Kobe Steel Scandal: Ethical Issues and Corporate Social Responsibility
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This report discusses the Kobe Steel scandal, focusing on the ethical issues and corporate social responsibility. It analyzes the discrepancies in data falsification and the impact on stakeholders. The report also explores the concept of sustainability and the triple bottom line model.
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Table of Contents INTRODUCTION...........................................................................................................................3 MAIN BODY..................................................................................................................................3 Corporate Governance.................................................................................................................4 Corporate Social Responsibility..................................................................................................5 Carroll's Pyramid for Corporate Social responsibility.................................................................5 Discrepancies in CRM done by Kobe Steels...............................................................................6 Sustainability...............................................................................................................................7 Triple Bottom Line......................................................................................................................7 Ways to Promoting Sustainability of organization......................................................................7 Discrepancies in Claims Organisation.........................................................................................7 PART 2............................................................................................................................................8 Normative Theory........................................................................................................................8 Descriptive Theory......................................................................................................................8 PART 3............................................................................................................................................8 Perspective of Different Stakeholder...........................................................................................8 CONCLUSION................................................................................................................................9 REFERENCES..............................................................................................................................10
INTRODUCTION Business ethics can be considered as approaches of implementing appropriate business policies and activities to overcome the arguably subjects with in the organization. This is important for the business organization to full fill all the business activities along with following business ethics with in organization. There are various ethical consideration are used by the organization to meet their organizational target with higher efficiency. This report is providing brief of Kobe Steel, Mitsubishi Materials, and Japan’s Corporate Governance Woes. Mitsubishi is one of the largest manufacturing organization(Crane, Matten and Spence, 2019). Mitsubishi Materials was established in year 1871 by Yataro Iwasaki. The Headquarter of the organization is in 3-2, Marunouchi 3-chome, Chiyoda-ku, Tokyo, Japan. Sustainability is mostimportant for the business organization. This can help the organization to manage and keep their business operations sustainable from the perspective ofeconomy, society and environmentally. This report is analysing scandal of information falsification that is performed by Mitsubishi Materials in year 2017. This business case has been studied from different business perspectives in order to analyse various ethical issues that are analysed in the scandal of data falsification. MAIN BODY This is important for the business organization to maintain and follow all the business ethics with in the business organization in order to maintain effective business practices in the organization. By following ethics organization can make proper arrangements to perform effective business in market place. There are different ethical consideration ore followed by organization to keep business sustainable from different perspective. In the case of Mitsubishi Materials main issue that is found is data falsification. In this scandal company has provided false data related to the material used in the products that are made with aluminium and copper. In this case company has admitted that one of its subsidiaries has falsified the data regarding the material that is used in production of products that are used in crucial parts of cars, air crafts (Grayson and Hodges, 2017). The Mitsubishi Materials is one of the largest manufacturing organization that is working with Kobe Steel Ltd on copper tube joint venture. It has been found that company is falsifying the product quality data. It has rose high pressure on manufacturing organization in Japan. As per the statement of Mitsubishi Materials that Mitsubishi Cable industrial unit had falsified data since April 2015 related to the quality of rubber o - rings that are used to prevent the leaks in the air crafts, cars and other equipment’s. There some issues were also found in the subsidiary of company that is producing metal products. The quality standards of metal products were found below quality standards that are claimed in data provided by the
company. This is one of the most critical ethical issue that is admitted by Mitsubishi Material in year 2017. The actions that are taken by the Mitsubishi material regarding the scandal of data falsification can be considered as violation of business ethics in corporate environment. Falsified data provided by the company was related to the metal products which are used in cars, air craft and other mechanical instruments. The products are found under the quality claims that are made bytheproductionsubsidiary.Afterthisscandalwasuncoveredbyinternalanalysisof organization senior leaders of organization have made apology in a press conference. The action that is performed by organization management and leader ship was good and gentle but there are some other actions also can be done by company. In the production of these metal products substandard material was used by organization. So this is duty of organization to provide compensation to the companies who have bought the product of Kobe Steel. By this process they would be able to full fill their business ethics in market place(Lins, Servaes and Tamayo, 2017). This is important for the organization to take proper actions in order to complete respective actions in order to full fill their corporate social responsibility. The CSR (corporate Social Responsibility) of the organization are important for the business of organization in target market. By following these responsibilities organization can full fill all the requirement of the organization that are related to the brand value of organization in market place. Corporate Governance Corporate governance can be defined as rules and laws that need to be followed by each business. Companies are monitored and regulated by these code of conduct of corporate governance. Carroll pyramid model of CSR explains that there are certain responsibilities that need to be fulfilled by each company. Economic responsibility means business has to make profit to contribute well in economy of nation. Legal responsibility means to follow all rules carefully and take care that all employees follow these regulation properly(Schrempf-Stirling, Palazzo and Phillips, 2016). Ethical responsibility means companies need to act ethically as they have to give respect to all its stakeholders. Philanthropic responsibility states that firm has to work for society welfare as well. In the case of Kobe steel, company has hide details regarding quality of material with its consumers and other stakeholders. Falsifying data regarding quality is wrong ethic. Kobe was responsible for transparency but it has not followed that responsibility. CEO of company needs to maintain transparency. All board of director and other important authorities
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need to share required information with right person. This falsifying data has affected the reputation of business to great extent. Accountability is necessary practice that must be ensured in business unit.Board of director, fiscal council, CEO are responsible person to maintain accountability in firm. These bodies need to work so that company can manage operations well. Faulty airbags of Takata were responsible for death of many person hence these bodies failed to perform their responsibilities well. Fairness is another essential code of conduct of corporate governance where it is responsibility of business to treat all stakeholders fairly without hiding anything. Corporate Social Responsibility There are different actions are performed by the business organization in target market that are based on self-regulatory business model of organization(Hopkins, 2016). This model are used by the organization to maintain their social accountability in order to meet all the ethical and social requirement. By following this model organization will be able to perform various standards with in organization to full fill needs of stake holders, employees and public. The main purpose of the corporate social responsibility is to make proper investment in the activities that are performed by the organization for the well being of people to over come the impact of their actions in order to avoid negative impact of organizational operation in target market. The main objective of the organizational regarding corporate social responsibility is to meet sustainable need sof organization for environment society and economy of country. By implementing this system in company practices Mitsubishi Material can improve their brand value in target market. Carroll's Pyramid for Corporate Social responsibility It is a simple frame work that is used by the organization to justify that why they have to implement and meet Corporate Social Responsibilities.The key features that are used in this model are- profit must be considered first, implication of all laws and regulation in the operation of organization and meet all the ethical duties of organization. This model is based on four consideration to justify the needs of following CSR policy in company(Jamali and Karam, 2018). These considerations are- Economic, Legal, Ethical and Philanthropic. By this evaluation process it can be found that why this is important for the organization to implement corporate social responsibilities in Kobe Steel. Economic
This is most important for the organization to meet all the profit in order to compete with its competitor in market place. For gaining profit from market place this is important or the business organization to implement corporate social responsibility with in organization. Legal There are some laws and regulations are also need to be followed by the organization to keep its actions legal in market place. The CSR model that is implemented by organization can help the organization to full fill all the requirements of legislation and regulations that are designed by the legal authority of country. Ethical This is main part of implementing CSR policy in organization. This can help the company to full fill all the ethical requirements of organization in business operations. this how implementation of CSR will be effective for the organization. Philanthropic There are some actions are performed by the organization that have negative impact on performance of organization. This is responsibility of the company to compensate the damage that is done by them by their business operations. By implementing CSR in organization company will be able to recover the damage to society, economy and environment. In the case of Kobe Steel this is important for the company to implement the Corporate SocialResponsibilityinbusinesspracticesinordertoavoidethicaldamagecausedby falsification of information regarding quality standards of products that are developed by Kobe Steels(Cui, Jo and Na, 2018). Discrepancies in CRM done by Kobe Steels There are some responsibilities of the organisation regarding ethics in market place. This is important for Kobe Steels to provide specific and accurate measures of quality standards of products that have been developed by the company in their manufacturing plant. In this case Kobe Steels has provided false information to its clients who are using these products in their manufacturing plant or the products like Air craft, Cars and mechanical instruments. Here the main discrepancies in the information that is provided by them to the client companies. This false information could have lead the organization or people associated with their products. This is how Kobe Steels have violated the ethical standard of CSR policies. Consistency of Organization with its Claimed Values This is duty of the organization to provide accurate and precise information to its clients to protect their rights and avoid the cases of violating their basic fundamental rights. The change
that are evaluated in the quality data of company report that is provided to the client. It can not be considered as major mistake that is performed by organization but due to regular issues in data provided to the client can be considered as intentional changes and misleading information to the customer of the company(Trevino and Nelson, 2016). This is how the information that is provided to client in form of quality report shows the major inconsistency in reports of Kobe Steel Company. As per this situation do not reflect the high value services of company to its clients. Sustainability Sustainability can be considered as the capability of the organization to maintain coexistence of biodiversity of environment and capability of the humans. Majorly sustainability of the business organization can be considered as activities that are performed by organization to prevent the negative impact of their activities on economy, environment and society. This also can be related to prevent the excessive use of natural resources to save some of these resources for the next generation by implementing practices like recycling and reusing in business operations. Triple Bottom Line Triple bottom line model can be considered as framework that is used by the business organization to make commitment regarding social and environmental concerns. As per this model there should be three bottom line for the performance of organization for organizational to full fill all the requirements of the organization. These three base line of these model are profit, people and environment. These all three considerations should be made by Kobe Steels to perform their business with all ethical considerations. Ways to Promoting Sustainability of organization There are different practices can be performed by the business organisation to promote there sustainable actions in market place. These sustainable operations company can show its commitment towards fulfilling ethical requirements of people, society and environment. The most common way that can be used by organisation is to follow corporate governance and corporate social responsibilities. Discrepancies in Claims Organisation As per the scandal that have been uncovered in year 2017 is had been found that organisation was continuously violating fundamental rights of customers by providing false information to them regarding quality of the product. So the claims that are made by organisation are completely different from actual situation
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PART 2 Normative Theory Deontology According to this theory the actions of organisation should be based on morals that are justifying right or wrong decision of the company in business operation and this morality should be based on series of rules and regulations instead of on basis of consequences of actions. This is how actions of organisation can be kept good for ethical practices of organisation. Descriptive Theory Individual Factor Theory Behaviour of a person or ethical behaviour of person at work can be affected by different factors that are present within the organisation. These factors are knowledge, values, personal goals, professional development, individual growth, morals and personality. More knowledge possesse by organisation can help them effective way to keep their actions ethical in the market place. PART 3 Perspective of Different Stakeholder Impact of Ethical Practice on Internal and External Stakeholder The impact of ethical practices have positive impact on internal and external stakeholder of organisation. It can help the company to implement better work standards within the organisation. The internal stakeholder of organisation are – employees, managers, company owner, leaders and entire workforce(Pearson, 2017). These people will be benefited by ethical practices that have been implemented by the organisation in work practices and it will boost their performance. Impact of Unethical Practices on Internal and External Stakeholder The impact of unethical practice are highly negative for the performance internal stakeholders of organisation. The falsification of the organisation admitted by Mitsubishi Material is highly negative for motivation level of employees along with other internal and external stakeholder of organisation. Unethical practices of organisation can reduce the brand value of the company in market place and affect its performance standards in current market scenario. This is how the impact of ethical practices is good and positive for performance and motivation of internal and external stakeholders of company. On the other hand unethical practices can majorly affect and decrease performance and motivational level of internal and
external stakeholder of organisation in functions and market operation. This is how impact of ethical and unethical practices of Mitsubishi Materials in business operation. RECOMMENDATIONS There are different changes can be made by organisation in business practices and monitoring process to effectively control the functions and decision that are taken by lower level managementoforganisation.Therearevarioustechnologieslikeartificialintelligence, automation, information system, digital technology and smart controlling system to effectively control actions of organisation in target market. All these changes can lead company to implement effective and better business standards within Mitsubishi Material. CONCLUSION This report is concluding importance of ethical sustainable and profitable business strategies for Mitsubishi Materials in international market scenario. This scandal of Kobe Steel Company hasbeenstudiedandanalysedthroughoutthewholereporttounderstandinghowdata falsification can lead business organisation to negative performance and brand value in market place. The importance of corporate social responsibilities has been studied and analysed in report. The effectiveness of ethical practice also has been evaluated to found its impact on internal external stakeholder of organisation. Various recommendations has been made to improve the business procedure of company in market place.
REFERENCES Books and Journals Crane, A., Matten, D. and Spence, L. eds., 2019.Corporate social responsibility: Readings and cases in a global context. Routledge. Cui, J., Jo, H. and Na, H., 2018. Does corporate social responsibility affect information asymmetry?.Journal of Business Ethics.148(3). pp.549-572. Grayson,D.andHodges,A.,2017.Corporatesocialopportunity!:Sevenstepstomake corporate social responsibility work for your business. Routledge. Hopkins, M., 2016.The planetary bargain: corporate social responsibility comes of age. Springer. Jamali, D. and Karam, C., 2018. Corporate social responsibility in developing countries as an emerging field of study.International Journal of Management Reviews.20(1). pp.32- 61. Lins, K.V., Servaes, H. and Tamayo, A., 2017. Social capital, trust, and firm performance: The value of corporate social responsibility during the financial crisis.The Journal of Finance.72(4). pp.1785-1824. Pearson, R., 2017. Business ethics as communication ethics: Public relations practice and the idea of dialogue. InPublic relations theory(pp. 111-131). Routledge. Schrempf-Stirling,J.,Palazzo,G.andPhillips,R.A.,2016.Historiccorporatesocial responsibility.Academy of Management Review.41(4). pp.700-719. Trevino, L.K. and Nelson, K.A., 2016.Managing business ethics: Straight talk about how to do it right. John Wiley & Sons. [Online]. Available through : <>.