Assignment 1: Business Ethics & Corporate Governance (EIB20103)
BUSINESS
ETHICS & CORPORATE GOVERNANCE
(EIB20103)
ASSIGNMENT
1
PREPARED
FOR:
PROFESSOR SR DATO’ DR KAMARUDIN MOHD NOR
PREPARED
BY:
NURBALQIS BINTI MOHD NASIR (62289113089)
BBA (HONS) ISLAMIC FINANCE
BBA (HONS) ISLAMIC FINANCE
1) Definition
of ‘Business Ethics’ and why business ethics is considered ‘Oxymoron’?
According
to Dicksee, "Business refers to a form of activity conducted with an
objective of earning profits for the benefit of those on whose behalf the
activity is conducted." This is means a business is a form of economic activity which have a transaction
between the seller and buyer with an objective of gain a profit. The activity
will involves an offer made by the seller and another party is buyer will
accepts the offer. So, both of the parties will get benefits with the contract
made. For ethics is defined on human
behavior of right and wrong, good and bad and proper and improper of human
action example in terms of fairness, honesty, murder, slander, and other. Ethics
is about morally correct behavior in human action in order to behave with
another person that will create a good relationship.
According
to Andrew Crane, “business ethics is
the study of business situations, activities, and decisions where issues of
right and wrong are addresses”. It show that all business have to concentrates
on their moral standard in order to apply in their business policies,
institutions and behavior. Having a good business ethics can bring a successful
to the business that should be applied by the junior employees until to the
management staff. It is important which they did not only concentrate for their
profit but also for their ethical in order to build a good relationship and
loyalty among their customers and clients. So, the business can increase their
lifetime for a long term because of honesty, loyalty and co-operation made by
the business to others.
Business
ethics, it has been claimed, is an oxymoron
(Collins 1994). By an oxymoron, we mean the bringing together of two apparently
contradictory concepts, such as in ‘a cheerful pessimist’ or ‘a deafening
silence’. This is means the mix of business and ethics which is without ethics
the business could not function in a good condition because the behavior
requires a great deal of trust and integrity. For example if the business require
unethical business behavior the business operation might throw away their bad
chemical on the river which might pollution the environment and might lied to
their customer regarding their product and services was an unethical way in the
business. Therefore business ethical is important in every business activity
because it provide honesty, trustworthiness and co-operation between each
others. So, business activity are impossible if the business always lied to
their customers, buyers and seller are never trusted with each other and
employees also refused to help each other. This might make the business meet to
the bad earning goal.
It
is important for the business to
apply ethics in their business that will provide excellent service and retain
customers. For example like KFC Company which has uncountable employees working
for them are a representative to the company customers. All of the employees
have to prepare foods and provide a good service for their customer everyday is
an ethical practice in order to being a professional staff. When the employees
being professional so, they can satisfy the company customer and make the
customers to keep purchasing KFC Company products and this situation will make
the company can retain their customers. Ethics also is important in business in
order to produce safe and effective products. For example like Toys “R” Us
Company which produce toys that most focuses on children. It is important for
the company to adopt policies and standard operating procedures manner that the
business manufacturing product should be conduct. They have to follow the
policies in order to meet the highest safety standards for manufacturing toys
for children which can avoid children from dangerous when playing their
products. So that, the company can produce safe and effective product for their
customers.
There
are many benefits of ethical
business which is increasingly in commitment among the employees. This is
because the employees realize that their future is based on the growth of the
business. So that they will strive to help the business grows which will give
benefits for them and make the employees to taking care of the businesses.
Other than that, ethical business will improve trust of customers in company
products and services. Like Toys “R” Us Company provide a safety product for
their customer based on their policies and standard operating procedures manner
which is the company need to follow because it was the company ethical to
produce safety product. When the company adopts the policies will make their
customer trust with their quality of product they offer. Ethical business also
will promote the organization in a strong public image. For example like Mydin Mohamed Holdings Bhd.
Company which is a Malaysian chain of hypermarket have a good public image via
their customers. This is because the way their threat their employees and the
way their treat the communities is part of their overall behavior which give a
good public image. While the Wal-Mart Company has a terrible public image even
they produce product in good quality and extremely low price but they still
have a negative public image. This shows that business ethics play a large role
in the organization in order to determining public image since they determine
behavior.
2) Definition
of ‘Corporate Governance’?
The
definition of corporate governance
is ‘the process and structure used to direct and manage the business and
affairs of the company towards enhancing business prosperity and corporate
accountability with the ultimate objective of realizing long-term shareholder
value whilst taking into account the interest of other stakeholders’. (Lee,
2003: 41) From my understanding this shows that corporate governance is the
combination of process and structure by which business and affairs of corporate
sector is being inform, direct, manage and monitor all the organization
activities in order to achieve the organization objectives. The corporate
governance is conducted by the board of Directors and the concerned individual
committees for the company stakeholder’s benefits. It makes a various
interaction between the shareholders, board of directors and the company
management in order to shaping the corporate performance. For example like Nestle Company, which they
have their own organization structure which contain of the directors, head of department
and staff that in charge to handle the management of the company in order to
make the company to run smoothly and to achieve the organization objectives.
Other
than that the corporate governance is beyond the law and it is related with the
Corporate Social Responsibility (CSR) which
will enhance the company image and give benefits to the communities. For example
like Avon Company that apply CSR in their company by protecting the environment
like produce Avon paper promise and hello green tomorrow which they can reduce
on using plastic. From the CSR implementation will provide brand awareness
towards their customer. All the customer that care about the environment will
keep supporting the company and will keep purchasing the product.
There
are three objectives of corporate
governance which firstly is to build up
an element of trust and confident. This is important in order to keep
maintaining their stakeholder’s. For example like food company in Malaysia, as
everyone know Malaysia is an Islamic country, so that all food company need to
produce legal and ‘halal’ food. The company needs to have HALAL certificate from
JAKIM, so that all customer will feel confident with the product and trust
towards the company product. Secondly is to
enhance stakeholders’ value by have a strong corporate governance structure
because it sees that have a higher valuation to their shares. So if the company
has well corporate governance will attract shareholders to invest in the
company. Lastly is to enhance corporate
performance and accountability. By improving the corporate performance and accountability
will maximizing the long-term value of the company itself especially for their
stakeholders and all of their partners.
References
What
is Business? Meaning Definitions Features of Business. (n. d.). Retrieved
January 27th, 2013, from http://kalyan-city.blogspot.com/2011/03/what-is-business-meaning-definitions.html
What
are Business Ethics? Meaning Definition Features. (n. d.). Retrieved January 27th,
2013, from http://kalyan-city.blogspot.com/2011/09/what-are-business-ethics-meaning.html
Part
A: Understanding Business Ethics. (n. d.). Retrieved January 28th 2013,
from http://www.oup.com/uk/orc/bin/9780199564330/craneandmatten3e_ch01.pdf
Nor
Azizah Zainal Abidin and Halimah @ Nasibah Ahmad (2007). “Corporate Governance
in Malaysia: The Effect of Corporate Reforms and State Business Relation in
Malaysia” http://web.usm.my/aamj/12.1.2007/AAMJ%2012-1-2.pdf
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