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Corporate Business Management

Introduction:

Ethics can be defined as a type of art that look at principles and rules, problems, special duties or obligations that apply to people in commercial businesses setting. Business ethics involves the principles and ethical rules that govern people within an organisation. Business ethics are also moral set of laws and actions applied in business activities and generally refer to the conduct of businessmen and organisations in the course of their business dealings.

Business activities have become increasingly global in some way because of the need to gather and increase the company’s financial bases. Advancement in technology including communication efficiency and better international relations through the concept of international marketing- has contributed to the promotion of the international trade. Competition has however become a great challenge to the success of global business management but most companies are rising to the challenge. These reasons and others have caused organisational managers to focus their attention on the issue of business ethics when they are undertaking their business activities.[1]

Causes of increased focus on business ethics:

The general conduct of organisations and businessmen has increased the focus on their ethical behaviour in the modern business. There are many causes as to why there has been an increased focus on the ethical behaviour of business in contemporary society and this includes; the universal business ethics; whereby the priority is given to the primary objectives of the business. For example most organisations main focus has been to make profits, through maximizing shareholders returns.

Most organisations have centred much on the profits without caring the plight of the customers, their shareholders and even assuming some government policies. This has resulted to intervention by relevant government bodies to ensure that fair and justice is observed by businesses in the course of their business undertakings.

Businesses are also expected to meet their corporate social responsibilities in the course of their businesses, for example, companies should be responsive by controlling pollution in order to protect the surrounding community from its effect. Organisations should also be social reactive that is; they should always meet the needs of their customers and avoid exploiting them.

There are also ethical concerns between different companies, for example unfair competition has dominated the course businesses dealings as well the abuse of corporate ethics policies in business marketing activities have been witnessed, such issues has raised concern as to how ethical behaviour and fairness should be achieved in the market place.[2]

The issue of professional ethics has also increased the focus on the ethical behaviour of businesses. The organisational; functions or departments through various qualified employees have been producing substandard results because of their reluctance to perform their work to the best.  Another ethical behaviour of concern in business has been the ethics of accounting professions.

This takes the aspects of false financial information, fraud, overpayments to senior managers and the executive officers, and corruption in form of bribery among others. There has been a growing concern of accounting malpractices that have hindered the success of businesses, for example, accountants may manipulate financial transactions for their own benefits or to fit what their senior managers are demanding which may lead to inefficiency in business and may also cause extensive damage to the shareholders.

Another ethical issue of concern relates to ethics and the human resource management which entails employee and employer ethical behaviours in the workplace. This may take the form of discrimination in the workplace which manifests itself in the form of age, gender, race, and religion among other factors. The formation of trade unions by the employees in order to present their grievances also takes a centre stage in ethical issues relating to HRM function. Employees would like to be heard, respected, and be involved in decision system of the organisation of which many managers always ignore the contributions of employees in regard to decision making thus causing unnecessary conflicts which may results to go-slows and strikes. [3]

Also balance of control, reviewing of contracts and privacy in the workplace has increased over the past, for example whistle-blowers in the organisation would always wish to be protected by the employer in an organisation. These issues have hindered the effectiveness and efficiency of the employees in performing their duties and thus more has to be done in terms of how the employer and the employee should conduct themselves in the workplace.  Another cause of increased focus on ethical behaviour is that of sales and marketing.

Due to globalization, marketing activities have changed because of new technologies being introduced in the market. Organisations strive to increase their sales as well as maintaining and attracting new customers, but strategies employed to regain market share such as advertising has been questioned for example there has been  advertising which have had negative impacts on the customers that include; exaggeration of prices, sale of harmful products, adverts of sex which affects the youth among others.

There is also production ethical issue whereby organisations have the responsibility to produce products that do not cause adverse effects to the consumers. The use of modern technologies in production especially in production of food products such as genetically modified food has been questioned and there have been ethical concerns on the effects caused to the environment as well as to the consumers. The continued increase in sale and production of defective, addictive and dangerous products such as tobacco has elicited ethical concerns that need to be address.

Environmental hazards associated to pollution from manufacturing processes have also raised concerns on some commercial activities undertaken. The aspect of international marketing has also raised concern relating to ethical issues in dealing with international business management. For organisations to succeed globally they must be conversant with the rues and regulations of the target market in order to avoid trade conflicts that can arise in the course of there business. [4]

Reasons behind the Collapse of Enron Corporation:

There has been debate as to why Enron collapsed because of moral or governance reasons. Enron Corporation collapsed in the year 2001 because of improper management and poor control of its activities due to extremely decentralized financial systems decision making systems. However, we cannot fully blame governance through ineffective management as a result to the collapse but ethical issues within the corporation also contributed to the failure of this organisation.  The business management of Enron had no clear corporate structure, experienced unaccountability, and lack of transparency was the norm of doing things in the corporation which resulted to the company being declared bankrupt.[5]

The major contributor to downfall of Enron was the unethical issue of not fully disclosing their financial information at the end of each their fiscal period, for example, the management of Enron through their accountants could not reveal the losses that the corporation was experiencing in some periods. This was a moral issue which if it could have been considered the corporation could still be successful in their business undertakings.

There was also an issue of corporation generating profits from some unknown particular business bodies including some partnerships which the corporation used to direct them. The quality of operations management function and Enron’s corporate culture adopted contributed immensely to the failure of the corporation. This is because the department of operations management failed in coming up with sound moral standards, did not maintain honesty, lack of proficiency and practiced unaccountability in its business activities.

The management of the corporation also failed in carrying out its responsibilities of supervising the activities being done. In fact the supervision managers were blamed to have killed the atmosphere of working by creating an environment full of corporate superiority. According to internal sources within the corporation that time, the management had developed a bad internal corporate culture which contributed to the collapse of Enron. For example, The Performance Review Committee did not perform there expected responsibilities competently but instead came up with the worst ranking system of employees which was widely believed to be the harshest system ever heard of.

There was an urge by the employees of Enron to attain apex ranking and to continue staying in the corporation which prompted them to engage in dealings and post income through unscrupulous deals within the organisation. There was division by the Enron management for several years which in turn led to substitution of fifteen percent of workers of the corporation and thus it also led to emergence of stiff competition that resulted to shortcomings in the corporation’s overall objectives.[6]

Enron’s dealings through contracts methods were immeasurably influenced by discretion that existed among the employees which gave rise to secrecy as a general rule of the corporation. This led to undertaking business deals without considering the corporation’s strategic objectives or taking into account organisational risk operation policies. This phenomenon was seriously witnessed in Enron finance department where the accountants had adopted a policy of engaging in business dealings without approval of the management and they were never held accountable for their unethical conduct.

We can therefore deduce that, the finance department was not the only department that was responsible for the Enron bankruptcy but there were many reasons that led to the collapse of Enron Corporation that included poor governance and incompetence of operations and performance management which were the main reasons that caused the downfall.[7]

The entire management of Enron failed in its responsibilities of; building a strong corporation’s moral values, building a system with integrity, coming up with a well build attitude of organisation practice, and enhancing answerability among its staff and especially the accountants. Poor corporate policies which were used in formulation and communication in the system were said to be wanting and did not match with the principles of the corporation.

Stringent and unkind chain of command and poor performance system of evaluation tainted the unique principles and moral foundation of the corporation which was based on respect, integrity, communication and brilliance, and instead centred their attention on making abnormal profits. In brief Enron corporate policy was viewed to be ambiguous and wanting and the business dealing model of Enron choice did not sustain itself which hampered the source of revenue and thus the collapse.

 CSR Policy of Barclays Bank:

Corporate Social Responsibility in Barclays Bank is regarded as the main force driving the organisation’s activities. This bank has adopted the utilitarianism theory in that it considers everything that is beneficial to the customers, employees, and the whole society to be of prime importance. Under Barclays, CSR policy is always assessed on the social responsiveness and social reaction by those that are affected by any dealings of Barclays bank. Indeed the bank instigated recently the bank’s brand reputation committee that will handle the issue of corporate responsibility.

The policy has been directed at making all the stakeholders of the bank to be aware of all the information that they need to know which enhances clearness on its business activities. Barclays’ Bank has also been in the fore front in coming up with environmental management systems that ensures that the society live in a free environment which is conducive for growth and development. For example, the bank has been engaged in clean up activities that deal with ensuring an environment through organizing various groups in collection of litter along the streets and planting of flowers that keep the environment beautiful and attractive.

Barclays Bank also has been considering the subject of age prejudice and diversity among its employees. For example, they have implemented policies that incorporates those with sixty years and beyond in its labour force. There has also been an issue of gender inequality whereby Barclays has responded by employing women in senior management levels. Also due to globalization, Barclays Bank has formulated health and safety policies in Sub-Saharan Africa that helps to curb the deadly menace of AIDS/HIV disease.

The bank has been responsible for educating the various citizens and creating awareness that the disease exists and it’s a dangerous one. They have gone up to the point of providing antiretroviral drugs to their staff and also provide drugs for three dependants of the employee.

However, Barclays Bank has not ethically complied with corporate social responsibility; this is evidenced by the questionable reporting procedures of their financial statements. Even though the bank was among the FORGE Group of financial organisations that designed standards for managing corporate responsibility, the bank has gone against the policies by reporting without honesty in it. This has been considered to be unethical business wise.[9]

Barclays has also been active on the issue of human rights especially in its branches in Kenya, Egypt, Columbia, and Zimbabwe where the issues relating to violation of human rights are commonly experienced. The bank has managed to come up with a latest human right policy which complies with UN and International Labour Organisation (ILO). They have provided funding for activities that practically are against fundamental human rights. The bank has done this through the provisions of its arms policy which approves funding for such human rights activities.

In relation to a suit filed in the US in the year 2002, Barclays also played a role in the support of apartheid rule in South Africa; the bank did these through providing funds to those who was advocating the system. Many has been questioning the responsibility of such a bank with reputable name of all over the world and the reasons behind its funding, an issue which was against the ethical contact of modern world. The bank is also heavily criticized with going against the policies for Organisation for Economic Corporation and Development; this was evidenced in Congo where the bank violated the policies when it was opening its branches.

However, in the year 2003, the bank was cleared from any wrong doing in relation to the apartheid rule and the breach of the policies in Congo, an outcome which many questioned how the decision was reached and term it to be unethical. For a company to succeed in its corporate social responsibility it is good to consider the effects of making the decision. For example, what are the harmful effects? Managers should consider how they can avoid such effects. For decision making to be ethical, it has to be fair. This is in relation to everyone that is affected by it. So we can say that Barclays Bank has performed fairly in corporate responsibility even though it has stumbled on the way.[10]

Conclusion:

Business ethics, management and Corporate Social Responsibility are interrelated and intertwined in such a way that it makes it difficult to know which factor is guiding or motivating certain reactions arising from a given situation within a business setting. All these theories centred on the ability of someone to choose what to think, say or do at the organisation and how this process will affect an individual or the organisations performance should be considered in order to attain business objectives.

References

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Bryce. R (2002)- Pipe Dreams. Greed, Ego, and the Death of Enron. Public Affairs

Cullen, J.B & Parboteeah, K. (2005). Multinational management: A strategic approach, third ed., Mason; Thomson South-Western

De George, Richard T. (1995): Corporate business management: Competing with Integrity in International Business. New York: Oxford University Press

Friedman, M.(1970)- The Social Responsibility of Business is to Increase Its Profit. The New York Times Magazine,

Hill C. (2005). Global Business Today, 4th Ed. New York: McGraw/Irwin

Hilltop, J. (1994): European Human Resource Management in Transition: Prentice Hall, New York.

John, .R (2000). Ethics and the conduct of business, third ed., New Jersey: Prentice.

Knight, Frank (1935/1980). The Ethics of Competition and Other Essays. Univ. of Chicago Press

Maundy, L. (2001): An Introduction to Human to Human Resource Management: Theory

And Practice: Macmillan, Palgrave.

Rampton, L. (2003): Human Resource Management. Melbourne press, New York.

Swatz. M and Watkins. S (2003)- Power Failure. The Inside Story of the Collapse of Enron Doubleday

United Nations (2001); Global impact: corporate leadership in the world economy. United Nations office, New York.

[1] John, .R (2000). Ethics and the conduct of business, third ed., New Jersey: Prentice

[2] Knight, Frank  (1935/1980). The Ethics of Competition and Other Essays. Univ. of Chicago Press

[3] De George, Richard T. (1995): Corporate business management: Competing with Integrity in International Business. New York: Oxford University Press

[4] Hilltop, J. (1994): European Human Resource Management in Transition: Prentice Hall, New York.

[5] Bryce. R (2002)- Pipe Dreams. Greed, Ego, and the Death of Enron. Public Affairs

[6] United Nations (2001); Global impact: corporate leadership in the world economy. United Nations office, New York.

[7] Swatz. M and Watkins. S (2003)- Power Failure. The Inside Story of the Collapse of Enron Doubleday

[8] United Nations (2001); Global impact: corporate leadership in the world economy. United Nations office, New York.

[9] Friedman, M.(1970)- The Social Responsibility of Business is to Increase Its Profit. The New York Times Magazine,

[10] Hill C. (2005). Global Business Today, 4th Ed. New York: McGraw/Irwin

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