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

  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 27^th, 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 27^th, 2013, from http://kalyan-city.blogspot.com/2011/09/what-are-business-ethics-meaning.html

Part A: Understanding Business Ethics. (n. d.). Retrieved January 28^th 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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