The Handbook of International Corporate Governance - Case Study Example

?Smith Engineering The primary purpose of any organization is to achieve the objectives and goals as indicated in the organizational vision ment. The organizational mission statement indicates how the organization plans to reach those objectives and goals. Like any other organization, Smith Engineering has its purposes and strategies to meet its goals. Smith Engineering is an innovative building and design engineering company founded in 1979. The goal of the company is to provide engineering excellence to the industrial area. The company seeks to develop engineering solutions for the Automotive and Nuclear industries. Smith Engineering aims at providing innovative engineering solutions to its clients. The company focuses on reliability, responsiveness, and quality design. In order to achieve such goals, the organization requires effective management (Institute of Director publication, 2005). Effective management means executing the managerial tasks effectively and with high level of efficiency. These managerial tasks may include: planning, coordinating, organizing, controlling, supervising, directing, staffing among others. Organizations owe the community and its stakeholder moral obligations. Moral Corporation is developed via corporate responsibility and the environment. Corporate responsibility entails two issues: doing the positive good to the community, and doing no harm or whatsoever to the community. This means that the corporations pay back to the community through participating in community beautification efforts and events, volunteering expertise, donating money to the worthy causes and being a responsible employer. On the other hand, doing no harm entails efforts of the business towards the environment in its production activities, transportation and disposal. Therefore, in order to best examine moral corporations and corporate responsibility for the environment let us start by considering issues of the environment we face. There is a wide possibility of developing a moral corporation; this requires looking closely at values and changing attitudes (Anne-Marie, 2003). The development of moral corporations needs to ensure that the environment is duly protected. Environmental ethics is complicated in practice because of the numerous distinct perspectives that are involved. The development of moral corporations needs to encompass this ethics. In some situations it may be difficult for corporations to understand the environmentalists’ arguments on environmental ethics. Disagreements hence rise on plans for developing a moral corporation. It is obvious that corporations possess different viewpoints on ethics of the environment (Wheatley, 2006). It is, however, possible for corporations put their different options aside for the good of the environment and agree simply that some actions about the environment need to be done in order to make corporations morally upright. In order to develop a moral corporation, such corporations need to admit that protection of the environment is important, whether they are acting out of a sense of responsibility or out of a sense of self-preservation for the future generation, for to the Earth itself or to all the forms of life. Corporations need to adopt an environmental pragmatism. This ensures that moral corporations are developed and maintained; that the corporations can achieve a consensus on the values of the environment that identify and determine the policies of the environment that all other corporations can agree on (Karl, 2009). Organizations like SE employ various strategies in order to meet their goals. Organizations need effective management in order to maximize their production under the prevailing conditions of scarce resources. Managers need to shift their focus to the contemporary issues of organizations such as the ambiguity, uncertainty, and complexity of organizations. It is also important for upcoming managers to exhibit a critical understanding of management practice and theory. Effective internal management of an organization demands that people and facilities in the organization are managed well. This introduces the concept of organizational behavior which involves how people within the organization react to changes, decisions and practices of management by managers (Sun, 2010). It is also important to have human skills in order to incorporate the views of other people and manage them well; this will also ensure that the people work towards a common goal within the organization. Critical management is determined to harmonize the workplace, through ensuring that the employees and facilities are managed well and working conditions improved. In order to ascertain this, managers need to rely on management theory and practice in order to deal with the uncertainties of organizations. The practice of management also deals real life experiences of the manager within an organization (Northcott, 2012). Organizations like SE have defined responsibilities and strategies used in meeting such responsibilities. These responsibilities are owed to customers, the community, and the stakeholders. According to recent studies, poor communication channels are associated with the complexity of organizations. Uncertainty in an organization results into a communication breakdown between the management and the employees. This communication breakdown causes a wave of effects on the overall functioning of the company, with workers failing to perform their duties (McLachlan, 2008). Employees are often blamed by the management for not being dutiful and diligent in their work due to this, and subsequently the employees become frustrated and even walk away from their respective jobs. For instance, ten employees from various departments have left the organization due to this aspect. Firms also do rely on memos as a means of communication in order to communicate important information to the employees. These memos are placed on the few notice boards within the firm, and most of the workers end up not reading them. As a result, most duties end up undone, with the workers being blamed for being lax (Connell, McMinn, Nathan & Bell, 2012). Some employees also fail to comprehend the information captured in the memos and end up with varying meanings derived from the same. The manager should come up with strategies that will ensure that proper and up-to-date communication systems are put in place. This will ease the system of communication within the firm, particularly between the administration and the employees, and among the managerial staff. Consequently, the manager should come up with various communication channels that are suitable for all parties. According to Taylor’s scientific management theory, employees need to undergo scientific training to enable them work efficiently (Hildago & Gutierrez, 2013). As such, the manager should also train the employees in the use of the handheld transceiver. The training should be conducted by professionals capable of simplifying any complexity that may be encountered in operating the device. The manager can also use employment contracts in solving organizational ambiguity and complexity. This will ensure that the administration of duties, rights and responsibilities which are often increasingly complex are simplified and determined in specifics. This is especially so, since there is no point of reference for the admissibility of work issues. For the purpose of easing this complexity, the managerial team within the firm needs to draw up work contracts for their employees. The contract should include the job description for each and every employee, clearly stipulating the exact roles that the employee is required to perform. The employee should not undertake any other duties that are not within the contract. This will eliminate ambiguity in the roles of different employees (Jones & George, 2011). The manager also needs to examine the management structure in order to manage the uncertainty, ambiguity and complexity of the organization. The manager should make employees aware of the protocol within the company, ranging from the directors, managers, heads-of-departments, and supervisors. The complexity that results from more than one manager and other officials ordering one worker is significantly reduced through this structural breakdown. Organizations that implement Total Quality Management encourage employees and managers to participate and collaborate within and across all departments and functions. Such organizations also encourage both the suppliers and customers to identify improvement areas and inform the organization’s administration not matter how small. Through Total Quality Management, employee teams are empowered and trained in such away to make sound decisions that can aid the organization in achieving high quality standards in their services and products. This technique also encourages a shift of responsibilities of controlling quality of services and products to all the employees from the specialized departments. Hence, Total Quality Management is a shift from the organizational bureaucratic approach to a decentralized approach to quality control (Bark, 2007). Economic systems like the UK make several attempts to allocate and make use of resources effectively. This is done through addressing major principles such as demand, Supply, and Congestion, Government Pricing and Policy, Regional Development Planning and Policy, interest rates, government fiscal and money policy. Macroeconomic indicators are statistics showing the current status of a country’s economy depending on a specific sector of the economy. In an economic system like the UK, macroeconomic indicators are published frequently at a certain time by either the private sector and government agency. When used properly, macroeconomic indicators help in effectively allocating and using the available resources. Generally, such statistics help companies to observe the economy’s pulse, thus it is not surprising that every company, whether local or international, follows with great interest these economic statistics. After the publications of the macroeconomic indicators, firms can observe the volatility in the market. The extent of the market volatility is determined by how important the indicator is. That is why understanding the macroeconomic indicator is vital for the growth of a company and allocation of resources (Bark, 2007). Economic systems also assess and demonstrate interest rate in economics as one of the vital determinants in the allocation and use of resources. As the institutions set the rates of interest, central bank of a country is therefore the most prominent actors. The flows of resources are determined and influenced by interest rates. In view of the fact that currencies are the representations of the economy of a nation, difference in the rate of interest impact the relative worth of currencies with regards to another. A change in the interest rates by the central bank causes volatility and movement in the foreign exchange market. Low interest rates encourage investments in the economy because the cost of borrowing will be low. The article illustrates that to the international firms, the movement in the Forex market affect their financial result. Most of the operating materials are imported and at the same time most of its products are exported across the globe (Jones & George, 2011). Therefore, interest rates existing in various countries exporting or importing products are important determinants of the operation results. High interest rates will affect the investment by companies because the cost of borrowing will be high. These are factors that economic systems use in the allocation and use of resources. The effect of fiscal and monetary policy can also affect companies such as SE. The government fiscal and monetary policies attempt to stabilize the economy through manipulation of the fiscal and monetary policies. Full employment, equitable balance of payment and controlled inflation define the stable economy. Fiscal and monetary policies relates to financial markets and the supply of money, credits and other financial assets. On the other side, fiscal policies relates to expenditures and taxes. Monetary policies such as increasing money supply in the economy are mainly implemented by the Central bank of a country. The government of a nation is therefore mostly responsible for the implementation of fiscal policies. The truth is; application of either fiscal or monetary will definitely affect the business environment of an economy. International companies will definitely be affected by the application of a monetary or fiscal policy. For example, fiscal policy such as increased corporate taxes will reduce the profit of the firm considering taxes have negative influence on the profit (Hildago & Gutierrez, 2013). Impacts of fiscal and monetary policy can also be seen in the economics principles that assert that interest rate is one of the vital determinants in the foreign exchange market. An increase in interest rates will increase the cost of borrowing. Companies that depend on borrowing of cash to invest in its daily operation, that increasing interest rates will reduce the amount available for their investment. If the Federal Reserve increases the rate of interest, the profitability of such firms will definitely go down due to reduced sales. The point is; increased interest rates will increase the cost of borrowing, which in turn reduces the amount needed to finance investments and through multiplier effect, this will lead to reduced profits to international firms (Connell, McMinn, Nathan & Bell, 2012). The impact of fiscal and monetary can also be seen on employment indicators. Employment indicators show the general health of the country’s economy or business cycle. To understand the rate at which the economy of a nation is functioning, it is necessary to understand how many jobs are created, how many people are unemployed, and the percentage of active workforce. In terms of inflation, it is also vital to observe the speed at which the country’s wages are growing. Companies that depend on human capital for output demand maximization demands that their management takes up deep interest in the employment situation of the economy (Hildago & Gutierrez, 2013). As illustrated in the article, an increase in inflation will result to an increase in employment. Therefore, an economy has to maintain a certain level of inflation rate in order to achieve a given level of employment level. High unemployment in an economy is an indication of stagnant or an economy that is not growing. Therefore, these economies will realize low investments from within or foreign firms. Therefore, firms will opt to invest in an economy that has high employment rate because high employment means low wages hence low labor cost (Sun, 2010). Developing a moral corporation is a free will issue on whether or not corporations are morally responsible for the actions they get involved in. Various scholars have had rage debates over the attributes of moral responsibility of corporations for decades. It is necessary to consider principles of corporate social responsibility in detail, when developing a moral corporation. These principles mainly involve legal aspects of a corporation, its economic, discretionary, and ethical aspects. Corporations look forward to make profits even as they observe the laws of the state. In addition, corporations should stay ethical and have the right to remain discrete with the respect to their environmental decisions. Corporations also involve various terms in their attempts to remain ethical such as reactive, responsive, defensive, and interactive with the environment. These terms are all useful in developing a moral corporation. Therefore, in order to develop a moral corporation, the management of such corporations needs to consider ethical consumerism, globalization and market forces, social education and awareness, training staff on environmental ethics, and making their stakeholders their priorities (Sun, 2010). In addition, the corporations need to manage effectively pollution, use of natural resources and land health. Bibliography Anne-Marie. 2003. Harvard Business Review on Leadership at the Top. Boston: Harvard Business School Press. p 45 Bark, J. 2007. Total Quality Management: Implementing Continuous Improvement, New York: Sterling Publishing Co. Inc. Connell, J. A., McMinn, Nathan E., & Bell, N. 2012. How will the next generation change the business world? A report on a survey. Insights to a Changing World Journal, 2012 (4), 100-113. Hildago, D & Gutierrez, L. 2013. BRT and BHLS around the World: Explosive Growth, Large Positive Impacts and Many Issues Outstanding: Research in Transportation Economics, vol. 39, pp. 8-13 Institute of Directors publication. 2005. The handbook of international Corporate Governance. A definitive guide. Boston: Harvard Business School Press. Jones, G. & George, J. 2011. Contemporary Management, London: McGraw Hill. Karl, P. 2009. Principles of Taxation. Boston: McGraw Hill. McLachlan, J. A. 2008. The right choice making ethical decisions on the job, New York: Prentice Hall. Northcott, M. S. 2012. Artificial persons against nature: Environmental governmentality, economic corporations and ecological ethics. Annals of the New York Academy of Sciences, 1249 (1), 104-117. Sun, W. 2010. How to govern corporations so they serve the public good: A theory of corporate governance emergence. New York: Edwin Mellen. Wheatley, M. J. 2006. Leadership and the new science, discovering order in a chaotic world. (2nd Ed.). San Francisco, Ca: Berrett-Koehler Publishers. Read More