Bonds between Economics and Business Management - Essay Example

Professional Journal 16/7/2007) Started my management today and received the outline of the It is startling how interconnected economics and business management is with social enterprise, history, and culture. Technology has made the world more accessible and also has held everyone a little more accountable for their actions. Can global trade reduce world tensions Is economic ideology related to social ideology These are questions that I'll attempt to answer. 18/7/2007) I read an interesting article today that says New Zealanders want the country to become a global leader on climate change. Striving for carbon neutrality not only makes good social sense, it makes good business sense. The US has balked at taking action on global warming citing fears it would hurt the economy. However, I think excessive planetary warming and polar meltdown would be more damaging. Besides, New Zealand is in an excellent position to lead the world in new carbon reduction products and technologies. It seems to be an inevitable path and we should take the lead. 19/7/2007) I had a discussion with my friend "Anthony" about the obligations that a business has to society. He is a strict free market advocate and believes the only obligation a corporation has is to make a profit. He argues that a business will self regulate its responsibility to society by its need to stay in business. He said if they sell substandard or unsafe products, the marketplace will reject them and the company will go out of business. I maintain that he has a naive view of business. A company that is only profit driven will focus on profit at any cost. They will use deceit, advertising, and lies to exploit the public. Companies will exploit consumers and nations will exploit weaker nations. Unsafe drugs will be sold that may take years to detect. A business has a responsibility to society and that should be a part of their motivation for existing. 21/7/2007) Random thoughts on stakeholder power: What do we do when there is a conflict of interest among the stakeholders What if a community thinks a business is creating too much noise at night On the one side there is the corporation, the suppliers, the shareholders, and the distributors, and employees who have little interest in investing money or paying higher prices for noise abatement. There are also the secondary beneficiaries such as local shops where workers spend their money. This bloc has vast wealth, legal teams, and wide support. On the other hand there are the local people who are annoyed by the noise. They have stakeholder power: economic, voting, political, and legal. But the only way that any of these powers are of any value is through organization. Non-economic stakeholders only have the power of organization because most companies will only be reactive. The role of the manager in the future will be to alter the reactive nature of business. 23/7/2007) 'Anthony' dropped by for another visit and we spoke about government's role in business. Of course, the hardened capitalist that he is advocated for absolute hands off of commerce. He did bring up a good point. He said that government regulation would always favor the party with the greatest influence. That's why the major portion of corporate public affairs involves relations with the federal government. In fact, government regulation is simply a tool that can be used by corrupt businesses to allow them to operate immorally within the law. He still insists that consumer choice and market pressures are the only real and valid form of regulation. 24/7/2007) Had to take a walk this evening in this chilly wet weather. I must remember to look for some footwear that is a little more resilient to moisture. Stopped by a little cafe and had a cup of coffee from Hawaii. Best I've had in quite a while. Made me think that I'm sitting in a local shop, drinking American coffee, and contemplating buying shoes probably from China. I'm no jet-setter but I certainly have gone global. As global cooperation and interaction increases how will we manage our intelligence and the economic environment 26/7/2007) Global trade agreements and trade organizations are the new form of peace treaties. Having trading partners gives the country an economic incentive to maintain good relations with other nations. This is not a new concept. It has been evolving since the 17th century and the industrial revolution. Technology, specialization, and transportation have been driving factors. They have also made war more possible and more effective. Trade negotiators may be the next nominees for the Nobel Peace prize. Totally free global trade and open markets may indeed make military action obsolete. There will only be economic sanctions to contend with. 28/7/2007) More thoughts on corporate responsibility: How can limited stakeholder power organize against a corporation where so few have so much power In the beginning of the 20th century when robber barons would take advantage of their employees and the market position to exploit their customers it became customary to view charity as corporate responsibility. Andrew Carnegie was forgiven by building libraries and schools. However, today the responsibility goes well beyond the simple act of charity. CSR has an obligation to provide safe employment and adequate wages. It must produce a safe sustainable product. It has a duty to the community, the revenue system, and the global marketplace. 'Anthony' would argue that these activities harm the corporation by impacting the profit margin. Yet, these activities will buy consumer goodwill and prevent expensive lawsuits. It can prevent expensive cleanup operations. It can attract the most talented employees. By demonstrating to a corporation that it is in their economic interest to practice CSR even the hard-line capitalists will begin to see its value. 30/7/2007) My management class has made a clear connection in my mind between the geographical space and the temporal concept than business must operate in. In a greater global arena, a corporation needs to also take a longer-term view of business. Their strategies must be conditioned in terms of years and decades, not just the next year's profit. 31/7/2007) What is the difference between management and leadership Leadership sets the standards and management maintains the standards. It has become more apparent to me that management can be learned, but leadership has to be acquired through experience. Many corporations, such as NIKE, had severe problems because the company was run by good management and poor leadership. They made money for their shareholders at the expense of their reputation. Their new citizenship statement reflects a better leadership style than in years past. However, they may never fully recover from their own self-inflicted damage. When a company has low standards, they will perform poorly in the long run, no matter how well managed they are. 2/8/2007) The quote "The human face that CSR applies to capitalism goes on each morning, gets increasingly smeared by day and washes off at night", explains the shallowness that CSR has the risk of becoming1. Other countries and cultures may not share our vision of corporate citizenship and may just present a happy face. This is especially true where a country may have little experience with capitalism. They are more likely to exploit its advantages and overlook the responsibility that it places on society. Capitalism must have a conscience to be successful. That's the role of leadership. 3/8/2007) Vocabulary word for the day: Transparency, transparency [trans-pair-uhn-see, -par] The full, accurate, and timely disclosure of information. Transparency gives the stakeholders a better look inside a company's operations and allows analysts to more accurately evaluate their business practices. More than any other quality, transparency has the ability to forewarn of problems and raise problematic issues. The Enron disaster might have been averted had they practiced greater transparency. Would their accounting practices have stood up to the light of a close examination I doubt it. I brought this up to 'Anthony' and the die-hard capitalist said that transparency was an invasion of corporate privacy. They are under no obligation to reveal any more than is required by law. Whose company is it anyway Is it the shareholder's and management's or does a corporation actually belong to the public and shareholders are merely stewards I lean toward corporate stewardship that has a responsibility to the public. 4/8/2007) Who does a corporation have its greatest responsibility to If the corporation has an obligation to the public, it has a duty to inform and enlighten their customer base. Business has the power to help guide consumers to make intelligent choices. It is incumbent upon the oil companies to offer fuel saving methods and alternative energy sources. The agriculture industry needs to develop sustainable food and utilities need to pursue energy savings rather than energy sales. However, it goes against the free market philosophy of 'give the consumer what they want', and enters into being a nanny for society. Plastic bags kill wildlife around the globe, yet grocers use them and justify it with the argument that it is what the consumer favors. Sometimes society needs to be nudged into a habit by corporations who have accepted the responsibility for leadership and a commitment to public service. 6/8/2007) Ethics can be relative. I was presented with the scenario of working on a project in a foreign country. The country had a long tradition of bribing local officials. The only way to obtain the proper permits for the project would be to bribe a local official. However, the company I worked for had a strict prohibition against bribery. I could violate my company's code and complete the project for the benefit of the shareholders and the host country, or I could refuse and lose the project. If I were to get caught violating the company policy, I would be fired and risk ruining my career. Since I can't change the culture of the host country, I would take the personal risk and bribe the official. I would complete the project for everyone's benefit. If I got caught, it would only be me that suffered any consequence. Ethics need to be in context with the environment that they are working in. 8/8/2007) I read the news today, oh boy. They have recalled jewelry made from 100% lead from the United States and Australia. The article said it was very likely to have also been imported to New Zealand. This highlights the potential that unchecked capitalism has to harm the public. The jewelry was imported from China, which has different standards than we do. Unsuspecting consumers could develop lead poisoning years after wearing a lead ring. Who is to blame here A. Is it China who was merely practicing free market policies by providing inexpensive jewelry B. Was it the importer who is profit driven and willing to take a risk C. Was it the shopkeepers who could not be expected to know the metal content of the items D. Or was it the consumer that was ignorant and cheap enough to buy it I'm going with E. All of the above. Public safety and CSR is everyone's responsibility. 8/10/2007) I called 'Anthony' and told him about the lead jewelry. He remarked that the system worked since it was promptly removed and there were ongoing inspections to locate it. He said that was a tribute to capitalism and not a failure. It's hard to argue that point. Anyone could have caught the product anywhere along the line. Of course, they would have lost business and probably their job. No matter what is written in a code of ethics, the real ethics of a corporation are born out of its culture and ethical climate. People will tend to acquire the ethics of the organization that they are working in. 8/11/2007) It seems the only way to alter an organization's ethics is to make an economic incentive for doing so. Neither legal compliance nor moral code will accomplish it. If a company is corrupt, they will probably not comply with the law. Even the most virtuous employee will succumb to unethical behavior in a corrupt business. Whistle blowing laws, while admirable, offer little protection against corporate giants. They are ideals that need to be in place, but they are ineffective at protecting the worker from stigmatism or firing or worse. Consumers need to organize and inform the corporate structure that it is in their best financial interests to be ethical, sustainable, safe, and responsible. Read More