Sample Solution

kin, 2017) defines corporate governance as “system by which corporations are directed and controlled”. Corporate governance also describes the framework of rules, relationships, systems and processes within corporations and defines accountability (ASX, 2014). Corporate underperformance is the company’s inability to meet the expectation of its stakeholders. Corporate turnaround means restructuring the company to return it to operational normality and financial solvency (Downey & CIMA, 2009). It usually involves a failure of leadership (Slatter, 2011) and lack of concern for corporate governance. The most important function of a board of directors is to foresee and manage risk. In case of Masters home improvement, it is evident that the board failed to gauge the risk with entering a market with virtually no gap and dominated by long standing players like Bunnings.

Masters was conceived in 2009 with an aim to put extra pressure on Westfarmers, owner of Coles, which also operated the top hardware player in the market, Bunnings. Masters started operations in 2011 in partnership with Lowe’s; by 2016 it had more than 60 stores (Evans, 2016). It was a recipe for disaster, a consequence of poor strategic decisions, overexpansion and ill-judged acquisitions (Hamilton & Mickelthwait, 2006).

Masters reported a total of $600 million in losses with over $3 billion of capital spending (Woo