committee is of the view that the process of incorporation and registration should be competitive with developed economies of the world.16.2 There may be reasonable prohibitions imposed under the Act on the use of certain names. The Government should retain powers to prevent companies having names that give the impression that the company is in any way connected with the Central / State Government or with a local authority.16.3 There should be power in law to require a company to abandon misleading names or to trade under a misleading name.16.4 The regime for change of name should be carefully reviewed. While providing the freedom to a company to change its name it should prevent too frequent a change of name to prevent cheating / misleading of stakeholders/ investors.Restrictions on commencement of business :17.1 Companies Act, 1956 provides for restrictions on commencement of business by public companies or exercise of any borrowing powers, unless the requirements of capital subscription by the numbers of the company have been met. Additionally, there is a requirement for issue of Commencement of Business Certificate by the Registrar of Companies (ROC).17.2 It appears that issue of a certificate of commencement of business would not be necessary since present Companies Act prescribes the amount of capital to be paid up immediately after the registration. This should be adequate to establish the borrowing power of the company. In view of this, the requirement of obtaining a separate Certificate of Commencement of business imposes avoidable delay and could be dispensed with.Limited liability Partnership (LLP)18.1 In view of the potential for growth of the service sector, requirement of providing flexibility to small enterprises to participate in joint ventures and agreements that enable them to access technology and bring together business synergies and to face the increasing global competition enabled through WTO, etc., the formation of Limited Liability Partnerships (LLPs) should be encouraged.18.2 It would be a suitable vehicle for partnership among professionals who are already regulated such as Company Secretaries, Chartered Accountants, Cost Accountants, Lawyers, Architects, Engineers, Doctors etc. However, it may also be considered for small enterprises not seeking access to capital markets through listing on the stock exchange.18.3 We recommend that a separate Act be brought about to facilitate limited liability partnerships. The concept need not be addressed in Companies Act.Limitation on Number of Partners specified in the Companies Act.19.1 The Committee recognizes that there are many forms of association that would facilitate business operation. It also recognizes the relevance of proprietorship and partnership firms in this regard. While the corporate form of organization would provide greater clarity to the stake holders and entities interacting with the business firm, the Companies Act need not compel limitations on other forms of organizations. This should be left to be specified or regulated through the respective legislations relating to such forms. Therefore, there may be a need for review of the Partnership Act. The Companies Act however need not make any prescriptions in this regard.19.2 Therefore, provisions limiting the number of partners as provided in the Section 11 of the Companies Act should be deleted. Necessary provisions in this regard may be included in the Partnership Act or other related Acts.Simplification of the regime for exit of companies from the Register of CompaniesSpecial Regime for Charitable and other Companies (Sec.25)20.1 There is a need for transparency in functioning of such companies. Objects of such companies should be clearly defined.20.2 Framework for remuneration should be such that it does not result in siphoning of the company’s funds.Simplification of the regime for exit of companies from the Register of Companies21.1 The Committee noted that the Register of Companies includes a very large number of defunct companies. There is a cost associated with carrying the information of such companies on the public register. This cost can be avoided.21.2 The procedure for a company seeking exit from the Register of Companies needs to be simplified. This should not require operation of special schemes for providing exit to companies through relaxation of rules. This should be possible through normal operation of the law. The law should enable Registrars of Companies to use suo moto powers to strike off names of defunct companies (a company which is not carrying on business or any operation) effectively. They should also be empowered to strike off the names of companies from the Register of Companies on application for the purpose by the company directors or majority of them. The application form to be prescribed should be simple. On receipt of such application, Registrar should issue a public notice about his intention to exercise the power to strike off the name of the company and also invite public comments on why he should not do so, to be indicated in a time-bound manner, after which consent may be presumed.21.3 Such application may however not be made if at any time during the previous 6 months, the company has changed its name, traded or otherwise carried on any business. The orders by the Registrar striking off the name of the company from the Register should again be issued in the form of a public notice and should take automatic effect on expiry of prescribed period. Public notice may be given by way of placing on the notice board / web site of the registration authorities and sent to the company as well as to its last known directors by registered post.

MGT501 Business EnvironmentInternal and External Stakeholder AnalysisName of the StudnetName of the InstitutionExecutive Summary·AAT Kings is an Australia-based coach tour operator that was founded in 1912·The key functional areas of the business include customer service, environmental sustainability and preservation, and human resources management·The political environment of AAT Kings is stable. High disposable income and GDP growth per capita suggests people are more likely to spend on services that add value to their experiences. The multicultural and multiracial attributes attract many foreign and national tourists to visit specific destinations. Internet penetration rate is high while transportation network connects all regions and is cheap. Environmental protection agencies and the government legilsations impact business performance. The enriched environmental attributes attract many foreign and national visitors to visit specific destinations·Internal stakeholders include the board, management team, employees, and shareholders·External stakeholders include the government, environmental protection agencies, partners and suppliers, and local community members·Main stakeholder groups include customers, shareholders, and employees. These three groups have the highest amount of influence on the business outcomes. However, the interest and influences that these stakeholder groups have on AAT Kings differs signficantly·AAT Kings must closely manage consumers, employees, and shareholders to ensure the achievement of positive organizational outcomesTable of ContentsIntroduction.4Company Background.4Functional Areas.4PESTLE Analysis.5Role of Internal Stakeholders.7Role of External Stakeholders.8Stakeholder Matrix of AAT Kings.9Nature and Degree of Main Stakeholders’ Interests.10Level of Main Stakeholders’ Influence.11Comparing Two Industries.12Conclusion.12References.13IntroductionAccording to the stakeholder theory, regardless of the financial stake of an organization, all needs of stakeholders must be met (McGrath & Whitty, 2017). A stakeholders refers to any individual or group of individuals that have concern or interest in a business. Stakeholder analysis is a key technique used by businesses around the world to identify the main stakeholders that may be concerned or have a vested interest in the processes or outcomes of a business and to analyze the needs of these stakeholders (Jones, Harrison & Felps, 2018). The attitude of stakeholders, along with the extent of the interest of the stakeholders can impact the success of an organizational project. The aim of this assignment is to carry out an internal and external stakeholder analysis with regards to AAT Kings. It will discuss the degree and nature of the stakeholder interests and influences in the context of AAT Kings and elaborate the implications of the conflicting interets.Company BackgroundAAT Kings is an Australia-based coach tour operator. The main line of service for the organization involves offering both long, as well as, short-distance tours. The company offers its services in two countries including Australian and New Zealand. The organization was founded in 1912 and serves under the parent company The Travel Corporation. As of 2017, the organization had over 500 employees and operated with over 70 fleets. The value that the company offers to potential tourists is to sustain and endorse the destinations along with creating memorable experiences for its consumers. Along with that, the company is also dedicated to running a business that is sustainable or have minimal environmental impact. AAT Kings is committed towards preserving the destinations and communities they explore for future generations.Functional AreasThe key functional area of the business is customer service. The employees of the company includes driver-cum-guides, as well as, professional travel directors who are seasoned and experienced in handling travellers and satisfying their needs. The employees are trained to enrich the travelling experiences of the consumers with the provision of informative commentary associated with the culture, geography, and history of the destinations visited. As such, another key functional area of the business is human resources management. The employees such as the professional travel directors and driver-cum-guides are employed on the basis of their knowledge of the specific destinations and regions that are served by the company. Another functional area of the business is environmental sustainability and preservation. The company is highly committed towards preserving the destinations served for the future generation along with minimalizing the extent of the environmental impact of its operations. Therefore, the key functional areas of AAT Kings include:·Customer service·Human resource management and,·Environmental sustainability and preservationPESTLE AnalysisAAT Kings PESTLE FrameworkPolitical·Stable political framework·Encouragement towards tourism·Strong political ties with other nations·Tax incentives are providedEconomic·GDP per capita is significantly strong·Economic framework attracts FDI·High disposable income levelSocio-cultural·Multicultural and multiracial·Consolidated educational framework·People want to spend on value-added servicesTechnological·Fast technological adaptability and growth·High internet penetration rate·Strong transporation networkLegal·Environmental protection regulations·Fair Work Act 2009Environmental·Great extent of biodiversity·Enriched with scenic beauties and landscapesTable 1: PESTLE Analysis of AAT Kings(Source: Author)A PESTLE analysis is a strategic framework utilized by businesses to analyze and evaluate the external environment associated with the business and how the external environment can influence the processes and performance of the businesses. PESTLE is an abbreviated form of Political, Economic, Socio-cultural, Technological, Legal, and Environmental factors that exist externally and cannot be controlled or manipulated by the businesses.·Political: The political ties of Australia with other nations are significantly positive and the government encourages international tourism extensively throughout the nation. The national borders are open to travellers from all countries. The political framework of Australia is stable and travel destinations are considered safe (Pham, Nghiem & Dwyer, 2017). Additionally, the Australian government provides tax incentives to organizations that are dedicated to reducing carbon footprint and preserving the environment.·Economic: The per capita GDP of Australia is on par with the 4 dominant West European economies. The diverse and abundant natual resources in the nation are able to attract a high level of FDI. The net adjusted disposable income level in Australia accounts for 32,759 USD per capita per annum which suggests that the Australian population are more likely to spend on services that add value to their lives.·Socio-cultural: Australia has one of the most multiracial and multicultural population in a global context. There are several important communities such as the indigenous population of Australia. The multiracial and multicultural attributes of the nation drive tourism significantly as many international and national tourists desire to get acquainted with different cultures and races. Additionally, the educational environment of Australia is efficient and attracts tourists from many nations which increases the potential number of tourists that may want to visit specific destinations around the nation.·Technological: The technological framework of Australia is highly adapting and growing. The country is well-known throughout the globe for its high technolgical growth over the years. Almost 88% of the Australian population are active internet users. Travel and tourism operators in Australia have considered the interent and social media to be one of the most effective enablers of business as it allows them to increase brand awareness and consumer engagement (Volgger et al. 2018). Additionally, the transport options available in the country connect all of the regions in the nation and are provided at cheaper rates.·Legal: Environmental laws and regulations in Australia can impact the tourism businesses and operators in the country. Australia tourism businesses and operators are often regulated by the government and environment protection agencies in Australia. On the other hand, the Australian legal framework incentivizes new businesses and there are many tax benefits for companies that attract foreign investment. The Fair Work Act 2009 is aimed to govern employment and fair treatment of all employees within businesses.·Environmental: The environment of Australia is enriched with the presence of beautiful forests, mountains, and beaches. The biodiversity of Australia is brilliant as more than one million species of animals and plants can be found in Australia. Additionally, there are also famous architectures and buildings that are present through the nation, such as the Sydney Opera House, that attract a massive pool of both international and national travellers and tourists each year.Role of Internal StakeholdersThe internal stakeholders of AAT Kings include the organization’s board members, the shareholders, the employees, and the management team.·In the board of AAT Kings, the members that are present include the CEO, a Chairperson, and a deputy Chairperson. This group is responsible for developing the strategic objectives of the company, approving the objectives, and developing the needed policies and processes to achieve the objectives.·Shareholders refer to indiividuals that have invested financially in the business. This stakeholder group is associated with financing the operations of the businesses in return of monetary benefits and interests from the company based on their investment (Amerta, 2017).·The management team is consisted of the managing director, as well as, other managerial level candidates. The management team is responsible for governing the day-to-day duties, processes, and operations along with taking care of plan and policy exection. It is also the duty of the management team to meausre the performance of the organization, implement organizational structure, and oversee and manage procedures associated with management (Todd, Leask & Ensor, 2017).·There are over 500 employees within the organization. The fundamental duty of the employees is providing consumer service to the tourists and travellers. The workforce of the organization is diverse to ensure that there are knowledgeable people present on the team that know different regions along with the historical, geographical, and cultural attributes of the regions. Depending on consumer choice, the employees are responsible for providing full or half-day tours. The employees are expected to share local knowledge and regional stories to the consumers.Role of External StakeholdersThe external stakeholders of AAT Kings include the government, customers, partners and suppliers, environment protection agencies, and the local community.·The government is responsible for regulating and governing the processes, procedures, and operational impacts of the business as a whole on the environment. Furthermore, the government also ensures that in all areas of the organization, organizational policies, legislations, and legal frameworks are effectively applied. For instance, the Fair Work Act 2009 aims to ensure that all organizations are able to provide equal oppportunities to employees and to proect the human rights of the employees.·In the context of AAT Kings, customers refer to both international and domestic visitors that want to visit specific locations and destinations served by the organization. The consumer group is one of the main stakeholders of AAT Kings who buy or purchase the product or service offerings of the organization. In addition to that, consumers also contribute significantly to reviewing the performance of the organization through the provision of feedback and promote the organization by reflecting on the positive expeirneces they had which contributes to word-of-mouth marketing.·AAT Kings has established partnerships and association with all degress and levels within the travel and tourism industry such as local tour guides and operators, motels, hotels, and resorts. The partners and associations with other known organizations are oriented towards promoting the brand awareness, as well as, the services offered by the brand. For instance, AAT Kings has established multi-year association with both Discovery and National Geographic as a means of universally conveying the Australian destination messages and experiences.·Both the government and environmental protection agencies around the nation can influence the business. These stakeholders have the capacity to develop and create legal and ethical parameters under which the business must perform to ensure regional preservation sustainability and minimal environmental impact.·Local communities may be dependent on the business for economic reasons. For instance, the regions that are visited by tourists, a large number of local sellers may sell handmade products and services to the tourists which may contribute to the regional development. Additionally, it may also create employment opportunities in local communities.Stakeholder Matrix of AAT KingsThe stakeholder matrix of AAT Kings is aimed to analyze the extent to which the internal and external stakeholders are interested in the business operations and can influence the business outcomes.Stakeholder GroupInterestInfluenceOrganizational Board and Management TeamHighHighGovernmentHighHighEmployeesLowHighConsumersLowHighLocal CommunitiesLowLowPartners and SuppliersShareholdersHighHighTable 2: Stakeholder Influence and Interest(Source: Author)PowerHighLowFigure 1: Stakeholder Matrix of AAT Kings(Source: Author)Nature and Degree of Main Stakeholders’ InterestsThe key stakeholders of AAT Kings include shareholders, employees, and customers. The customers are of highest importance and the interest of this stakeholder group is vested in the quality of the offerings and services of the organization. The consumers want value in exchange for the money the spend on the company (Bettinazzi & Zollo, 2017). In this context, it may be stated that if the company is not able to satisfy the necessities and demands of the consumers, the consumers may opt for a replacement of AAT Kings. On the other hand, the needs and demands of the employees are vested in health, safety, and income. Employees are significantly important for the success of the business as they are the ones who are responsible for carrying out the duties and activities developed by the organization and representing the company to the consumers. The key interests of the employees include industry-competitive pay rates along with other non-monetary advantages including safety and health insurance policies in exchange for the effort they put in their work (Voyer, Kastanakis & Rhode, 2017). Shareholders invest in the business which keeps the business functional and operational in all areas and enables it to generate enough funds to effectively carry out these functions and operations. The main need of the shareholders is associated with the concept of values and their demand is constituted by the interest to earn profits from their investment in the company from ROI (Zhong, Wang & Yang, 2017). In case this stakeholder group is not satisfied, the company may lose necessary capital to keep the business functional and effective. Therefore, all of these consumer grops need to be closely managed by the organization.Level of Main Stakeholders’ InfluenceStakeholder influence may be referred to as the extent of power that specific individuals or group of individuals exert that influences the organizational outcomes. Stakeholder influence refers to the level to which such groups can persuade others in the organization into following orders or making decisions. The main stakeholders of AAT Kings are shareholders, customers, and employees with consumers being the most influential group of stakeholders. It is impossible for the company to survive without the consumers as the company generates revenues from serving the customers solely. Consequently, AAT Kings must strive to offer the consumers with value-added services that enrich consumer experiences. Employees, on the other hand, are responsible for the creation and delivery of the offerings consumed by the customers. The loss of employees or a low employee retention rate and a high employee turnover may cause considerable losses and the company services may deteriorate consequently. Consequently, the organization must provide industry-competitive salaries and other benefits to attract the best talents in the sector. Shareholders are fundamentally the owners of a firm (Schwarzmüller et al. 2017). Shareholders contribute the capital that is necessary to keep a business operational and invest in areas that may be necessary for a business. The board of the company acts on behalf of the shareholders and have the vested ability to fire organizational members in case the operations are poor. Additionally, poor satisfaction of the shareholders may be troubling for the businesses as in case of future investment need, the shareholders may not be willing to invest in the company due to which, shareholders must be closely managed at all times.Comparing Two IndustriesWoolworths operates in the supermarket sector and there are various similarities and differences in the business environment of AAT Kings and Woolworths. In terms of similarities, both AAT Kings and Woolworths are significantly influenced by employees and consumers. Customers have significant interest and influence given the fact that the services and offerings of both of the companies are consumer-centric and designed to add value to consumer experiences and necessities. The employees are responsible for ensuring that the services are being provided efficiently to the consumers through their operations and activities. On the other hand, whereas Woolworths operates internationally in several nations, AAT Kings operates in only two nations which is why the stakeholder segment of Woolworths is more complicated and wide compared to AAT Kings. The business of Woolworths is not only impacted by the Australian government, but also by the governing authorities in the countries it serves. Additionally, the key interest of shareholders in Woolworths is profit generation whereas, in a company like AAT Kings, the shareholder interest is also visible in other elements such as environmental protection and regional preservation.ConclusionThis report enabled the identification of the main stakeholders of AAT Kings along with facilitating the assessment of the extent to which these stakeholders can influence the business of the organization. The key functional areas of the business include human resources management, consumer services, and environmental sustainability and protection. The organization is highly committed to create stakeholder engagement and maintaining stakeholder interests to achieve corporate success.ReferencesAmerta, I. M. S. (2017). The role of tourism stakeholders at Jasri tourism village development, Karangasem regency. International journal of social sciences and humanities, 1(2), 20-28. 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Who adopts the Airbnb innovation? An analysis of international visitors to Western Australia. Tourism Recreation Research, 43(3), 305-320. Retrieved 12 April, from https://espace.curtin.edu.au/bitstream/handle/20.500.11937/66375/264474.pdf?sequence=2&isAllowed=yVoyer, B. G., Kastanakis, M. N., & Rhode, A. K. (2017). Co-creating stakeholder and brand identities: A cross-cultural consumer perspective. Journal of Business Research, 70, 399-410. Retrieved 12 April, from http://eprints.lse.ac.uk/68552/1/Co-creating_stakeholder_and_brand_LSERO.pdfZhong, N., Wang, S., & Yang, R. (2017). Does corporate governance enhance common interests of shareholders and primary stakeholders?. Journal of business ethics, 141(2), 411-431. Retrieved 12 April, from https://www.researchgate.net/profile/Ninghua_Zhong/publication/279170045_Does_Corporate_Governance_Enhance_Common_Interests_of_Shareholders_and_Primary_Stakeholders/links/558bdebb08ae40781c1f214e.pdf

The banking industry is undergoing a radical shift, one driven by newcompetition from FinTechs, changing business models, mounting regulation and compliance pressures, and disruptive technologies.The emergence of FinTech/non-bank startups is changing the competitive landscape in financial services, forcing traditional institutions to rethink the way they do business. As data breaches become prevalent and privacy concerns intensify, regulatory and compliance requirements become more restrictive as a result. And, if all of that wasn’t enough, customer demands are evolving as consumers seek round-the-clock personalized service.These and other banking industry challenges can be resolved by the very technology that’s caused this disruption, but the transition from legacy systems to innovative solutions hasn’t always been an easy one. That said, banks and credit unions need to embrace digital transformation if they wish to not only survive but thrive in the current landscape.1. Increasing CompetitionThe threat posed by FinTechs, which typically target some of the most profitable areas in financial services, is significant. Goldman Sachs predicted that these startups would account for upwards of $4.7 trillion in annual revenue being diverted from traditional financial services companies.These new industry entrants are forcing many financial institutions to seek partnerships and/or acquisition opportunities as a stop-gap measure; in fact, Goldman Sachs, themselves, recently made headlines for heavily investing in FinTech. In order to maintain a competitive edge, traditional banks and credit unions must learn from FinTechs, which owe their success to providing a simplified and intuitive customer experience.2. A Cultural ShiftFrom artificial intelligence (AI)-enabled wearables that monitor the wearer’s health to smart thermostats that enable you to adjust heating settings from internet-connected devices, technology has become ingrained in our culture — and this extends to the banking industry.In the digital world, there’s no room for manual processes and systems. Banks and credit unions need to think of technology-based resolutions to banking industry challenges. Therefore, it’s important that financial institutions promote a culture of innovation, in which technology is leveraged to optimize existing processes and procedures for maximum efficiency. This cultural shift toward a technology-first attitude is reflective of the larger industry-wide acceptance of digital transformation.3. Regulatory ComplianceRegulatory compliance has become one of the most significant banking industry challenges as a direct result of the dramatic increase in regulatory fees relative to earnings and credit losses since the 2008 financial crisis. From Basel’s risk-weighted capital requirements to the Dodd-Frank Act, and from the Financial Account Standards Board’s Current Expected Credit Loss (CECL) to the Allowance for Loan and Lease Losses (ALLL), there are a growing number of regulations that banks and credit unions must comply with; compliance can significantly strain resources and is often dependent on the ability to correlate data from disparate sources.Major Banking RegulationsBasel IIIPublished in 2009, Basel III is a regulatory framework for banks established by the Basel Committee on Banking Supervision. Basel III’s risk-weighted capital requirements dictate the minimum capital adequacy ratio that banks must maintain.Dodd-Frank ActPassed during the Obama administration, the Dodd-Frank Wall Street Reform and Consumer Protection Act placed regulations on the financial services industry and created programs to prevent predatory lending.CECLCreated by the Financial Accounting Standards Board, the CECL is an accounting standard that requires all institutions that issue a credit to estimate expected losses over the remaining life of the loan, rather than incurred losses.ALLLThe ALLL is a reserve that financial institutions establish based on the estimated credit risk within their assets.Faced with severe consequences for non-compliance, banks have incurred additional cost and risk (without a proportional enhancement to risk mitigation) in order to stay up to date on the latest regulatory changes and to implement the controls necessary to satisfy those requirements. Overcoming regulatory compliance challenges requires banks and credit unions to foster a culture of compliance within the organization, as well as implement formal compliance structures and systems.Technology is a critical component in creating this culture of compliance. Technology that collects and mines data performs in-depth data analysis, and provides insightful reporting is especially valuable for identifying and minimizing compliance risk. In addition, technology can help standardize processes, ensure procedures are followed correctly and consistently, and enables organizations to keep up with new regulatory/industry policy changes.4. Changing Business ModelsThe cost associated with compliance management is just one of many banking industry challenges forcing financial institutions to change the way they do business. The increasing cost of capital combined with sustained low-interest rates, decreasing return on equity, and decreased proprietary trading are all putting pressure on traditional sources of banking profitability. In spite of this, shareholder expectations remain unchanged.This culmination of factors has led many institutions to create new competitive service offerings, rationalize business lines, and seek sustainable improvements in operational efficiencies to maintain profitability. Failure to adapt to changing demands is not an option; therefore, financial institutions must be structured for agility and be prepared to pivot when necessary.5. Rising ExpectationsToday’s consumer is smarter, savvier, and more informed than ever before and expects a high degree of personalization and convenience out of their banking experience. Changing customer demographics play a major role in these heightened expectations: With each new generation of banking customer comes a more innate understanding of technology and, as a result, an increased expectation of digitized experiences.Millennials have led the charge to digitization, with five out of six reporting that they prefer to interact with brands via social media; when surveyed, millennials were also found to make up the largest percentage of mobile banking users, at 47%. Based on this trend, banks can expect future generations, starting with Gen Z, to be even more invested in omnichannel banking and attuned to technology. By comparison, Baby Boomers and older members of Gen X typically value human interaction and prefer to visit physical branch locations.This presents banks and credit unions with a unique challenge: How can they satisfy older generations and younger generations of banking customers at the same time? The answer is a hybrid banking model that integrates digital experiences into traditional bank branches. Imagine, if you will, a physical branch with a self-service station that displays the most cutting-edge smart devices, which customers can use to access their bank’s knowledge base. Should a customer require additional assistance, they can use one of these devices to schedule an appointment with one of the branch’s financial advisors; during the appointment, the advisor will answer any of the customer’s questions, as well as set them up with a mobile AI assistant that can provide them with additional recommendations based on their behavior. It might sound too good to be true, but the branch of the future already exists, and it’s helping banks and credit unions meet and exceed rising customer expectations.Investor expectations must be accounted for, as well. Annual profits are a major concern — after all, stakeholders need to know that they’ll receive a return on their investment or equity and, in order for that to happen, banks need to actually turn a profit. This ties back into customer expectations because, in an increasingly constituent-centric world, satisfied customers are the key to sustained business success — so, the happier your customers are, the happier your investors will be.6. Customer RetentionFinancial services customers expect personalized and meaningful experiences through simple and intuitive interfaces on any device, anywhere, and at any time. Although customer experience can be hard to quantify, customer turnover is tangible and customer loyalty is quickly becoming an endangered concept. Customer loyalty is a product of rich client relationships that begin with knowing the customer and their expectations, as well as implementing an ongoing client-centric approach.In an Accenture Financial Services global study of nearly 33,000 banking customers spanning 18 markets, 49% of respondents indicated that customer service drives loyalty. By knowing the customer and engaging with them accordingly, financial institutions can optimize interactions that result in increased customer satisfaction and wallet share, and a subsequent decrease in customer churn.Bots are one new tool financial organizations can use to deliver superior customer service. Bots are a helpful way to increase customer engagement without incurring additional costs, and studies show that the majority of consumers prefer virtual assistants for timely issue resolution. As the first line of customer interaction, bots can engage customers naturally, conversationally, and contextually, thereby improving resolution time and customer satisfaction. Using sentiment analysis, bots are also able to gather information through dialogue, while understanding context through the recognition of emotional cues. With this information, they can quickly evaluate, escalate, and route complex issues to humans for resolution.7. Outdated Mobile ExperiencesThese days, every bank or credit union has its own branded mobile application — however, just because an organization has a mobile banking strategy doesn’t mean that it’s being leveraged as effectively as possible. A bank’s mobile experience needs to be fast, easy to use, fully-featured (think live chat, voice-enabled digital assistants, and the like), secure, and regularly updated in order to keep customers satisfied. Some banks have even started to reimagine what a banking app could be by introducing mobile payment functionality that enables customers to treat their smartphones like secure digital wallets and instantly transfer money to family and friends.8. Security BreachesWith a series of high-profile breaches over the past few years, security is one of the leading banking industry challenges, as well as a major concern for bank and credit union customers. Financial institutions must invest in the latest technology-driven security measures to keep sensitive customer safe, such as:Address Verification Service (AVS)AVS “checks the billing address submitted by the card user with the cardholder’s billing address on record at the issuing bank” in order to identify suspicious transactions and prevent fraudulent activity.End-to-End Encryption (E2EE)E2EE “is a method of secure communication that prevents third-parties from accessing data while it’s transferred from one end system or device to another.” E2EE uses cryptographic keys, which are stored at each endpoint, to encrypt and decrypt private messages.Banks and credit unions can use E2EE to secure mobile transactions and other online payments so that funds are securely transferred from one account to another, or from a customer to a retailer.AuthenticationBiometric authentication “is a security process that relies on the unique biological characteristics of an individual to verify that he is who he says he is. Biometric authentication systems compare a biometric data capture to stored, confirmed authentic data in a database.” Common forms of biometric authentication include voice and facial recognition and iris and fingerprint scans. Banks and credit unions can use biometric authentication in place of PINs, as it’s more difficult to replicate and, therefore, more secure.Location-based authentication (sometimes referred to as geolocation identification) “is a special procedure to prove an individual’s identity and authenticity on appearance simply by detecting its presence at a distinct location.” Banks can use location-based authentication in conjunction with mobile banking to prevent fraud by either sending out a push notification to a customer’s mobile device authorizing a transaction or by triangulating the customer’s location to determine whether they’re in the same location in which the transaction is taking place.Out-of-band authentication (OOBA) refers to “a process where authentication requires two different signals from two different networks or channels… [By] using two different channels, authentication systems can guard against fraudulent users that may only have access to one of these channels.” Banks can use OOBA to generate a one-time security code, which the customer receives via the automated voice call, SMS text message, or email; the customer then enters that security code to access their account, thereby verifying their identity.Risk-based authentication (RBA) — also known as adaptive authentication or step-up authentication — “is a method of applying varying levels of stringency to authentication processes based on the likelihood that access to a given system could result in its being compromised.” RBA enables banks and credit unions to tailor their security measures to the risk level of each customer transaction.9. Antiquated ApplicationsAccording to the 2017 Gartner CIO Survey, over 50% of financial services CIOs believe that a greater portion of the business will come through digital channels, and digital initiatives will generate more revenue and value.However, organizations using antiquated business management applications or siloed systems will be unable to keep up with this increasingly digital-first world. Without a solid, forward-thinking technological foundation, organizations will miss out on critical business evolution. In other words, digital transformation is not just a good idea — it’s become imperative for survival.While technologies such as blockchain may still be too immature to realize significant returns from their implementation in the near future, technologies like cloud computing, AI, and bots all offer significant advantages for institutions looking to reduce costs while improving customer satisfaction and growing wallet share.Cloud computing via software as a service and platform as a service solutions enable firms previously burdened with disparate legacy systems to simplify and standardize IT estates. In doing so, banks and credit unions are able to reduce costs and improve data analytics, all while leveraging leading-edge technologies. AI offers a significant competitive advantage by providing deep insights into customer behaviors and needs, giving financial institutions the ability to sell the right product at the right time to the right customer. Additionally, AI can provide key organizational insights required to identify operational opportunities and maintain agility.10. Continuous InnovationSustainable success in business requires insight, agility, rich client relationships, and continuous innovation. Benchmarking effective practices throughout the industry can provide valuable insight, helping banks and credit unions stay competitive. However, benchmarking alone only enables institutions to keep up with the puck — it rarely leads to innovation. As the cliché goes, businesses must benchmark to survive, but innovate to thrive; innovation is a key differentiator that separates the wheat from the chaff.Innovation stems from insights, and insights are discovered through customer interactions and continuous organizational analysis. Insights without action, however, are impotent — it’s vital that financial institutions be prepared to pivot when necessary to address market demands while improving upon the customer experience.Financial service organizations leveraging the latest business technology, particularly around cloud applications, have a key advantage in the digital transformation race: They can innovate faster. The power of cloud technology is its agility and scalability. Without system hardware limiting flexibility, cloud technology enables systems to evolve along with your business.