Unit V Major Corporate Failures for Corporate Governance Ethics and Social Responsibility of Business Mcom sem 4 Delhi University

Unit V Major Corporate Failures for Corporate Governance Ethics and Social Responsibility of Business MCOM sem 4 Delhi University:- we will provide complete details of Unit V Major Corporate Failures for Corporate Governance Ethics and Social Responsibility of Business MCOM sem 4 Delhi University in this article.

Unit V Major Corporate Failures for Corporate Governance Ethics and Social Responsibility of Business Mcom sem 4 Delhi University

Thus Business Ethics is a form of applied ethics that examines ethical rules and principles within a commercial context; the various moral or ethical problems that can arise in a business setting; and any special duties or obligations that apply to persons who are engaged in commerce. The subject of business ethics is thus a normative discipline, whereby particular ethical standards are advocated and then applied. It makes specific judgements about what is right or wrong, which is to say, it makes claims about what ought to be done or what ought not to be done. Hence business ethics is usually less concerned with the philosophical foundations of ethics or with justifying the most basic ethical principles but are more concerned with practical problems and applications, and any specific duties that might apply to business relationships.

Business ethics covers the widest swathe of issues, principles, stakeholders and the realm of politics, government and policy-making too. For instance, business ethics grapples with everything from whether to try to influence politicians and the government with bribes to arrange for favourable policies (like tax rates, licensing etc) to whether to allow homosexuals to work in the company or letting women work in unsafe night shifts to whether to give regular reports to the media on what the company’s confidential plans are to exiting business processes that may be causing environmental pollution even if the alternatives are costly or not strictly required by law etc.

Understanding the landscape of business ethics can be problematic. The field is vast, often encompassing such concerns as corporate governance, reputation management, accurate accounting and audits, fair labor practices and environmental stewardship to name but a few. In fact, the field addresses the entire scope of responsibilities — or obligations — that a company has to each of its stakeholders: those who have a vested interest – or stake – in the decisions and actions of a company, like clients, employees, shareholders, suppliers and the community. Depending upon the company in question, one may even be able to identify additional stakeholders.

Unit V Major Corporate Failures for Corporate Governance Ethics and Social Responsibility of Business Mcom sem 4 Delhi University:-The International Business Ethics Institute comments

‘The field of business ethics is further complicated by the fact that many terms exist to refer to corporate offices and programs intended to communicate, monitor, and enforce a company’s values and standards. In theory, one can make some rough distinctions among the various domains related to business ethics, e.g., corporate responsibility, social responsibility, corporate compliance, etc. In practice, however, such distinctions blur because corporate offices of compliance established in the 1970s may now function similarly to an office of corporate and social responsibility.’

Before pondering or thinking about the business ethics that a business will follow, almost always the first step is identifying the stakeholders of the company.

A company’s stakeholders are all those who are influenced by, or can influence, a company’s decisions and actions and can include (but are not limited to): employees, customers, suppliers, community organizations, subsidiaries and affiliates, joint venture partners, local neighborhoods, investors, and shareholders (or a sole owner).

After the stakeholders are identified the issues that a business will grapple with generally can be classified under the categories: general business ethics, professional ethical issues and international business ethics and the ethics of economic systems.

Unit V Major Corporate Failures for Corporate Governance Ethics and Social Responsibility of Business Mcom sem 4 Delhi University:-General business ethics would cover the following

1. Determining the fundamental purpose of the organisation or the philosophy of business. If a company’s main purpose is to maximize the returns to its shareholders, then it could be seen as unethical for a company to consider the interests and rights of anyone else as far as that company and it’s owners are concerned. Or the company may decide the fundamental purpose is more than making money for he owners.

2. What Corporate Social Responsibility (CSR), which is an umbrella term under which the ethical rights and duties existing between companies and society is debated, will be followed. Of course firstly the company will have to decide if it at all feels it has a social respnsibility or duty or not. CSR can be understood in terms of over-all corporate responsibility, but with greater stress laid upon the obligations a company has to the community, particularly with respect to charitable activities and environmental stewardship for instance. CSR can also be described as being a tacit contract between business and a community, whereby the community permits the business to operate within its jurisdiction to obtain jobs for residents and revenue through taxation. Additionally, the community expects the business to preserve the environment and to make the community a better place to live and to work through charitable activities and investments and financial initiatives.

3. Issues regarding the moral rights and duties between a company and its shareholders. For instance what fiduciary responsibility the company has towards them, and issues relating to the shareholder concept in it’s relation or conflict with the stakeholder concept.

4. Ethical issues concerning relations between different companies: e.g. hostile take-overs, industrial espionage etc.

5. Corporate governance issues. Corporate Governance refers to the set of processes, customs, policies, laws and institutions affecting the way a corporation is directed, administered or controlled. Corporate governance also includes the relationships among the many players involved (the stakeholders) and the goals for which the corporation is governed. The principal players are the shareholders, management and the board of directors. Other stakeholders include employees, suppliers, customers, banks and other lenders, regulators, the environment and the community at large.

6. Political contributions and relationships that will be maintained and pursued.

7. The position that the organisation will take on legal reform.

8. Issues relating to the misuse of corporate ethics policies as marketing instruments.

Unit V Major Corporate Failures for Corporate Governance Ethics and Social Responsibility of Business Mcom sem 4 Delhi University

Professional ethics covers the myriad of practical ethical problems and phenomena which arise out of specific functional areas of companies or in relation to recognized business professions. For instance, the ethics of finance and accounting, of human resource management, of sales and marketing, of production and of intellectual property, knowledge and skills.

Ethics of finance and accounting woul cover the following sorts of issues:

1. Policies and issues relating to creative accounting, earnings management, misleading financial analysis etc.

2. Issues and polcies on avoiding of insider trading, securities fraud, forex scams and criminal practices generally.
3. In recent years there has been concerns expressed on excessive payments made to corporate CEO’s.
4. Bribery, kickbacks, facilitation payments: while these may be in the (short-term) interests of the company and its shareholders, these practices may be anti-competitive or offend against the values of society.

Unit V Major Corporate Failures for Corporate Governance Ethics and Social Responsibility of Business Mcom sem 4 Delhi University

Ethics of human resource management covers the ethics of human resource management (HRM) and covers those ethical issues arising around the employer-employee relationship, such as the rights and duties owed between employer and employee. Some of the important issues under this category are:

1. Discrimination issues including discrimination on the basis of age (ageism), gender, race, religion, disabilities, weight and attractiveness.
2. Issues surrounding the representation of employees and the democratisation of the workplace: relations with worker unions and policies on strikes.
3. Issues affecting the privacy of the employee: workplace surveillance like email and phone tapping of employees, health tests, drug testing etc.
4. Issues relating to whistle-blowing.
5. Issues relating to the fairness of the employment contract and the balance of power between employer and employee: slavery, indentured servitude, employment law etc.
6. Occupational safety and health.

Ethics of sales and marketing deals with questions like when marketting goes beyond the mere provision of information about (and access to) a product and seeks to manipulate people’s values and behaviour. To some extent society regards this as acceptable, but where should the ethical line to be drawn?. Some of the issues under this sub-category are:

1. Pricing issues like price fixing, price discrimination, price skimming.
2. Anti-competitive practices: these can include but go beyond pricing tactics to cover issues such as manipulation of loyalty and supply chains.
3. Ethical acceptibility and propriety of specific marketing strategies like greenwash, bait and switch, shill, viral marketing, spam (electronic/email), pyramid scheme, planned obsolescence etc.
4. Content of advertisements: attack ads, subliminal messages, sex in advertising etc.
5. Ethical propriety of marketting to Children and marketing in schools.
6. Dealing with black markets and grey markets.

Ethics of production is an area of business ethics that deals with the duties of a company to ensure that products and production processes do not cause harm. Some of the more acute dilemmas in this area arise out of the fact that there is usually a degree of danger in any product or production process and it is difficult to define a degree of permissibility, or the degree of permissibility may depend on the changing state of preventative technologies or changing social perceptions of acceptable risk. Someof the issues grappled with are:

1. Defective, addictive and inherently dangerous products and services.
2. Ethical relations between the company and the environment: pollution, environmental ethics, carbon emissions trading etc
3. Ethical problems arising out of new technologies: genetically modified food, mobile phone radiation and health.
4. Product testing ethics: animal rights and animal testing, use of economically disadvantaged groups (such as students) as test objects.

Ethics of intellectual property, knowledge and skills deals with the fact that these are valuable but not easily “ownable” objects. Nor is it obvious who has the greater rights to an idea: the company who trained the employee or the employee themselves? The country in which the plant grew, or the company whichdiscovered and developed the plant’s medicinal potential? As a result, attempts to assert ownership and ethical disputes over ownership arise and lead to some of the following issues:

1. Patent infringement, copyright infringement, trademark infringement issues.
2. Misuse of the intellectual property systems to stifle competition: patent misuse, copyright misuse, patent troll, submarine patent etc.
3. The notion of intellectual property itself has been criticised on ethical grounds.
4. Employee raiding issues: the practice of attracting or weaning away or do poaching of key employees away from a competitor to take unfair advantage of the knowledge or skills they may possess.
5. The practice of employing all the most talented people in a specific field, regardless of need, in order to prevent any competitors from employing them.
6. Bioprospecting (ethically done) and biopiracy (unethical).
7. Business intelligence and industrial espionage.

Unit V Major Corporate Failures for Corporate Governance Ethics and Social Responsibility of Business Mcom sem 4 Delhi University

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