Effects Of Corporate Governance On CSR

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Effects Of Corporate Governance On CSR

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Effects Of Corporate Governance On CSR

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Questions:
1.Analyse the ethical issues and dilemmas faced by sponsors of global soccer from the utilitarian, rights and justice perspectives.

2.Prepare a Memorandum to the Board in which you discuss all of the issues raised by the Board and your recommendations.

3.Identify and Developehe Sustainable purpose of the Organisation, Stakeholders represent an Important starting point

4.According to Dessler (2011:504) one way of Managing Ethics in a company is through a Corporate Governance framework.

5.Friedman stated that the Sole responsibility of Management is to maximise profits for the owners of a Business.

Answers:

1.The controversy regarding the scandal in the regulatory body of soccer is not only affecting the status of FIFA, but also it is creating ethical issues and dilemmas for the sponsors also. Large brands such as, Coca-cola, Visa and Adidas are facing issues regarding their goodwill and reputation due to the scandal. They are indirectly getting connected with the scandal by sponsoring various football events (Traub 2015). From the perspective of ethical theories such as, utilitarian, justice and rights, sponsors are facing several issues and dilemmas.
Utilitarian theory states that, any actions can be termed as moral or ethical if it serves for the good of the majority (McGee 2014). In this case, the issue faced by the sponsors is that, majority of the football fans are not willing to see Sepp Blatter as the CEO of FIFA. Therefore, the continuation of the sponsorships by the organizations is not serving the majority. Major portion of football fans around the world are asking the sponsors to terminate their sponsorship contracts, which will force FIFA to prevent and investigate the scandal (Pielke 2013). Thus, majority is upset with the sponsors and it is affecting in their goodwill and reputation. Negative impression may be created among the customers for these organizations for supporting unethical behaviors of FIFA.
Sponsors are facing dilemmas in selecting the right side to opt for. On the one hand, they are facing the heat from the world media and social groups for sponsoring events of FIFA and on the other hand, they even cannot think of terminating their contracts with FIFA (Chien, Kelly and Weeks 2016). The last football world cup of 2014 is the highest rated and most viewed sporting event in the world. It shows that, despite the scandal, the popularity of football is on the increasing trend. Thus, sponsors cannot ignore an event which is being the most watched sporting event in the world. This is a serious dilemma they are facing on whether to continue with the sponsorship or terminate the contracts.

In the recent years, FIFA also drew flaks regarding the conditions of the laborers in Qatar for the preparation of 2022 world cup. Human rights violations are being reported with the migrant workers (Gardner et al. 2013). Thus, sponsoring world cup events will create a negative impression about the sponsors. They will be considered as the stakeholders in the violation of human rights. Again, the goodwill and reputation of the organizations will be at stake. However, as discussed earlier, football world cup is the most popular sporting event and ignoring that will be a huge marketing failure for the sponsors. Here also, they are facing dilemmas about sponsoring the world cup events or not.
From the perspective of justice, there are certain issues being faced by the sponsors regarding the compensation and steps taken for the offence. Justice states that, rules and regulations should be strictly adhered and the offender should be prosecuted according to the law (Rawls 2016). In the case of FIFA also, sponsors are facing the issue regarding sponsoring the corrupted institution. Several FIFA officials are being accused and arrested for the scandal. Thus, negative impression is creating for the organizations by sponsoring the events of FIFA. It is being seen as; sponsors are not interested in justice and ethical principles. Hence, they are supporting the institution whose official are being accused for fraud.
Sponsors are having dilemmas in this case also. If they have to terminate their contracts with FIFA, then there are numerous organizations worldwide, which will fill that gap. Thus, the expected pressure to be created on FIFA cannot be accomplished. Thus, it is of no use of them to terminate the sponsorship contracts. Moreover, they required popular events like this to promote their products. Thus, being considered as an unjustified act, organizations still have to continue with their sponsorships (Naidenova, Parshakov and Chmykhov 2016).
2.To: (To be filled by the student)
From: (To be filled by the student)
Date: 22/06/2017
Subject: Modifications in the audit committee
It is being notified that board of directors decided to induct new members in the audit committee. Mr. Fatcat and Ms. Simper will be inducted in the new audit committee. It is also being decided that, all the subsidiaries of Confused Ltd will be audited by them in the initial stage. Later on, based on their effectiveness it will be decided whether separate audit committee is required or not. Independent auditor may be employed in order to reduce the cost (Fiolleau et al. 2013). In the annual financial statement, auditor committee will review the final account of the organization, cash flow statements and meeting the global standards of the accounting principles (Chong 2013).

However, it is being seen that, the nominated members may pose some sort of challenges for the organizations. Mr. Fatcat is the supplier of Confused Ltd. Thus, conflict of interest may happen. Also, Ms. Simper is the wife of managing director. Hence, conflict of interest may happen here also. Thus, it is recommended that, independent auditor should be employed. It will enable the organization to have neutral and unbiased financial report (Chong 2013).
Sincerely
3.Organizations implementing green strategy should need to consider various factors to ensure the effectiveness (Giunipero, Hooker, Denslow 2012). The first factor to be considered is to determine the feasibility of the green strategy to be implemented. Otherwise, it will pose financial challenge to the organization. Issue related to the cost incurred should be considered. Implementing green strategy will cause high initial investment. Productivity level may also take a hit due to the implementation of green strategy. Implementing green strategy may decrease the productivity of the employees. This issue should also be considered.
Stakeholder is anyone from the customers to the directors of the organization who may have interest in the operations of the organization. Stakeholders will have direct or indirect influence in the organizations. In the present business scenario, organizations are being operated according to the interest of the shareholders (Laczniak and Murphy 2012). Relations between the shareholders are inter-related and are dependent on one other.

A cereal manufacturer should have the green strategies to maintain their cultivation of crops. Their main motive will be to maintain the sustainable development of their cultivation process (Giunipero, Hooker, Denslow 2012). It should not be affected by the change in climate. On the other hand, a retail bank should implement the green strategies in order to reduce the use of paper in the organization. They will concentrate more on cash less transaction to reduce paper waste and renewable source of energy.
4.Corporate governance states the rules, policies and the procedures according to which, organizations are driven by the leaders. Organizations are being controlled according to the policies stated in the corporate governance. Roles and responsibility of the directors, shareholders and mangers are being declared in the corporate governance. Hence, the best way to implement ethical principles in the organizations is to state it on the corporate governance (Jo and Harjoto 2012). Ethical principles to be given in the corporate governance will be followed by the all the stakeholders in the organizations. Initiating various programs for sustainability may have short-term implications but in the long-run, ethical policies in the corporate governance will enable the organizations to change the entire organizational framework in order to adhere with the ethical principles.
5.Traditional approach of the organizations was to stick with the basic objectives of the organizations. According to this theory, business organizations should only concentrate on their products or services and gain profit from the customers. This theory states that, the society will only be benefited if the organizations are left alone to do their basic jobs. This will ensure good return for all the stakeholders. Thus, economic interest of the stakeholders should be given top priority over any other social responsibility (Laczniak and Murphy 2012). Followers of this theory argue that, the organizations can earn more profits by concentrating only on the economic goals. Corporate resources should be utilized to achieve the economic objectives rather than the social objectives. According to them, it is the responsibilities of the government to look after the social issues. Thus, indulging in to the social issues will only create more complexities for the organizations.

However, contemporary business organizations are initiating a modern approach compared to the previous one. According to this approach, organizations also have social responsibility other than their economic objectives. This theory states that, the social impact of the organizations is as important as the economic objectives of them (Jo and Harjoto 2012). According to this theory, it is the responsibility of the organizations to give back to the society from where they are sourcing resources and gaining profits. Social benefits will enable the organizations to operate in a more optimized environment which will eventually helps the organizations in gaining their revenue and meeting the economic objectives (Laczniak and Murphy 2012). The advantages of this theory are, gaining of reputation and goodwill among the customers, long-term profitability and social benefits with the help of sustainable developments.

References
Chien, P.M., Kelly, S.J. and Weeks, C.S., 2016. Sport scandal and sponsorship decisions: Team identification matters. Journal of Sport Management, 30(5), pp.490-505.
Chong, G., 2013. Detecting Fraud: What Are Auditors’ Responsibilities?. The Journal of Corporate Accounting & Finance, 24(2), pp.47-53.
Fiolleau, K., Hoang, K., Jamal, K. and Sunder, S., 2013. How do regulatory reforms to enhance auditor independence work in practice?. Contemporary Accounting Research, 30(3), pp.864-890.
Gardner, A., Pessoa, S., Diop, A., Al-Ghanim, K., Le Trung, K. and Harkness, L., 2013. A portrait of low-income migrants in contemporary Qatar. Journal of Arabian Studies, 3(1), pp.1-17.
Giunipero, L.C., Hooker, R.E. and Denslow, D., 2012. Purchasing and supply management sustainability: Drivers and barriers. Journal of Purchasing and Supply Management, 18(4), pp.258-269.
Jo, H. and Harjoto, M.A., 2012. The causal effect of corporate governance on corporate social responsibility. Journal of business ethics, 106(1), pp.53-72.
Laczniak, G.R. and Murphy, P.E., 2012. Stakeholder theory and marketing: Moving from a firm-centric to a societal perspective. Journal of Public Policy & Marketing, 31(2), pp.284-292.
McGee, R.W., 2014. Trade. John Wiley & Sons, Ltd.
Naidenova, I., Parshakov, P. and Chmykhov, A., 2016. Does football sponsorship improve company performance?. European Sport Management Quarterly, 16(2), pp.129-147.
Pielke, R., 2013. How can FIFA be held accountable?. Sport management review, 16(3), pp.255-267.
Rawls, J., 2016. 18. A Theory of Justice.
Traub, T., 2015. FIFA scandal fuelled by corporate riches, political manoeuvres. Green Left Weekly, (1056), p.21.

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