Corporate Responsibility and UK Governance Code

This report focuses on the current approach to corporate governance and UK governance code within Sport Direct Company. It critically appraises the system and processes of the organization for managing business ethics.

Corporate Responsibility
1

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
(a) Current approach to corporate governance and UK governance code ..................................3
(c) The organization system and processes for its management of business ethics.....................5
CONCLUSION................................................................................................................................8
REFERENCES ...............................................................................................................................9
2

INTRODUCTION
In the present environment, organisations are required to meet their responsibilities
regarding legal, economical and ethical consideration that support them to sustain in the industry.
Corporate responsibility is the key approach or practice which mainly involves activities that
support the community and their shareholders (Walker-Said and Kelly, 2015). For the present
ethical audit report, the selected organisation is Sport Direct Company which is the leading
British retailer that deals in offering products related with sport goods. Along with this, report
will focuses on understanding the current preposition of corporate governance within the
organisation. While, it also critically appraise the system and processes of the organisation so
that they can manage the business ethics.
(a) Current approach to corporate governance and UK governance code
Sport Direct Company is one of the leading UK retailer that deals in offering range of
products related with sports, fitness, fashion etc. the cited firm mainly concentrate on the
corporate responsibility practices through focusing on areas like people, health and safety,
environment, customers and community (Kamal and El-Masry, 2016). Corporate governance is
an effective mechanism as well as system of practices through which company is been directed
and controlled by their directors. It also includes levelling the interest of different stakeholders so
that they can satisfy their requirement. In order to present corporate responsibility, UK
government focuses on framing the governance structure with the code and regulation whose key
aim is to facilitate the activities related with effective management within the organisation so that
they can easily attain the long terms success (Hillenbrand, Money and Ghobadian, 2013). UK
government emphasizes on the key principles of code that need to be implied within the
organisation so that staff may engage in the performance of ethical activities.
The foremost principle within the corporate governance includes leadership i.e. company
must be directed by effective board that have their clear section of their responsibilities that need
to be followed (Denis, 2016). So, that company may easily attain the long term success.
According with this principle of leadership, the current approach to corporate governance within
Sport Direct Company ensures effective board that consists of chairman and different executive
directors Whose key responsibility is to ensure delegation of leadership to the management so
3

that they can engage in operating the daily activities which support in leading the group
(Claessens and Yurtoglu, 2013).
Another code that is framed by UK corporate governance include effectiveness among
the board of company. So that they may engage in balancing their skills and knowledge that
support them delegating effective duties and responsibilities (Bushee, Carter and Gerakos, 2013).
It has been critically evaluated that to ensure effectiveness within the Sport Direct Company
must establish the audit committee that engage in reviewing ethical standard has been followed
in the company or not. Along with this, it also enable their effectiveness through engaging in the
external audit process.
In addition to this, another principle within the UK governance code include
accountability which says that the board must focus on establishing the transparent and formal
arrangements through which they can implement the provision related with corporate reporting
as well as risk management so that they may easily achieve the strategic objectives (Larcker and
Tayan, 2015). In order to meet the principle of accountability within the Sport Direct Company,
board emphasizes on implementing the financial reporting process that prepare the financial
account so that it may meet the interest of the stakeholders.
Another section of the UK governance code include engaging in designing proper
remuneration system by the executive directors so that they can easily promote the success of
company in the long run (Weiss, 2014). Therefore, government has also stated that performance
related elements and components must be kept transparent so that other stakeholders may not get
de-motivated. Therefore, to meet this code related with the governance, executive directors
within the organisation must engage in constructing provocative activities related with
management of performance as well as it also engages in setting the remuneration levels so that
they can easily satisfy their stakeholders (Quarshie, Salmi and Leuschner, 2016). In order to
ensure providing proper remuneration to staff and employees the board within the company is
assisted with principle so that it include establishing remuneration committee that conduct
meetings with members so that effective decision regarding the remuneration is been made
(EVERYTHING IS CHANGING, 2017).
The last principle within the UK governance code includes engaging in proper
relationship with all their shareholders so that they can fulfil their interests (Hwang and Chung,
4

2016). This principle within the corporate governance include that board must have effective
communication with their shareholders regarding the understanding of goals and objectives. It
has been required that to ensure proper relationship with shareholders, they must conduct the
meeting with their shareholders and investors which support in active participation. It has been
assessed that the current corporate governance within the Sport Direct Company has recognized
the significance of communication among their different shareholders (Paulraj, Chen and Blome,
2015). Therefore, it may be done through providing annual reports to all of their investors and
shareholders.
Therefore, the group within Sport Direct Company has been formulated that is mainly
committed with the high standard of corporate governance within the premises so that activities
may be effectively directed and controlled (Walker-Said and Kelly, 2015). The key responsibility
of the group within the organization is that all the members and systems incorporate within the
board so that they may easily engage in taking effective decision. It is an ongoing procedure that
mainly engages in the activities related with determining, measuring as well as monitoring of the
certain risks. Thus, company complies with the different corporate governance codes that are
framed by the UK government.
With the help of conducting interview from the existing employees within the Sport
Direct Company it outcome in determining the level of ethical practices within the organization.
The certain interview question include-
Is the company following the UK conduct code within the premises?
Is the company is engaging in any unethical activities?
Do the activities meet the requirement and needs of the individual?
From the above different ethical questions it has been assessed that shareholder are satisfied with
the activities that are rendered by the company.
(c) The organisation system and processes for its management of business ethics
Business ethics refers to ethics principles and morality for doing business. It practical on
different aspect within the business that conduct effective action for individual and organisation
(Kamal and El-Masry, 2016). These ethics guide the company what is right and what is wrong.
In order to successfully engage in meeting, the corporate responsibility organisation is
required to ensure proper management of business ethics that basically considers the view point
5

related with the activities. It has been critically appraised that there are different systems and
processes within the organisation that need to ensure ethical activities so that they can easily
fulfil the interest of the stakeholder (Hillenbrand, Money and Ghobadian, 2013). The key
process within the Sport Direct Company includes procurement of material and sport products
that are required to be delivered to different customers. Therefore, this process focuses on ethical
practices as the company procure the sport merchandise with the manufacturer within the
community that uphold or implement the ethical practices related with delivering the quality
sport products to the company. Along with this it also eliminate the defective product from the
packaging process (Denis, 2016). In addition to this, it has been critically evaluated that
organisation process has the key responsibility in managing their activities in such a manner that
it may not impact the environment where company operates their operation. Thus, for managing
the ethics while procuring the material company must engage in using effective transportation
system that lessly pollute the environment and reduces the rate of carbon emission. This effective
practice would protect the environment and also ensure proper management of transportation
(Claessens and Yurtoglu, 2013).
On the contrary to this, it has been critically evaluated that organisation process does not
engage in effective trading practices as they offer the product to their customers at different
prices. Thus, these trading practices within the organisation are considered as an unethical
practice that affects the performance of the organisation (Bushee, Carter and Gerakos, 2013).
Along with this, for selling the range of sports product in the market company also
engages in the online activities as with the help of this they can easily distribute and supply
products to the customers (Larcker and Tayan, 2015). In order to manage the online activities of
Sport Direct Company, management need to ensure activities that support the ethics within the
business. For instance, ethics in online distributing of sport product ensure focuses on the
security and privacy of the customer’s personal information to ensure satisfaction and build trust
among them regarding the company’s products. On the other hand, Larcker and Tayan (2015)
has stated that company do not engage in implementing different layer while making the online
purchasing therefore, it may sometime results in conducting the wrong and unethical practices
that impact the perception of customer related with online shopping. In addition to this, it has
been stated that increasing growth of online shopping among the individual faces certain ethical
6

issues related with their privacy and security (Ethical Issues in E-Commerce on the Basis of
Online Retailing, 2011). It has been also measured that with the increasing online activities and
communication, it increases the level of their services along with this it also reduces the overall
cost associated with the printing that results in addressing their income in a proper manner.
Therefore, for the management of business ethics in this process they must engage in the
activities which results in protecting and securing the information of the customers.
Another effective system within the Sport Direct Company include that the company
should have effective supply chain management as they are committed to engage in effective
business practices. Therefore, the cited sport retailer organization should impose effective code
of conduct practices that insists all of their suppliers to adhere that outcome in ethical practices.
From the view point of Claessens and Yurtoglu (2013) implementing code of conduct or rules
within the company helps the staff to be treated equally and fairly as well as it also eliminates the
illegal activities related with producing and supplying the sports products to the customers
(Claessens and Yurtoglu, 2013). Along with this, the cited retailer company also focuses on
maintaining relations with their suppliers as they engage in adhering the Sport Direct's standards
through which the company ensure that goods and merchandise meet the standard of quality. In
addition to this, Hwang and Chung (2016) has also stated that for the management of business
ethics in the supply chain management system company conduct the tests on fabric and material
for the products (Hwang and Chung, 2016).
Along with this, the organisation system also includes their centralised commercial as
well as different supporting function through which they can easily sell their sports products
among different customers (Paulraj, Chen and Blome, 2015). Therefore, it supports the company
in engaging in effective operational activities related with warehousing of sport products so that
it can fulfil the requirement of the different customers. In addition to this, the established
committee within the Sport Direct Company also engage in ethical activities through providing
opportunities related with inspiring, motivating and empowering the staff within the company so
that they can easily assists in accomplishing the goals and objectives. The company also ensure
proper commitment among the staff through engaging in constant developing and rewarding
them within the premises (Walker-Said and Kelly, 2015). Therefore, all these ethical practices
related with employment assist in enhancing the level of commitment towards the organisation
7

which directly helps in achieving desirable growth. With the help of all these activities, company
can easily engage in management of their ethical activities that support in executing their
activites and duties towards the organisation as well as environment in which they are operating.
Along with this, it would also positively impact in meeting their responsibilities related with the
social and economical that directly enhances their performance and image in the environment
(Paulraj, Chen and Blome, 2015).
CONCLUSION
From the above report it has been concluded that company need to focus on
accomplishing the social responsibilities that assists them to sustain in the community. Along
with this, it also helps Sport Direct Company to engage in the ethical practices that enhances
their image within the industry. Along with this, the report also measures the current corporate
governance structure that organization follows to engage in the ethical practices.
8

REFERENCES
Books and Journals
Bushee, B.J., Carter, M. E. and Gerakos, J., 2013. Institutional investor preferences for corporate
governance mechanisms. Journal of Management Accounting Research. 26(2). pp.123-149.
Claessens, S. and Yurtoglu, B.B., 2013. Corporate governance in emerging markets: A
survey. Emerging markets review. 15. pp.1-33.
Denis, D., 2016. Corporate Governance and the Goal of the Firm: In Defense of Shareholder
Wealth Maximization. Financial Review. 51(4). pp.467-480.
Hillenbrand, C., Money, K. and Ghobadian, A., 2013. Unpacking the mechanism by which
corporate responsibility impacts stakeholder relationships. British Journal of Management.
24(1). pp.127-146.
Hwang, J. and Chung, J. E., 2016. The Roles of Business Ethics in Conflict Management in
Small Retailer–Supplier Business Relationships. Journal of Small Business Management.
Kamal, N. and El-Masry, A. A., 2016. Corporate Responsibility Index. InEncyclopedia of
Corporate Social Responsibility. Springer Reference & Database Publishing.
Larcker, D. and Tayan, B., 2015. Corporate governance matters: A closer look at organizational
choices and their consequences. Pearson Education.
Paulraj, A., Chen, I. J. and Blome, C., 2015. Motives and performance outcomes of sustainable
supply chain management practices: A multi-theoretical perspective. Journal of Business
Ethics, pp.1-20.
Quarshie, A. M., Salmi, A. and Leuschner, R., 2016. Sustainability and corporate social
responsibility in supply chains: The state of research in supply chain management and
business ethics journals. Journal of Purchasing and Supply Management. 22(2). pp.82-97.
Walker-Said, C. and Kelly, J. D., 2015. Corporate Social Responsibility?: Human Rights in the
New Global Economy. University of Chicago Press.
Weiss, J. W., 2014. Business ethics: A stakeholder and issues management approach. Berrett-
Koehler Publishers.
Online
EVERYTHING IS CHANGING, 2017. [Online] Available through:
<http://www.sportsdirectplc.com/~/media/Files/S/Sports-Direct/annual-report/Annual
%20Report%202015%20-%20FINAL.pdf>. [Accessed on 7th January 2017].
9

Nardal, S., and Sahin, A., 2010. Ethical Issues in E-Commerce on the Basis of Online Retailing.
[Online] Available through: <http://thescipub.com/PDF/jssp.2011.190.198.pdf>.
[Accessed on 7th January 2017].
10