Vodafone Companys Signature Strength - Case Study Example

VODAFONE COMPANY Students’ Name Code & Course Professors Name University City Date Vodafone Company Introduction Corporate governance has created divergent principles governing the operations of organizations. In this regard, corporate governance refers to the system by which an organization is directed and controlled where its outlines the specific distribution of responsibilities between managers and shareholders. In the wider spectrum, it integrates the relationships between stakeholders, bother external (customers) and internal (employees). Simply put, corporate governance is the design of organizations that enforce management which internalizes the stakeholder’s welfare in relation to proper ethical conduct. The various subjects of corporate governance, this paper confront, presents specific attributes that contribute to its significance in the contemporary business environment. It addresses the attributes of corporative governance in relation to professional ethical conduct. Literature Review Agency Approach The corporate governance, which suggests that the best practices that, might enhance good relationship between the company and the stakeholders in a company might not be observed fully (Franken, 2014). The agency advocates the importance if the stakeholders in any organization. Managers or agents may not always function to the interests of the shareholders when handling the crude issues affecting the company’s normal functioning, but they should base their governance on a corporative aspect (Franken, 2014). Simply put, the managers need to act safe and seek preferred levels of growth since they are more concerned with the company’s interests. Consequently, the shareholders tend to task decision-making duties to the agents or managers this should, however, dealt with the required attention to prevent the promotion of selfish interests that might end up ruining the organization. Stakeholder Approach The stakeholder approach presupposes a change from the traditional role of board of governors to an approach that seeks to adhere and protect the stakeholder’s interest. A company’s top management is instrumental in setting values and objectives within which the employees and subordinates follow accordingly (Argandona, 2011). Contrariwise the stakeholder theory advocates for the need for companies to direct their strategies towards the stakeholder’s interests (Argandona, 2011). As an important feature of the organisation, stakeholders need to feel appreciated as a part of the organisation. In effect, establishment of an effective board of directors is paramount to any company or organization. The relation between the managers or directors and the workers in an organization is vital since it ensures effective operations. Individual interests are therefore disregarded during service delivery since they do not achieve the company’s goal (Franken, 2014). A well-developed market for corporate control is significantly important since asymmetric information, incomplete contracts, immoral code of conduct, are not observed. A number of governance approaches have been created including, but not limited to prudent market competitions, financial institutions and an effective board of directors. Analysis The company has over 360 million worldwide customers, where 19 million customers in United Kingdom. As a multinational business operating center, its signature strength lies with its governance framework and how it engages with stakeholders on local and international level. Additionally, the company operates globally, where specific ethical challenges are eminent. The challenges are, however, addressed with respect to its current governance approach as stipulated by its executive committee. The following are the key issues that are considered to determine the code of practice of during the normal operations of the Vodafone Company. Remuneration practices Vodafone is a renowned telecommunication company which offers good services to its customers due to the remunerations given to its workers and shareholders (Vandevelde, 2015). The basic policy of its remuneration practice is to ensure that the employee’s customer service delivery is unique and welcoming (Vandevelde, 2015). Its remuneration practices are based on a pay-for-performance strategy, which enhances competition and good code of conduct among the workers. The workers and the share holders are remunerated based on the quality of their production. Tentatively, remuneration ensures that the professional ethical code of conduct is observed during service delivery (Vandevelde, 2015). In effect, the remuneration practice is conducted on a transparent and fair basis which guarantees fair remuneration practice. Its approach to remuneration enhances its effectiveness when handling tasks. Vodafone’s approach to remuneration catalyses its operations and employee productivity. Transparency and disclosure Transparency and disclosure purposely attracts more buyers and shareholders to the company. There are specific laws that are outlined in dictating its transparency and disclosure when presenting reports, notably financial statements (Legal Annex, 2014). As a telecommunication company, Vodafone is compelled to uphold professionalism when offering its services. As such, it has ensured that its subsidiary companies across the globe adhere to its transparency and disclosure laws as outlined in the company’s constitution (Legal Annex, 2014). The managing directors ensure transparency when dealing with employees and customers. As its signature strength, openness and fair dealings has garnered more customers and investors preference. Transparency at Vodafone shows good ethical operation which is an ingredient for success. Committee composition The company’s robust committee composition consists of two committees namely: the board committee and the Chief Executive Officer Committee (Grana & Mari, 2013). The board committee comprises of the nomination committee, the remuneration committee, executive committee, social and ethics committee and the audit, risk and compliance committee. On the other hand, the Chief Executive officer’s committee is composed of finance, CEO: international, technology, legal and regulatory, strategy and new business and the human resource (Grana & Mari, 2013). The composition of the committee conforms to equality in gender aggregate, where any gender qualifies to be a member of the committee. Such compositions guarantee effective decision-making practices that ensure oversee a proficient approach to its operations. The committee is tasked with ensuring the company’s processes are attuned to its code of ethics and other practices. Shareholder rights Shareholder rights are important aspects of a company’s growth. All shareholders are entitled to proper service delivery, and there are guaranteed in Vodafone Company (Vodafone, 2015). In this company all shareholders enjoy the right of attending the general meetings, sharing the company’s profits depending on their levels of investments, they are entitled to a final distribution in case the company winds up its operations and the shareholders have the right of receiving a copy of the annual accounts, production and sales (Vodafone, 2015). As a result, the Vodafone Company ensures that it observes all the rights guaranteed to its shareholders so as to assure the shareholders security of their investments. The required ethical code of conduct basing on the delivery of services to its customers is fully observed. The shareholders are consulted or asked to give their views on the important decisions before they are fully implemented. Anny lose encountered over a given period is dealt with swiftly to ensure that the shareholders realize profit of their investments (Vodafone, 2015). In this company, it is, therefore, evident that the rights of the shareholders are observed, and the shareholders enjoy their rights. Board diversity Board diversity in Vodafone Company is vital. The Vodafone Company has diversified the women on board basing on the Women on Boards Report of 2011. The real progress has been made to increase the number of women on the board on the FTSE 350 Boards (Davies, 2014). The culture of including women on the boards of various companies has been embraced in all of the British. Vodafone basing on Gender Equality Act has ensured that women are included in the board of management. The integration of a diverse has enabled the company to realize significance improvement since 2011. Diversifying the board ensures that the professionally qualified employee are taken to perform irrespective of their gender. In effect, a competitive environment is thus created, and the workforce increased hence speeding up quality production in the company (Davies, 2014). Social responsibility The company plays an instrumental role in promoting social responsibility in the United Kingdom. It has a mandate of making the community its central part of its business to ensure that the company-customer relationship is good (Vodafone, 2015). The company’s stakeholders are always keen to impart the society in a positive way. As a result, Vodafone has established very many supporting firms to the needy in the society. This impacts a positive feedback to the society since they help in marketing the company’s products. The result is that the company realizes significant sales. As part of social commitments, the company has offered scholarships to the needy students. Tentatively, it supports worldwide human life-saving organizations such as the Red Cross by offering monetary support to the organization to facilitate its smooth operations (Vodafone, 2015). Audit process The Audit and Risk Committee is charged with a responsibility of the auditing process, in which the financial; transactions are audited to ensure the accuracy of disclosed financial statements (Vodafone, 2015). The auditors consult the workers to ensure the provision of accurate information and the company’s entire business transactions are captured in the auditing process (Vodafone 2015). The process is carried out based on the professional ethics, and the auditors are professionally qualified. An effect audit is vital to the company since it will lead to disclosure of its financial statements in an accurate way. It will further prevent unethical business transactions in the company specifically, corruption and stealing of the company’s money and materials. It is, therefore, prudent that an accurate professionally auditing process will help Vodafone company in the realization of its goals and its rank as the second multinational telecommunication company will be maintained. Ethical Issues Despite the company’s ethical compliance, it may be subject to various ethical issues that might affect its performance. Basing on the Doughty Centre for Corporate Responsibility, any company despite its compliance to the professional ethical conduct is subjected to various issues (Marsden, 2010). The ethical compliance is vital to any company since it protects the shareholder’s and management’s interests. Almost all practices in Vodafone Company revolve around monetary transactions. Consequently, the workers during their service delivery to their customers should, therefore, observe the required professional code of conduct during their service delivery (Marsden, 2010). Ethical misconduct within the company is bound and can be attributed to very many causal agents. It is usually rated to unethical issues including but not limited to lack of integrity during performance, lack of respect among the company workers and their customers, and other heterogeneity factors which hinder proper service delivery to the customers (Sustainability Report, 2011). Evidently, the customers lack the ability to evaluate quality of services offered by the Vodafone Company, in effect, the rights to quality services are outlined in the report so as to enable the workers to offer quality services to their customers. The customers after knowing their rights to good and quality services provided to them by the company. Unethical acts are strictly discouraged from the company’s working staff. Anyone caught involved in these acts faces the law in accordance with the professional code of conduct at work. Conclusion It is evident that Vodafone’s signature strength lies in its corporative governance. Given its global position it extensively addresses various ethical challenges that relate to service delivery. Therefore, it has outlined rules that govern its operations during service delivery. These rules and regulation are imperative when addressing ethical challenges that might at times confront the company during service delivery. Its corporate governance approach has helped it maintain a competitive advantage in the service industry. The company’s stakeholders, therefore, are highly valued when making important decisions that pertain to its operation. Reference List Argandona, A. (2011) Stakeholder Theory and value Creation. IESE Business School. Davies, L. (2014) Women on Boards: Davies Review Annual Report 2014. Accessed from . [16th March 2015]. Franken, J. R., & Cook, M. L. (2013) Governance and Performance of Multipurpose Cooperatives. Accessed from . [16th March 2015] Legal Annex. (2014) Law Enforcement Disclosure Report. Accessed from . [16th Mach 2015]. Grana, F., & Mari, L. M. (2013) The Case of Vodacom Group. An Integrated Reporting, 237-253). Springer International Publishing. Accessed from . [16th March 2015]. Heracleous, L (2011). Rethinking Agency Theory: the view from law. Academy of Management, 35(2): 294–314. Marsden, k. (2010) Corporative Responsibility. Accessed from . [16th March 2015]. Sustainability Report. (2014) Accessed from . [16th March 2015]. Vodafone. (2015) Accessed from < http://www.vodafone.co.uk/about-us/company-history/ >. [on 16th March 2015]. Vandavelde, L. ( 2014) Letter from Remuneration Committee Chairman. Accessed from . [on 16th March, 2015]. Read More