...about social responsibility, Friedman’s “Efficiency Perspective is placed centrally. During my research I found that Friedman is often criticised for being too classical. Friedman believes that manager’s foremost objective or even moral obligation to the firm should be to maximise profits always. There is however one condition that makes his perspective more complicated, not only for me, but also for several well-known authors. According to Friedman, the managers obligations should be carried out: “…while conforming to the basic rules of the society, both those embodied in law and those embodied in ethical custom”. This leads to one of the main questions of my essay: To what extent does Friedman’s “Efficiency Perspective” give foundation for responsible and moral international management behaviour? And need we any concern if it fails to do so? To fully answer the questions, I first need to explain the two different parts of the first question: responsible international management behaviour and moral international management behaviour. In businesses nowadays they combine these two parts, respectively responsible and moral becomes social responsibility in international management. The second question anticipates the other theories and models we need to consider when Friedman’s efficiency perspective does not give foundation for social responsibility in international management. However before I go in further detail to answer these questions, I first...
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...practicing stakeholder management will be more sustainable. Discuss. Over the years, social and ethical concerns have brought attention to the community that caused much bitter conflict to the relationship between business and society. As people become better educated and more affluent, rising expectations naturally follow for major institutions and these developed a backdrop against which criticisms towards businesses have grown. Therefore, these created the need for them to assume greater societal responsibilities rather than mere ruthless pursuit of own profits. Many businesses today share the same viewpoint that making profit for profit’s sake no longer leads to sustainable performance, stakeholder management has become an increasingly important aspect of a business’ operation integrating traditional economic considerations with environmental and social concerns (Jones 2012). While doing well and doing good are no longer seen to be mutually exclusive, corporations practicing stakeholder management is highly debated to be sustainable to a large extent. With all the benefits that it brings, this approach however also has its fair share of limitations to be discussed later in this essay. Outlining the term ‘sustainability’ Sustainability is the capacity to endure. One of the best known general definitions about sustainable development was expressed as “meeting the needs of the present without compromising the ability of future generations to meet their own needs” (United...
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...board, its shareholders and other stakeholders, and the goals for which the corporation is governed. In contemporary business corporations, the main external stakeholder groups are shareholders, debt holders, trade creditors, suppliers, customers and communities affected by the corporation's activities. Internal stakeholders are the board of directors, executives, and other employees. Corporate Governance has a broad scope. It includes both social and institutional aspects. Corporate Governance encourages a trustworthy, moral, as well as ethical environment. Scope of Corporate Governance can be shown in the following picture for at a glance realization: The rights and obligations of shareholders A corporate governance framework should protect shareholder rights. It should ensure that there is one vote for one share. It should ensure that management provides sufficient and relevant information. It should encourage shareholders to participate in annual general meetings and vote. Shareholders should be able to share in residual profit (dividends). Minority shareholders should be protected. It should ensure fairness and transparency in the operations of the company. Obligations: use voting rights. Equitable treatment of shareholders A corporate governance framework should ensure equitable treatment of all shareholders, including minority and foreign shareholders; Same voting rights (within same class of shares etc); All shareholders of same class...
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...and Social Responsibility of Shareholders to Stakeholders As the human civilization developing, the society is becoming increasingly controversial. Social responsibility as a sophisticated concept appeared in 20th century. Social responsibility means that a corporation or individual should be held accountable for any of its actions that affect people, their communities, and their environment. It implies that harm to people and society should be acknowledged and corrected at all if possible. There are some different kinds of social responsibilities. And the content of obligation may be different. Our group will focus on CSR (Corporate social responsibility) which may require a company to forgo some profits if its social impacts seriously hurt some of it s stakeholder or if its funds can be used to have a positive social impact. The idea of corporate social responsibility appeared around the start of the 20th century. Then, two broad principles emerged (Charity Principle and Stewardship Principle) which shaped business thinking about social responsibility during the 20th century and become the foundation stone for the modern idea of corporate social responsibility. The Charity Principle, the idea that the wealthiest members of society should be charitable toward those less fortunate people, is a very ancient notion. The stewardship principle points that the company leaders have the obligation to see that everyone-particularly someone in need or at risk-benefits from their...
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...do take serious about the importance of ethical behaviour. The multinational companies' spot and impact is developing in the global economy furthermore, with it higher requests on obligation regarding the social and natural impacts that originates from the organizations' own particular operations. Accordingly, there is a developing enthusiasm for corporate social responsibility (CSR). Enquist, Johnson and Camén (2005) state that after waves of generation situated and later administration arranged viewpoints on organizations, a third wave of sustainability and triple bottom line concern deduction is developing. According to (Elkington, 1997) the triple bottom line is trying to surround the three type of sustainability. Which is the economic, the environment and the social. Enquist, Johnson and Camén (2005) confirms that by saying this: Companies are paying attention to their core values and the development of a sense of corporate social responsibility, which can be used in marketing strategies and in customer-retention management 1.2 Definition of Corporate Social Responsibility Based on financial theory, there is only one objective that is overlying in the corporation. They are trying to maximise the shareholders wealth. Then again, companies are affected by stakeholders other than shareholders, constituents who are frequently roused by non-financial interest, for example, the...
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...and legal obligation towards the society adapted from (Ghillyer, 2010) and (SCHWARTZ & SAIIA, 2012) (Brown & Forster, 2013)). More company also nowadays become more aware of CSR (Bondy, et al., 2012) and sees it as a positive tools (Harjoto & Jo, 2011) As an organization fail like in the case of Midland and Southern Bank people are become more interested in how is an organization going (Johnson, et al., 2009). The interest shift as problem hits, as organization rely on peoples trust to run the organization (Cohen & Dienhart, 2013). This cause the organization to have more moral obligation to the growing network on stakeholders (Polonsky, 1995). Management especially in the case of Midland and Southern banks are being judge by stakeholders morally. As organization obligation re managing stakeholders (Nicholson & Newton, 2010). Approaches that are taken to judge organization are shown in research by Carroll’s (1987) (Carroll, 1991) which will be further discussed below. However, Midland and Sothern bank in the end was acquired by HSBC after it failure (Lee, 2009). It also seems that based on the case government started to create more firm regulation after the issue happen. 2.0 Senior Management Role and Obligation: high salary justified or unjustified? Senior management which includes board of director have important roles in an organization. Directors and senior management roles include overseeing risk, strategy, organization governance and managing stakeholders (Nicholson...
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...shareholder is simply an individual, organization, or company that legally own share(s) of stock in a joint-stock company. By owning shares of stock, a company’s shareholders collectively own the company itself and therefore have the right to vote on decisions that affect how the company is run. This usually means the shareholders as part owners will push for company actions that increase their own financial returns. Definition: A company that uses the shareholder approach to conducting business typically views the impact of business operations on profit. In addition, the length of concern for changes in business operations is usually short-term; such as focusing on meeting quarterly or annual results. Attributes: * Shareholders are primarily concerned with the company’s bottom line. * In a traditional business models, shareholders have the primary influence on the company’s strategy, usually resulting in business model with the foremost objective to increase the company’s stock value. In a shareholder business model, a company only addresses the needs and concerns of four parties: investors, employees, suppliers, and customers; with investors and customers receiving the most attention. Stakeholder approach: To make an analogy, stakeholder and shareholders are like sparkling white wine and champagne. All champagne is sparkling white wine, but not all sparkling white wine is champagne. Similarly, all shareholders are stakeholders, but not all stakeholders are...
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...Management, Control & Accountability for Financial Resources INTRODUCTION The purpose of this paper is to identify the information needs of the internal and external stakeholders in a manufacturing concern and how they can be met. All stakeholders of a firm require different types of information to help them in the decision making process. The top management which comprises of the Chief executive officer and the board of director require information pertaining to the finances of the firm, the key issues of the firm and the performance of the firm to formulate the strategic policies and strategies of the firm. The middle management consisting of the marketing manager, production manager etc will require information to effectively fulfill their job responsibilities and take actions accordingly. The external stakeholders such as the shareholders have invested their hard earned money in the business and would want to be informed about how well the firm is doing and the return that they will be getting for the money that they have invested. The shareholders are usually interested in the financial reports of the firm to see how profitable and liquid the firm is and will it be able to provide dividends to them. Financial reporting is necessary for management, control and accountability purposes. It helps to assess whether the resources of the firm are being utilized in the most efficient manner and the firm is meeting its objective of generating the maximum profit. Information...
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...Composition and review: There was imbalance of independent and non independent directors in the board. Craig Norgate, who was the Chairman of PGG Wrightson failed to promote cooperation and efficiency amongst the board members, and was unsuccessful in trying to maintaining good relationship between the management and the board. The Chairman of NZFSU and PGWW failed to comply with the rules of Corporate Governance that, there should be a mix of balance and skills according to the size and complexity of firms, and in this case study, there were fewer independent directors and the need of them were felt by NZFSU, when the company’s current directors were unable to cope up with the failure of the company The board need to achieve the right mix, and should choose directors who have the required skills and knowledge and can contribute to achieve the goal of the company and provide more benefits to the shareholders. There should be a rigorous process for nomination and selection procedure of a director. The Chairman of Boards of PGG Wrightson and NZFSU, were accused in not disclosing the complete biography and details of the directors who were nominated in the elections for the directors. John Parker and Graeme Wong who were re elected as directors had a strong supporting from the board, even though their past performance as directors was quite poor. The notice of the meeting should mention the details such as qualification and skills of each and every director...
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...between what is right and wrong, and doing the right thing. Social responsibility goes hand-in-hand with ethical decision-making, as social responsibility is the obligation to act in an ethical way. Ethics and social responsibility are required when developing a strategic plan especially when considering the stakeholders. In this paper, the subject will discuss the role of ethics and social responsibility in developing a strategic plan and analyze how my ethical perspective has evolved throughout my MBA program. Stakeholders of a company include those with any interest in the firm such as the shareholders, managers, employees, customers or suppliers. Each has their own duties to be socially responsible. Shareholders responsibility is to make sure there is good return on investment. For managers and employees fair pay and good working conditions constitute social responsibility. And customers deserve fair prices and good quality products. Conflict may occur between shareholders and stakeholders, which is where proper ethical decisions need to be made. Some companies establish ethical committees to ³establish some kind of routine for probing into the general ethical climate of the firm´ (Mintzberg,Ghoshal, Lampel,& Quinn, 2003, p.299). Codes of conduct are also used to establish in what manner to act. Ethics needs to be integrated into a company¶s mission statement, value statement and strategic plans. If the strategic plan describes what the company stands for and what its...
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... The Pyramid of Corporate Social Responsibility: Toward the Moral Management of Organizational Stakeholders, Business Horizons, July-August 1991 For the better part of 30 years now, corporate executives have struggled with the issue of the firm’s responsibility to its society. Early on it was argued by some that the corporation' sole responsibility was to provide a maximum financial return to s shareholders. It became quickly apparent to everyone, however, that this pursuit of financial gain had to rake place within the laws of the land. Though social activist groups and others throughout the 1960s advocated a broader notion of corporate responsibility, it was not until the significant social legislation of the early 1970s that this message became indelibly clear as a result of the creation of the Environmental Protection Agency (EPA), the Equal Employment Opportunity Commission (EEOC). the Occupational Safety and Health Administration (OSHA), and the Consumer Product Safety" Commission (CPSC). These new governmental bodies established that national public policy now officially recognized the environment. employees, and consumers to be significant and legitimate stakeholders of business. From that time on, corporate executives have had to wrestle with how they balance their commitments to the corporation' owners with their s obligations to an ever-broadening group of stakeholders who claim both legal and ethical rights. This article will explore the nature of corporate social...
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...market relies on transparency and honesty. Bankruptcy filings are material information and, as such, investors have a right to know that a company is in distress. On the other hand, filing for bankruptcy protection is intended to help the company get out from under debt and keep operating. Disclosure can work against that process. With the introduction of innovations such as credit default swaps, creditors are less likely to be motivated to work with the company. Furthermore, employees with mobility are likely to begin departing once they know the company’s future is in doubt. Investors have a right to know, while stakeholders have a right to their livelihood. Where do we draw the line (9)?” Corporate Bankruptcy Explained Bankruptcy is a judicial process to provide an individual or a business that no longer can pay its debts with relief from financial obligations. It distributes a debtor’s property equitably among creditors and enables the debtor to start afresh. Federal bankruptcy laws govern how companies go out of business or recover from crippling debt. The most common bankruptcies are Chapter 7 liquidations and Chapter 11 reorganizations. Under Chapter 7, the corporation must stop conducting all operations and goes completely out of business. A court appointed trustee liquidates the company’s assets and the money is used to pay off the debt...
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...name is Margie Lutvey.I am here today to provide recommendations and strategies for your business, Monsanto, through identifying the key problems and issues and provide you with a stakeholder management strategy that I find would be most effective for you and your organization. I will mainly be discussing the ethical dilemmas of sustainability faced by your company and the potential impacts its can have on you stakeholders. Stakeholders are any group or individual who can affect or is affected by a firms objectives. Firms and organisations are better able to achieve their strategic objectives if they engage with their stakeholders. With engaging with stakeholders it is also a building block for better decision-making and minimizing negative impacts on third parties and doing the right thing. Stakeholders don’t have to be equity shareholders. They can also be your employees, communities, pretty much anyone who has a stake in your company’s success and incentive for your products to succeed. They can be business partners, who rely on your success to keep the supply chain going. Therefore it is important to engage stakeholders in business activity as they have the power to hold a viable “stake” in your company. It is important to engage with stakeholders to keep a good relationship with them. Stakeholders can have a negative and or a positive effect on the organization. A positive attitude makes it easier for the organization such as Monsanto to create potential sponsors, where as...
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...STAKEHOLDER ANALYSIS UNIVERSITY July 14, 2014 Stakeholders are a powerful force in business from both an economic and societal point of view. “Stakeholder theory is a theory of organizational management and ethics.” (Phillips, 2003) Stakeholders are the individuals, groups, and organizations who can affect the firm’s vision and mission, are affected by the strategic outcomes achieved, and have enforceable claims on the firm’s performance.” (Hitt, Page 19) “Stakeholders can include employees, customers, owners/investor groups, suppliers, unions, professional /industry associations, government, community neighbors, NGOs, educational institutions, neighbors, the media and so on.” (Fowler, 2014) Managing for stakeholders involves attention to more than simply maximizing shareholders. It is not an excuse for managerial opportunism. Stakeholder Theory does not require changes to current laws; it is not a theory of socialism; it is not a comprehensive moral doctrine; and it is not applicable only to corporations. (Phillips, Page 484) An organization in return have a dependency relationship with its stakeholders. The more critical and valued a stakeholder’s participation, the greater a firm’s dependency becomes. They continue to support an organization when the firm’s meets or exceeds their expectations. Both, the organization and the stakeholders have responsibilities towards each other in their own interest. “It is important to gain feedback from a variety of stake holders. This...
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...decision-making process within the given scenario. First of all, the stakeholders in this situation need to be defined before examining the issues. Next, the examination of the ethical issues involved within the context of the given scenario needs to be looked at. Finally, an analysis of what ethical actions I would have taken if I was Wayne Terrago under the circumstances given in this scenario will be explored. To begin with, the stakeholders in this situation need to be defined before examining the issues. After careful assessment of the situation, I will lay out a step by step reasoning behind who I believe are the main stakeholders in this ethical dilemma. The most obvious stakeholders in this given situation are the President of Robbins Industries, the Vice President of Finance of Robbins Industries, and Mr. Wayne Terrago, the Controller of Robbins Industries because they are the individuals responsible for making the decisions in this situation and are the main decision makers responsible for financial and accounting decisions at Robbins Industries. The shareholders and the employees of Robbins Industries will be the stakeholders who will be most affected by the decision that will be made by the three decision makers because in most cases of accounting fraud by a company, the losers in the situation more often than not are the shareholders and the employees of that company, and in this case, the employees and shareholders of Robbins Industries. The investment bank who will be...
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