The Accountability in VISA Company in 4 Areas of Accountability - Research Paper Example

A Report on the Accountability in VISA Company in 4 Areas of Accountability; Describe and Explain Each of These Selected Issues and Secondly DescribeHow Each Issue is implemented in VISA Company Introduction In the present scenario, market conditions have intensified with increased competition and advent of technologies. Business organisations are thus required to conduct their operations with better accountability for better competitiveness in the worldwide market segments. Presently, with effect from the stated factors, complexities for business organisations have increased substantially, owing to which, they are required to conduct their operations with better accountability in different areas that commonly include communities, environment, financial statements and stakeholders (Corporate Accountability Research, 2011; Keith, 2010). Subsequently, VISA Company (henceforth VISA), operating as a payments technology based global organisation and offering different products such as debit, prepaid as well as credit services to its worldwide customers need to consider the asserted areas (VISA, 2014). This research paper emphasizes the different issues relating to Corporate Social Responsibility (CSR), Sustainability, Models of accountability and Codes developed by OECD, which are required to be mitigated to assist VISA in performing its operation accountably to yield long-run sustainability. Company Background VISA is an international payment corporation, which connects customers, businesses and governments. It was established in 2007 and since then, the company has enlarged its business to above 200 nations. The key function of the company has thus been concentrated to maintain electronic payments. It runs various payment networks and enables approval, clearance and disbursement of payment transactions in the global extent. It also provides security to the customers for protection of frequent activities and ensures proper payment between parties. VISA performs in ‘open loop payment network’ by which, it is able to connect and manage the exchange of financial information between various banks, financial institutions and account holders among others. Headquartered in San Francisco, VISA presently has about 14,400 financial institution customers, with 2.1 million ATMs and about 2.2 billion cards. The organisation has established one of the most sophisticated transaction processing networks, which is able to manage above 47,000 financial transactions per second. Furthermore, VISA has also remained committed towards dependable, convenient and safe financial transactions. VISA’s transaction processing services continue to expand to address the requirements of customers worldwide. The technology of VISA also make it simple for merchants to accept, process and settle electronic payments, to manage deception and to safeguard secure online transactions. Since, VISA maintains huge amount of electronic transaction worldwide, it upholds serious accountability to make sure that the business is conducted in an ethical manner. The accountabilities of VISA are critical in order to retain the trust of banks, financial institutions, merchants, cardholders, shareholders and other important stakeholders. VISA is also committed to maintain strong and effective governance, which is regulated by relevant laws, principles and guidelines on conducting business activities (VISA, 2014). Four Selected Accountability Issues in VISA Corporate Social Responsibility (CSR) In the present business context, organisations are required to adopt certain strategies based on which, business operations are conducted with better sustainability as well as accountability. In this respect, the concept of ‘Corporate Social Responsibility’ (CSR) can be witnessed to have been widely adopted by modern business organisations with the intention of ascertaining that operations are conducted with enhanced accountability. Contextually, CSR is identified as a procedure based on which, business operations are performed in a transparent as well as ethical manner. Subsequently, CSR ensures that business operations are performed in compliance with the expectations and needs of stakeholders as well as communities respectively. In this context, CSR policies are integrated with business activities, so that business performances benefit business organisations, communities and stakeholders effectively for all round benefits (Zekiene & Ruzevicius, 2011). Presently, organisations are identified to face different threats, which commonly include fraudulent accounting practices and violation of legal obligations. Respectively, businesses are also observed to be affected adversely in terms of their performances for unethical business practices (Time Inc, 2012). In this regard, VISA, by conducting business operations globally in order to improve its effectiveness and competitiveness in worldwide market segments, have adapted CSR practices with the aim of ensuring that its business operations are performed with due significance to sustainability (Carroll & Shabana, 2010). Contextually, the company, with the assistance of its CSR policies has been able to perform a varied range of operations on the basis of ethical principles and sound business governance framework (Zekiene & Ruzevicius, 2011; D’Amato et al., 2009). From a critical perspective, it can be asserted that integration of CSR principles in its business operations has been facilitated VISA with the opportunity of ensuring its strategies conducted according to the expectations of communities and stakeholders. Additionally, the company, with the assistance of CSR has been able to ensure the development of world economies through enhanced financial stability as well as assistance during crises. In this regard, the company’s ethical use of know-how, products along with philanthropy has facilitated the development of an improved positive position globally, which in return has assisted the company to be accountable for sustainable business performances (VISA, 2014). VISA has also been witnessed to align social causes with corporate strategies with the aim of integrating the needs of society and stakeholders when implementing its CSR initiatives. Additionally, the company is also recognised to develop partnership with different institutions that include local governments, financial institutions and businesses for better financial stability in the long run. In this respect, with the assistance of CSR polices and transparency, the company has been able to develop the global economic architecture to a certain extent. It is in this context that its CSR practices have aided the company in making financial transaction system more effective for better expansion of financial transaction system. Respectively, the financial transaction system of the company has assisted the company in meeting the financial needs of underserved people and others on a global context. Contextually, people are facilitated with the opportunity of managing their personal finances as well as developing assets, to build wider economy consecutiveness (Wharton, 2012). The company, in order to ensure that business operations are conducted ethically on a global context, has further emphasised continuous grooming of aligned business operations with different brands or companies dedicated in conducting their activities based on ethical standards (VISA, 2014). The company is also identified to adopt practices in accordance with which, employees are required to conduct their operations with a common vision, which has assisted the employees of the company to work as a team. Subsequently, the company is able to meet the expectations of stakeholders and communicate effectively, accelerating its sustainability position (Dunstans Publishing Ltd, 2012). Sustainability In this competitive and technologically advanced business scenario, business organisations are required to conduct their operations in accordance with determined business objectives. organisations are also required to adopt different corporate polices and strategies based on which, business activities are performed for effective sustainable development in different areas including environment, profitability and stakeholder welfare. In this regard, in order to ensure sustainability, organisations like VISA are witnessed to focus on different areas that include consumer, technology and business collaboration. For better sustainability, they also strive to ensure that needs of consumers are met in accordance or beyond their expectations. Additionally, business organisations are also required to implement advanced technology features through continuous innovation, so that operations are performed transparently and innovatively. Businesses are also identified to aim at collaborating activities with other profit and non-profit organisations with the aim of accelerating developments in the global economy. In this respect, business organisations, in order to ensure sustainable business performances, are recognised to align their business systems, business capacities and business processes with the aim of integrating sustainability in every business activity (Lacy et al., 2010). In this regard, VISA is identified to adopt different corporate strategies based on which, business operations are performed with better sustainability. The company has also been performing business operations in a transparent manner, as the people are offered with adequate information in relation to VISA application process, transaction procedures, rights as well as obligations. Subsequently, people are able to have a better understanding about the operational procedures and facilities offered. Contextually, the company, with the assistance of sustainability strategy, has been able to conduct operations in accordance with the needs of global people for sustainable business performances (Sustainability Management School, n.d.). The company is also identified to adopt different philanthropic mission or developmental programs, so that needs of global people are met successfully (Shemkus, 2013). In order to build sustainability on global market segments, VISA has focused on different areas wherein product development, security, business development, client relationship, technology as well as innovation are considered with enhanced significance. The development of the aforementioned areas has further assisted the company in performing its predetermined business operations yielding better sales figures and profit margins (Financial Times, 2012). The company has also implemented the measure of ‘Fair Value Measurements and Investments’ with the aim of ensuring that financial information are reordered as well as disseminated appropriately. Subsequently, the company measures financial information at a fair value and has been able to develop confidence amid stakeholders (VISA, 2011). Moreover, the company, with the intention of performing business operations based on sustainability strategy, has also followed specific procedures, which include assessment, strategy development and implementation respectively. Contextually, the company has also been observed to conduct periodic reviews of business and market requirements based on which strategies are formulated as well as implemented (BSR, 2009). Models of accountability Rhineland model: In the area of accountability, corporate ethics plays a vital role in shaping the responsibility of management towards organisational well-being. At the functional level, corporate ethics influences the activities of VISA vis-à-vis the external environment, such as suppliers and business associates. Conventionally it was understood that organisations exist for the primary beneficiaries of the owners, while reducing the negative consequences of others. However, in present days, such understanding has changed almost entirely, where much concentration is provided on beneficiaries of the shareholders. In this context, it can be stated that the Rhineland model of capitalism states that organisations require seeking the benefit of every stakeholder. However, such benefits should not originate from the expense of others’ interests, causing damage to the welfare of the overall organisation. In Rhineland model, an organisation is regarded as an independent socioeconomic unit creating an alliance of several participants such as shareholders, board of directors, employees, suppliers and customers (Habisch et al., 2005). In this context, it can be stated that the management of system of VISA also constitute various participants, striving towards continuity of the organisation. The responsibility of VISA extends to not only the owners, but also to other stakeholders. The company can be herewith asserted to be accountable towards the shareholders and investors when there is any conflict in interest persisting (Habisch et al., 2005). Nordic model: Nordic model signifies the paradigms of economic and social concerns, which are followed by Nordic nations. This model comprises combination of free economy and welfare state. Nordic model is fundamentally aimed at increasing individual sovereignty, encouraging social flexibility, ensuring universal endowment of basic human rights, stabilising the economy and obligating towards free trade within a given socio-economic context. Nordic model has several characteristics comprising of robust property rights and contract administration, low restriction to free trade in combination with cooperative risk sharing, low product market directive and low level of dishonesty among others. Unlike other socioeconomic models, Nordic model concentrates on improving workforce involvement in organisation and encouraging gender equality, which can also be observed in VISA. It is worth mentioning that Nordic nations are best administered with respect to economic and social activities in the world, which has apparently empowered these constituencies to industrialise rapidly than other nations. Through the application of Nordic model, VISA has effectively exploited the opportunities of globalisation and has been successful to enhance risk management activities (Andersen et al., 2007; VISA, 2014). Anglosakson model: The principle of free economy or free competition emphasises the typical components of a capitalist economy, globalisation and economic liberalisation. However, such aspects do not define the collective activities of companies in order to carry out businesses. Recently, several incidents such as financial crisis and fraudulent corruption in various companies have generated greater importance for corporate governance issues. Principally, there are two key systems available for organisations in order to apply corporate governance, including anglosakson model as one of those. The key priority of anglosakson model is to protect shareholders. In anglosakson model, the shareholders are liable for appointing directors who in turn are eligible to appoint managers in order to administer the business. Thus, organisations that use this particular model have separation of ownership and control with much transparency in their decision-making procedure (Senaratne & Gunaratne, 2008). Similarly, in VISA, one of the key priorities is to safeguard the interests of shareholders. Furthermore, in VISA, the directors are selected by the shareholders, wherein the effectiveness of this model is subject to better communication between shareholders, board of directors and the management regarding every vital business decision (Senaratne & Gunaratne, 2008). Codes Developed by OECD In order to increase accountability of organisations, OECD has developed codes on corporate accountability of organisations. These codes constitute lawfully binding principles and instruct legal business practices to organisations. Due to the recent financial crisis, there has been renewed interest in capital and control in transactions whereby these measures developed by OECD are expected to be effective in maintaining better governance. Free circulation of money, investment and services within national frontiers is also considered the key pillars for economic growth, increased employment and development. These codes encourage fair competition and economic effectiveness for the beneficiaries of the consumers. By establishing a cooperative and consultative procedure, OECD codes have supported in creating an environment where organisations can pursue national policies as well as achieve progress in business. The financial crisis has further revealed multiple inadequacies in corporate governance. The conventional standards failed to deliver framework that organisations require to follow in order to nurture sound commercial practices. Due to this reason, OECD has launched codes, constituting set of recommendations, for improvement in key accountability areas of organisations such as remuneration, risk management, board activities and implementation of shareholders rights. The codes are also intended to promote governments to assess and develop legal, formal and supervisory frameworks for corporate governance and to deliver direction as well as propositions for stock exchange, investors, organisations and other parties (OECD, 2004). In the similar context, VISA is also committed towards maintaining appropriate standards of commercial conduct. VISA has developed its unique codes of corporate governance and code of business conduct and ethics, which altogether performs towards openness and transparency in business and leadership. The codes of VISA are strategically directed by the board to every directors, officer and employee of the organisation. According to OECD codes, the corporate governance framework must provide strategic supervision to the organisation along with effective observations of management by the board and board’s accountability to the shareholders (OECD, 2004). Similarly, in VISA, the codes demonstrate basic strategies regarding business activities, which require to be maintained by every organisational member. In accordance with the OECD codes, the board appraises and directs the organisational strategies, develops key plans for business, generates risk management policies, creates annual budget, sets performance goals, oversees major capital expenditures and evaluates the business performance. Furthermore, equivalent of OECD codes, VISA has also developed certain rights for its shareholders by proper law and shared agreements. Accordingly, the codes are designed in order to protect the interests of shareholders, aimed to strengthen the value of the organisation in terms of increased honesty, innovation, cooperation with key stakeholders and business excellence (VISA, n.d.). Conclusion Conclusively, it can be comprehended from the foregoing discussion that VISA is a renowned payment technology group, offering different financial transaction services to worldwide customers. It is noteworthy in this context that the present business scenario has changed owing to intensified market competition for different factors that include advent technologies and increased business competitors. Additionally, business organisations are also identified to face challenges in different areas relating to financial scandals and unethical business practices. In this regard, VISA is identified to implement effective corporate strategies based on ethical business practices, business modes and governance codes. The company, with the assistance of corporate strategies, has subsequently been facilitated in performing business operations in accordance with the needs of stakeholders and other businesses. Respectively, the company has been able to conduct business operations with better accountability as well as sustainability, which directly promotes the advantages of accountability issues subjected to proper strategic consideration by business entities. References Andersen, T. M., Holmström, B., Honkapohja, S., Korkman, S., Söderström, H. T., Vartiainen, J. (2007). The Nordic model: embracing globalization and sharing risks. Retrieved from http://economics.mit.edu/files/5726 BSR. (2009). VISA: Aligning and strengthening corporate responsibility strategy. Retrieved from https://www.bsr.org/en/our-insights/case-study-view/VISA-aligning-and-strengthening-corporate-responsibility-strategy Corporate Accountability Research. (2011). What is corporate accountability? Retrieved from http://corporateaccountabilityresearch.net/files/2011/09/What-is-corporate-accountability.pdf Carroll, A. B., & Shabana, K. M. (2010). 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