Implementation and Impacts of Socially Innovative Commerce in the Economy - Coursework Example

Student’s Name: Instructor’s Name: Course Code & Name: Date of Submission: Words: 2,136 Table of Contents Introduction 1 Corporate Governance 2 Purpose of Corporate Governance 4 Theories and Global Commerce 6 Conclusion 8 Reference: 9 Introduction This essay seeks to analyze the implementation and impacts of socially innovative commerce in the economy. It examines scientific aspects of innovation that are geared towards achieving the goals and objectives of every business entity. These arguments are based on New York Times newspapers of February 12, 2016. The newspaper analyzes the effect of fall of oil prices to waste management firms specializing in the recycling of waste. The issue of climate change has become global concern where developed and developing countries have come together to find ways of adopting greener business practices. The adoption of environmentally friendly practices requires corporation between private, government and non-governmental agencies since tackling climate change cannot be won by a single entity or individuals. The concern parties have an obligation to demonstrate scientific innovation that is needed to spearhead business activities towards achieving high levels of profitability and stability (Hitt, Ireland and Hoskisson, 1999). The theories of corporate governance and global commerce have played a significant role in reversing climate change. They ensure business adopts acceptable business practices such social accounting reporting which board of governance and global commerce regulators should monitor. Global business involves risks and uncertainties that require managers and innovators to come up with new scientific innovation to improve their businesses. The waste management companies are experiencing downturn due to fall in the fuel prices. The companies affected are United Plastic Recycling and Infinitus Energy. Some of the companies have closed and filed bankruptcy due to low demand for the recycled product. The oil prices have drastically dropped from previously $110-$120 per barrel to $39-$44 per barrel. According to New York Times article of March 8, 2016, the prices dropped due to high supply and removal of Iran sanction after entering into an international agreement on nuclear restriction (Krauss, 2016). According to laws of demand and supply increase in supply causes a drop in price since producers need to convince consumers to purchase their product. The decline in oil price has forced major plastic users to opt for the new plastic other than recycled since oil is one of the raw materials. It has pulled down prices of recycled plastic to extend that recycling companies have started making losses and another closing (Hitt, Ireland and Hoskisson, 1999). Therefore, issues of falling oil prices and the collapse of companies dealing recycling of waste calls for concern from the government, oil industry players and recyclers. The situation needs to be rectified to reduce environmental impact due to increased non-biodegradable waste and government spending on waste collection and disposal which was previously reduced by waste management companies. Corporate Governance Corporate governance is a broad term that incorporates legal rules, systems, relationships and primary processes by which a certain authority uses to control the operations of its business. They are legal frameworks that are constructed by business firms to control business operations. The code of conduct that is required to accomplish a certain task within a business firm by all stakeholders is a key towards achieving business goals and objectives. According to Harvard business summit on global governance, Ms. Minow’s company advocates that business firms should identify means on how to be the best in the market (Wilkinson, 2011). The best practices that the oil companies need to adopt include participation in rectifying the effect that is already felt in environment and cost of waste disposal. They should focus on how to develop their skills and innovation culture towards meeting the demands of the customers in the market. A corporation or business entities have legal responsibilities towards shareholders, business owners, creditors and the entire society. It requires managers to develop effectively sound policies that aim at maximizing the value of shareholder’s wealth. The aspect of corporate governance is more than the relationship between a business firm and external environment. It goes beyond the relationship aspect of accountability and responsibility towards the operations of the enterprise. Corporate governances are mechanisms and process that can be used to control the activities within a corporation. It seeks to identify the responsibilities and the absolute rights of shareholders and management team in carrying out their activities. The corporate governance incorporates rules and regulations that are used to make firm decisions regarding corporate affairs. It seeks to monitor, manage and evaluate various policies with an intention of maximizing the value of shareholder’s wealth. In global business operations, code of conduct is an essential practice that prevents two parties involved in trade against trade risks and uncertainties. The adoption of better scientific innovation in managing business entities is much worth than just concentrating on code conduct. The practice is evident from Pepsi, and Procter & Gamble are major players in support of recycling to cut on environmental impact. The process is part of their sustainability goal which is always associated with strength of corporate governance in developing and ensuring implementation of company policies. He argues that, to think about where the nation is heading regarding business forms a solid foundation towards developing business activities in the country. Innovation in business is not an art but an attitude and culture that need to be adopted by business firms. Defining better mechanisms and processes within a business entity is a strong corporate governance pillar that leads an organization towards achieving goals and objectives of the business. Purpose of Corporate Governance Every business firm strives to achieve high growth rates in the market by developing new products that meet the needs and preferences of shareholders. The aggressiveness of making high profit and impressing shareholders has resulted in poor business practices that impact external stakeholders. The aggressiveness of the oil companies to achieve high returns has led to drop in prices which have a high environmental impact than gain by a motorist on low oil prices (Krauss, 2016). The corporate governance of the companies affected in the industry can assist in achieving a trade-off between the benefit of reducing oil prices and its impact on other players and environmental impact. With the practical adoption of innovation techniques and culture, corporate governance will assist an organization to treat shareholders equally and focus on wider stakeholder perspective. The team should work by the needs of shareholders. Effective corporate governance will define precisely how an organization should achieve its goals and objectives. It represents better mechanisms and producers to be adopted to improve the profitability of the firm. The primary purpose of every manager is to design a proper working mechanism that incorporates both stability and profitability of the business. Such achievements require the firm to develop sound policies, rules, and regulations that are used to make firm decisions regarding corporate affairs. The director seeks attention from the governments and politicians to indulge their efforts in innovative culture. The government through their regulatory systems should develop innovative policies and processes that aim at improving business activities within the country. The board of directors needs to have high skills and techniques to review and evaluate the performance of a business and to provide lasting solutions where necessary. Employing qualified personnel is not a waste of money and time. According to Wilkinson (2011), employing qualified personnel is a great investment that seeks to maximize total output from a given investments. Qualified personnel can critically evaluate, monitor and to develop sound innovation policies. Ethical behavior is a fundamental requirement in every business unit. The way employees and management integrate their activities with an aim of meeting their target goals and objectives in a business reflect the success of the firm. Good ethical behavior motivates the management team to develop sound innovation programs that aim at integrating science with business. Business analysis and metrics are among major scientific measures that have been adopted to solve business issues. Matrices such as BCG matrix and business matrix can be used by managers to make firm decisions (Wilkinson, 2011). The proper corporate governance ensures that the managers adhere to the company code of ethics and promote good business practices. For instance, Enron Company collapsed due to poor corporate governance which made CFO and other top management employees participate in unwarranted activities that led to its collapse. The oil and waste management companies can adopt the best corporate governance policies to absorb shocks associated to increase in competition and drop in global prices due to decline in oil prices. Theories and Global Commerce Business operations can occur globally through the exchange of goods and services between parties in different countries i.e. Business carried over a long distance in high volume. The act of purchasing and selling of goods and services globally is termed to as global commerce. The trading of oil products are the major players in the global market since countries with an abundant supply of oil export them to countries without oil deposits (Krauss, 2016). Sjursen (2000) argues that integration of business entities and diversification of products and services is a key towards achieving the success of the business. The theories of global commerce have been developed to focus on strengths of the global market platform and correct the shortcomings arising from the difference in currencies, laws and sanctions. The international law on global market participation needs to be in place i.e. laws on quantity supplied. For example, re-entry of Iran to global oil market could not have destabilized the prices if we had such laws. Comparative advantage theory seeks to compare production levels between two countries. It argues that a country is said to have a comparative advantage over another when it can maximize available resources to attain full production. Firms seek to maximize shareholders wealth through attaining high levels of output. According to Sjursen (2000), innovation and new technological advancement should be adopted by business firms within a given nation. He argues that growth is anticipated through the proper formulation of policies that favors innovation. Many business firms and small scale business firms indulge their efforts on digital measures such as internet marketing. However, it is essential for companies and business firms to know the best strategies to be used to meet objectives and goals of the firm. According to Waters (1995), many entrepreneurs in developing nations are not opportunistic since they are not actively participating in the global market. Also, much of their international trade consists of imports rather than exports thus hurting economy. These countries have deficit balance of trade thus affecting prices negatively. However, due to lack of innovative culture, it becomes difficult to implement their ideas. The aspect of innovation goes beyond the integration of business units into monitoring, evaluating and analyzing key business units to detect any lag and to develop effective global solutions. Factor production theory argues that countries should specialize in a trade concerning factors of production available in their countries. Investors should make use of capital, land, technology and labor to improve the levels of output in the firm. Shareholder maximization will only be possible if sound policies are formulated to comply with goals and objectives of the firm (Waters, 1995). Resource utilization gears the firm towards attaining maximum output while minimizing cost incurred. The specialization according to resource endowment can play a major role in price stabilization and avoid effects caused by the excess supply of the oil. Dependency theory argues that resources tend to flow from the periphery to the wealthy. It argues that the rich people become rich at the expense of the poor people. Large and small business operations strive to achieve strategic goals through implementation of set objectives into reality. The core objective of every business venture is to reduce the cost of production incurred by the firm while maximizing on the level of profitability (Wilkinson, 2011). Due to stiff market competition and global changes, large and small business firms have adopted technological methods of managing information systems to help make work of the management easier thus large profit margins. Lastly, development of international laws controlling global market is required to ensure equal economic growth i.e. oil producing countries should develop equally as those specialized in agricultural produce or technological sector. Conclusion In conclusion, corporate governance plays a major role in ensuring business sustainability and achieves shareholder objectives. The corporate governance address issues concerning internal and external stakeholders of the entity. Therefore, sound corporate governance can address the issues concerning increased cost of waste management by developing proper practices. Lastly, countries participating in global market must come up with international laws that ensure uniform growth of participants. The global market increases the scope of the market thus enabling producers to produce more which improves country’s economic growth. Therefore, the government should develop policies that promote the growth of local and international business in its territories. Also, the introduction of import and export quotas in the global market can assist in ensuring that demand matches supply to avoid price destabilization witnessed globally from oil price. Reference: Hitt, M., Ireland, R. and Hoskisson, R. (1999). Strategic management. Cincinnati: South-Western College Pub. Krauss, C. (2016). Oil Prices: What’s Behind the Drop? Simple Economics. [online] Nytimes.com. Available at: http://www.nytimes.com/interactive/2016/business/energy-environment/oil-prices.html [Accessed 24 Mar. 2016]. Sjursen, K. (2000). Globalization. Bronx, N.Y.: H.W. Wilson Co. Waters, M. (1995). Globalization. London: Routledge. Wilkinson, R. (2011). Global Governance, for Whom?. Global Policy, 2(1), pp.119-120. Read More