ial Exercise 135) Answer All the actions and events involving different people are based on the strong ethical considerations that promote the welfare of the people. In the field of business, the controversies regarding the moral responsibilities and ethical considerations are the inherent challenges that must be understood in the wider perspectives primarily because they are accountable to their various stakeholders like partners, customers, employees etc. a) Relationship between financial and ethical measures The researches have that the companies who have well defined code of ethics have achieved better financial outcome vis-à-vis various financial measures like MVA1, EVA2, P/E RATIO3 and ROCE4.
The code of ethics inculcates confidence and trust amongst the various stakeholders and provides more stability and greater financial return. Thus, long term sustainability of improved performance should serve as incentive for ethical business practices for Arctic Fox. b) Stakeholder theories and concepts The various stakeholders of the company are intrinsic part of an organization. Ethically correct practices encourage dissemination of correct information to the public and other stakeholders and promote confidence building. Within the organizations, collective decision making and shared goals greatly facilitate mutual trust and motivation for improved performance.
As ethical business practice positively impacts the performance outcome of the organization, Arctic Fox must ensure that it follows strict code of ethics. c) The concepts of good and bad and the implications. The general ethics form the basis of mutual interaction amongst the people in a society. Though some of these values evolve to embrace the changing times and others may interpret it differently under different situation but the universal acceptance of what is right and what is wrong has given them a strong foothold to withstand the adversities of the time.
The good business practices significantly impact long term sustainability of the organizational performance and Arctic Fox’s ethical decisions need to be evaluated from a multifaceted approach to issues and actions that are focused on the wider interests of the people. Tutorial 2 (Exercise 139) Answer a) What mechanisms in the governance chain should (or could) have prevented what happened at Enron? Enron’s case study shows that the lack of necessary control mechanisms, not only corrodes the trust of the investors but they have long term repercussion on their market credibility and performance outcome.
Internal control is another key factor that has the power to put the stakeholders’ interests at risk. Effective mechanisms of internal controls of the company could have prevented what happened at Enron. Internal controls are intrinsic part of strategic management which streamlines various operational, productive and administrative processes that are designed to produce improved productive performance leading to better financial outcome. b) What changes in corporate governance are required to prevent similar occurrences? In the fast changing environment of globalization, business compulsions have become more stringent in their nature and factors like accountability, responsibility and reliability have become important pre-requisites for business to create a credible environment for their trade and investment.
The transparency in the Corporate Governance would create effective control measurements that would safeguard the interest of all its stakeholders, investors and business partners. In the fast changing environment of globalization, business compulsions have become more stringent in their nature and factors like accountability, responsibility and reliability have become important pre-requisites for business to create a credible environment for their trade and investment.
Tutorial 21 (Exercise 140/ 134) Answer a) The preparation planning and intelligence gathering that must take place prior to commencing negotiation. In the highly competitive environment of global business, change has become intrinsic part of business strategy. In the recessive trends, it becomes all the more to develop more dynamic strategies that would help meet the challenges of time. Greylag Engineering also needs to evolve and incorporate changes to meet the challenges of the contemporary business environment. Thus, the need for downsizing the workforce and restructuring of the organization has necessitated negotiations with the labor union.
Negotiations are broadly defined as dialogues between two business partners/ union to resolve differences in opinion and perspectives regarding various issues, vis-à-vis financial outcome, HR, terms and conditions, scope etc. so that each comes out to be the winner. Effective negotiations improve and improvise mutual interests for optimal advantage between business partners, thus promoting confidence and mutual respect. Therefore, it requires intensive planning and intelligence gathering to gain leverage during negotiations with the labor union.
The organization must be prepared with contingency plans for the workers who may become redundant. It is also important that the management must ensure proper dissemination of information and take its workforce in confidence during the change. The proactive participation greatly facilitates the change. The intelligence gathering helps the management to understand and predict the working style of the other party, namely labor union or the workers. Evaluating the pros and cons of the developing situations and understanding the behavioral pattern of the union leadership would greatly facilitate the management in the negotiation process and gain leverage in the outcome.
b) Ethical considerations and the behavior of negotiators. The negotiating skills are important part of negotiators. The negotiators must be able to communicate effectively and therefore must exude positive attitude and ethical consideration in their negotiation and agenda framing. The managerial leadership that encourages mutual understanding, empowerment and trust significantly impacts the negotiation outcome. While implementing the changes within the organization, especially during downsizing of staff, efforts must be made that it is accompanied by appropriate measures that benefit the staff.
The ethical considerations of the management must also ensure alternate employment opportunities or options so that retrenched employees are able to earn a respectable livelihood. This step would not only promote a healthy respect for their employers but also inculcate self confidence and motivation for the remaining employees to improve their performance. c) Actions that may be taken when discussions become stalled. When the discussions become stalled, efforts must be made to avert panic situation and aggressive behavior. Conflicts are part of negotiation process and conflict resolution needs to be taken up with understanding the issues with wider implications.
Open communication must be used to solve differences and establish strong interpersonal relationship. Thus, the best way to tackle conflicts is to provide a neutral platform to the involved parties and thrash out the differences with a mediator with clear intention of solving it. (1054)