The Corporate Ethics in Relation to an Australian Manufacturing Company - Case Study Example

?Management Table of Contents Table of Contents 2 Executive Summary 3 Introduction 5 Critical Analysis of Ethics, and Corporate Social Responsibility6 Critical Analysis of CSR and Global Outsourcing 10 Conclusion 15 Recommendation 16 References 17 Executive Summary The report describes the Corporate Social Responsibility (CSR) and the Corporate Ethics in relation to an Australian manufacturing company. An Australian company, which manufactures vacuum pumps for the hospitality and medical industry, intended to enter the global market to spread the business. The company has focused on the profit maximization and higher market shares. The paper involves the investigation of various issues regarding CSR while entering a global market place for the Australian company. The corporate ethics and the corporate social responsibility have been studied in this paper. Various CSR issues have been discussed in the paper to analyze the need of CSR in global outsourcing. The paper has also involved a proposed recommendation regarding the required measures to outsource globally and also a conclusion for the overall discussion. From the study the main idea has been developed regarding the corporate ethics and the responsibilities of a corporation towards the society. The key findings to be considered by the Australian company are type of the market while entering the global territory, the people of that region, and the environment of the particular country. The other findings to be considered by the company are the various laws and regulations of the other countries, the legal formalities, the consumerism factor and the quality product manufacturing. The Australian company can easily spread the business in global market by considering all these CSR issues and various corporate ethics. Introduction In the twenty-first century, various public initiatives are putting a lot of pressure on industries to improve ethical business practices, processes and actions. Corporate ethics and corporate social responsibility are parts of those practices. Corporate ethics scrutinizes the ethical morals or problems and the ethical principles that happen in the environment of a business. Corporate ethics is applicable to each and every aspect of the conducts of a business and also to the individual’s conduct within the organization. The corporate social responsibility (CSR) is the responsibility which involves an organization for continuous commitment of the ethical behavior to the society. It helps to improve the standard and the quality of life of the employees as well as the life of the society and the local communities (Zimmerli & et. al., 2007). The prime objective of this study is to highlight the various importances of corporate ethics and CSR and the usefulness of these two practices while deciding the global outsourcing of an Australian company with proposed recommendation and conclusion for the overall discussion. Critical Analysis of Ethics, and Corporate Social Responsibility Corporate Ethics Corporate ethics involves the ethical principles of the management as well as of the mangers to persuade them to be translucent in business transactions. Business ethics considers the customer’s feelings regarding planning out the goods and the services provided to the customers. Corporate ethics also considers the stakeholder’s interests to the business. Corporate ethics is one of the most important activities in every organization, especially in relation with the customers and their idea about consumerism. Consumerism refers to the term which describes the rights of the consumers and the legal concerns. Corporate ethics is an evaluation and a study conducted by a business to make decisions in relation to the judgments and the moral concepts. Corporate ethics involves the organization’s responsibilities towards their customers, the commitment to be honest towards the customers. It also involves the responsibility of the company to conserve the nature and the environment. Corporate ethics also involves the protection of the rights of the employees, the workers, the society and the local communities. Safety is the other part of the corporate ethics, which ensures the safety for the stakeholders, the workers and the customers. Corporate ethics has become very difficult in present days due to the globalization, as different countries have different rules and regulations of the government and the different climate and cultures of the organizations (Fernando, 2009). Corporate Social Responsibility (CSR) Every company or organization has certain responsibilities to the society, in fact the organizations should always be grateful to the society in which they grow and flourish. Corporate responsibility is the term which describes the duties and the responsibilities every company has for its society and stakeholders. Corporate responsibility refers to the process of maintaining the relationship between the employee and the organization, the employee and the stakeholders, the organization and the society among others. The more a company would be responsible towards the society the more that company can grow and get ample opportunities to stay in the market for long (Kotler & Lee, 2008). Corporate Social Responsibility is one of the most important actions taken by any organization either internationally or nationally. As the organizations are serving worldwide and they are providing their service globally, thus they have realized the value of Corporate Social Responsibility. CSR is one of the most popular and required activities done by each and every other company. CSR basically includes social ethics, cohesiveness among the employees, as well as in the market. CSR also involves the investment for the society and the company should be more transparent to the society. CSR includes employment and many other social responsibilities (Banerjee, 2007). Benefits of Corporate Ethics and Corporate Social Responsibility Corporate ethics is the term which involves the moral value of the behavior of an organization and its employees towards the society, to the workplace and to employees. Corporate social responsibility is a part of almost every company these days. CSR is an approach under the corporate ethics of the organizations. Corporate ethics and CSR both have certain importance and benefits for a company and its mangers. Corporate ethics and the corporate social responsibility help in reputation enhancement. It is by corporate social responsibility a company can get popularity, and the reputation of the company is expected to increase. The other reason to be socially responsible is to gain competitive advantage, with the help of CSR any company can prove themselves different from others and they can get the identity of being unique. CSR or corporate ethics helps a company to be cost effective company. Every company focuses on their budget and the investment, CSR can help a company to utilize the finance in a proper way and the company can save the cost. CSR also helps in industry trends; it enhances the knowledge of the business and helps the organization for being aware. CSR assists an organization to meet the customer’s demands and their needs. With the help of CSR any company can focus on the customer satisfaction. Corporate ethics, especially CSR helps to satisfy the shareholders and also the top level management of the organization (Hohnen, 2007). In essence, a good corporate ethics and CSR facilitates an organization and its managers to enhance the profitability, the sustainability and the competitive advantages among others. A manager of an organization would be benefited while making strategies, taking decisions and planning the activities to maximize the profit of the business of the organization. CSR and corporate ethics is also important to attract new customers and to retain existing customers for the business as a company ensures the better quality products and safety for the customers due to a proper CSR in the company. Being responsible to the consumers, an organization produces better quality goods and services, ensures the employee as well as the customer safety and satisfaction (The Economists Intelligence Unit, 2005). Responsibility of CSR and Corporate Ethics towards Stakeholders A stakeholder of a company is a person or a group who can be affected by the company, its activities and by their policies, directly or indirectly. Every stakeholder has certain interests in the company. The shareholders or the investors, the employees, the suppliers and the customers are the direct stakeholders of an organization. They are also known as primary stakeholders. And the indirect or the secondary stakeholders are the people who are indirectly connected to the organizations and get influenced by the organizations, such as, local people, government and media among others. The corporate social responsibility of an organization under the corporate ethics involves certain responsibility of CSR towards the stakeholders of the company (Morsing & Schultz, 2006). The responsibilities of CSR to the stakeholders include the fact that the company should always bring the interest of the stakeholders in the business process. Company should try to find out various solutions to the issues that would please stakeholder’s interest simultaneously. A company should have a proper dialogue with every stakeholder regarding their problems and demands and should also involve them in several communications. The CSR of an organization should constantly monitor the new designs of the processes and policies to serve the stakeholders in a better way. The CSR of a company should also focus on the commitments towards the fulfillment of the promises to the stakeholders as well as their dreams (Freeman & et. al., 2006). Critical Analysis of CSR and Global Outsourcing Global Outsourcing The Global outsourcing is the term which refers to the outsourcing of the knowledge, the skills, the labor and the products among others. Global outsourcing has become one of the most important as well as vital aspects of a business. Most of the companies are now functioning globally by outsourcing their products, knowledge and skills. While operating globally every company should focus on the various CSR issues to run a business in a smooth way (Minevich & Richter, 2005). In relation to the provided scenario, it can be stated that, an Australian company, which produces vacuum pumps in the medical sector can easily serve globally to increase market share and profits, and reduce the costs of manufacturing, facilitate the company to have more effective competition in the global marketplace (Grossman & Helpman, 2003). While taking the decision regarding global deals, the company should keep in mind certain CSR issues such as, Identify the Market The company should identify the appropriate market before dealing globally, as the availability of the medical treatment options are different at different markets. Under the medical industry, an organization should be responsible to provide new and improved products and treatment facilities to the people of the region. It would facilitate the company to grow further as well as would be helpful for the people of that particular country (Shah, 2007). Making a Profit Being a company under the medical and hospitality industry, the Australian company focuses on the ways of making profits from the health a sector which is public goods. In that case, the company should focus on the quality of the services and the goods to be provided to the people. It would ensure the safety of the consumers and would also help the company to gain profit. Better quality of products gives a company better opportunity to spread globally (Shah, 2007). Facing Ethical Dilemmas To produce and to provide better goods and services to the people, the company should manufacture developed goods with the help of proper research. These researches should consider certain CSR issues such as, the ethical inference of the research through animal testing or trials with the humans in the clinic. The company should always keep in mind that no research should harm the nature or the elements of the nature. It should not put any impact on the ecological balance and the climate. Every company has certain responsibilities towards the nature and the society. The companies are also responsible towards the elements of the nature, be it an animal or human being. There should be a balance among various related segments to maintain the ecology (Berad, 2011). Before dealing globally, the Australian company should keep three criteria in mind, i.e. the community, the environment and the people. The term ‘people’ reflects the issues regarding employees and their better working conditions, pay, and diversity within an organization. ‘Community’ refers to the term which includes the charitable and the economic efforts for both global and local market. It also includes the people within the community, their cultures, and habits. The ‘environment’ involves the green practices, waste and reduction of the consumption of the energy, lower emission of gas and less pollution (Berad, 2011). People While deciding upon global outsourcing of production, the company should focus on the people of the area or region where they would like to function globally. The company should involve the demands, the tastes and the requirements of the people of the country, the company is dealing with. The tastes and the demands of the people or the customers of that region would facilitate the company to decide the production capacity and the features and the design of their products according to the needs of the people (International Association of Outsourcing Professionals, 2010). Community Community of a country or a particular region refers to the economic and cultural conditions of the country. The company should identify the culture and the economy of the country before entering into the global business with that country. It would give the company a fair idea about the extract estimation of the costs and the investments. It would also help the company to generate various options to be responsible towards the country and its people. A company should identify the culture of the particular country before entering to know the taste, the habits and requirements of the people of that country (International Association of Outsourcing Professionals, 2010). Environment The company should do a research on the environment or on the climate of the global region to identify its nature and the company should produce products according to the nature of the environment so that people do not get affected. While a company uses natural resources from the environment and the nature, the company should always keep in mind that they should maintain the balance between the human and the nature (Frost, 2006). The Australian company and any other similar company should focus on the maintenance of the balance between the nature and the climate. The companies should focus on less Carbon Di- Oxide emission, lesser emission of fossils fuel, and reduced utilization of energy and preservation of energy for future needs. The companies should also involve aforestation to maintain the ecological balance (International Association of Outsourcing Professionals, 2010). The Australian company should also focus on the ethical values of the products and the business such as, Ethical Consumerism ‘Ethical consumerism’ is a term which describes the values and the rights of the consumers. While a company is entering a global market under medical and hospitality industry, it should keep in mind that the consumers of their products should not get cheated and should not get defrauded. The company should always consider the consumer rights and the value the promises that have been made to the consumers regarding the services and the products (Berad, 2011). Quality Products Before entering the global market, the company should focus on the quality of the products. The company should always provide their local as well as global customers with better quality goods. They should make it clear that the product would not harm the consumers in any ways. The company should be adequately concerned about their consumer’s health and safety (Shah, 2007). License of the Business Every company should carry a valid license before dealing in the global market. The company should always keep a license for their goods and the quality of their goods. The certification would help the company to do a smooth business in the global market and it would also help the consumers to be in the safe side (Berad, 2011). Legal Laws The company should follow each and every rules and regulations in the global region to have a certified and a safe business. Every country has their its rules and norms, before entering that country a company should obey all those rules and norms. It would help the organization to avoid any kind of disruptions and also for running an effective business (Shah, 2007). Organization faced CSR Issues in Recent Times in Outsourcing There are certain CSR issues while serving globally. Different companies have different ways of handling the issues through corporate social responsibilities such as, British Airways has identified the issue of climate change being in business in 1990s and the company has taken corrective measures for that. The changes in the climate have increased the emission of Carbon and damage in the nature. The company has taken the decision of developing a team to work on the climate change issues. The company has assured the less emission of gas and energy while flying with the help of their audit results (Shah, 2007). In the other case, another company, Barclays has identified the issues of social exclusion which leads to financial inclusion. The social exclusion is the condition when the people of a particular society are not capable of availing their fundamental human rights. The financial inclusion brings in the situation to provide unbanked people with various financial products to meet their requirements, which raise the financial obligation on those people. Barclays has taken certain measures to reduce the number of unbanked people and the company has also planned to help the low earning people with various account facilities as they are new to the bank (Chaudhri, 2006). Even IBM has approached the sustainability issues of CSR. Sustainability is the issue which encourages an organization to change the position in the market with the change in the environment of the business. It helps a company to increase their value of the brand as well as the company reputation. IBM has introduced various volunteering programs to promote new strategies. The company has focused on the consumer success or satisfaction, innovation of different matters, personal responsibilities and trusts (Chaudhri, 2006). Conclusion In relation to the above study, conclusively, it can be stated that the corporate ethics is the process of valuing the rights and the moral of the people related to the corporate. Corporate ethics is the responsibility of the corporations towards their employees, workers as well as towards their customers and stakeholders. The approach taken by companies under the purview of corporate ethics is known as corporate social responsibility. In CSR, the companies function to provide the society certain values and they show the concern towards the society and environment being responsible towards the nature. CSR is also applicable for the global outsourcing. Global outsourcing is the process where the companies deal in beyond borders, through outsourcing and providing the global customers with their production, skills, and knowledge. Every company should keep in mind the various CSR issues before entering the global market to maintain the reputation, value of the brand and the long-term sustainability. Recommendation In relation to the above study, a recommendation can be proposed to the Board of the Australian company that the company’s decision to enter the global market for better profit, lower cost of manufacturing, high market share and better competitive advantage is absolutely relevant and valid. But the company would have to focus on certain CSR issues before entering the global market to cover all the needs of the company as well as of the customers (Kanji & Chopra, 2010). The CSR issues include various factors like sustainability, climate change, social exclusion, stakeholder engagement and governance among others. 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