Ethics and Corporate Social Responsibility PDF

Ethics and Corporate Social
Responsibility in
Accounting

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Understanding of globalisation with respect to businesses..........................................................1
The way in which globalisation impacts businesses and their stakeholders................................2
Impact of globalisation on accounting profession.......................................................................4
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................6

INTRODUCTION
Globalisation is facilitating large as well as small organisations to expand their businesses
all around the world. With the help of it companies can execute their operations in different
countries and attain business goals (Hayakawa, Machikita and Kimura, 2012). The organisation
which is selected for this report is is Vodafone Plc. It is a British multinational
telecommunication company and executing business all around the world. Its headquarter is in
London, United Kingdom. Various topics are covered under this report such as concept of
globalisation, the way in which globalisation impacts businesses and their stakeholders. Apart
from this, impact of globalisation on accounting profession is also covered under this
assignment.
MAIN BODY
Understanding of globalisation with respect to businesses
Globalisation can be defined as the process of interconnecting the world by increasing
trade and exchange of culture. It has resulted in enhanced production of goods and services all
around the world. Barriers for companies are also reduced with the help of globalisation to enter
in to international market as restrictions related to foreign trade are also being decreased.
Vodafone is one of the largest telecommunication brand which is successfully operating its
operations all around the world. It has facilitated the enterprise to raise finance and investment
for it to operate business internationally (Jeníček, 2012).
After globalisation Vodafone expanded its business in various countries as the rules and
regulations of government were decreased after it. Higher profits are also generated by various
other companies with the help of it. For example, Mc Donald's have attained end number of
benefits due to globalisation because it has helped the company to expand its business in various
countries and generated higher revenues. After adopting global market Mc Donald's have
established more than 34000 restaurants in almost 118 countries and delivering meals to more
than 69 million people every day. This success is achieved by the organisation by analysing
market situations and opportunities which have taken place after globalisation (Growth of Mc
Donald's, 2014).
Globalisation helps developing countries to get developed with the help of large
companies which are planning to expand their business in different locations. Contribution of
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such types of companies helps to develop the economy and increase national income. Marks and
Spencer is one of the large sector organisations which is mainly established in United Kingdom.
This enterprise is also benefited by globalisation and planning to open new 250 stores across the
world. There are various countries such as Latvia where Marks and Spencer is willing to operate
its business. All these plan that are formulated by the entity are going to be executed in next
three years. With the help of globalisation it will open new food outlets in various new locations.
Main purpose of all these strategies is to expand business internationally in order to capture
larger market share (Growth of Marks and Spencer, 2019).
From the above analysis it has been understood that globalisation is a tool which
facilitates business entities to expand their business in new locations so that larger market area
can be captured and profits can be maximised. In order to start international trade it is very
important for organisations to adapt rules and regulations of those nations where the business is
going to be established. It helps developing countries to get developed by inviting large sector
organisations to launch their business there and help to increase national income. It has also
helped Vodafone to expand its business in various locations and raise its profits and revenues
(Impact of globalisation, 2018).
The way in which globalisation impacts businesses and their stakeholders
Globalisation leave positive as well as negative impact upon business entities by creating
complexities and opportunities to execute business in different locations. Due to this mind set of
stakeholders also get impacted as they change it according to profitability and market image of
the company. Globalisation helped Vodafone to increase capital flow, foreign investment and
technology. With the help of it the organisation has expanded its business in different locations
and attained various benefits such as enhanced profitability. All the impacts of globalisation on
businesses and stakeholders are as follows:
More efficient market: Globalisation creates more efficient markets for organisations
such as Vodafone, Mc Donald's etc. It leaves positive impact upon functionality on overall
business processes because with the help of it organisation can operate in multiple markets where
higher revenues could be generated. Shareholders in Vodafone get impacted due to globalisation
as their interest within company will be increased if they analyse that entity is having end
number of markets where business can be operated successfully (Ang, 2016).
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Increased wealth equality throughout the world: With the help of globalisation wealth
equality throughout the world get increased which leaved positive impact upon business
activities. It will also result in enhanced wealth of Vodafone which will generate interest of
investors in the company as they only invest in such enterprises where they can generate higher
returns on their money. In this way their interest within the organisation get impacted due to
globalisation. If company generates higher revenues then it helps to attract more and more
investors. When profits get decreased then stakeholders get negatively impacted.
Enhanced competition: Globalisation results in increased competition in the sector
which affect businesses to execute their operational activities appropriately. Due to this internal
stakeholders such as managers and employees of Vodafone can get affected as they have to work
more effectively in order to deal with the competition available in the market. It also provides
opportunities to companies to develop and grow their business by providing good quality
products and services to clients and increase their satisfaction level. It is the best way to deal
with all the other companies which are executing business in same sector (Shenkar, Luo and Chi,
2014).
Price instability: It is one of the negative impact of globalisation as it results in price
instability. In order to expand business in multiple countries some of the companies provides
goods and services to clients on low prices which leaves negative impact on other organisations
as they also have to sale their products on low cost in order to survive in market. All these
activities enterprises face challenges related to price instability which affects their business.
Vodafone has also faced such types of issues due to globalisation where competitors decrease
their prices in order to rule the market. It directly leaves impact upon external stakeholders such
as customers because they have to choose one from end number of service providers (Saka-
Helmhout and Ibbott, 2014).
Job insecurity: It is also a negative impact of globalisation which affects businesses and
stakeholders. While planning to expand business in different locations organisations such as
Vodafone recruit employees from the region where business is being expanded. After
globalisation all the individuals have started to look job out of their home country as they think
that they will get higher compensation there. Employers take advantage of it and hire labour at
cheap cost. When employees get to know that then they get impacted and try to switch to other
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enterprises. It will affect the business as skilled workers will leave the company and stakeholders
such as staff members will be affected as they won't continue the job due to less pay.
From all the above described points it has been assessed that globalisation is impacting
business entities as well as stakeholders of those companies in positive and negative manner. In
order to reduce negative implications of it, it is very important for the organisations to take
appropriate action. It can result in decreased unfavourable impacts of globalisation on enterprises
and their stakeholders.
Impact of globalisation on accounting profession
As globalisation has reduced barriers for the organisations to expand their business in
different countries so it also increases complexities for accounting professionals to comply with
accounting standards of all the nations. They are mainly responsible to formulate final accounts
of business entities and when a company starts to operate business in multiple countries then
accountants are required to gather information regarding all the rules and regulations of that
region regarding accounting. It is very important for them to form financial statements according
to standards of the nation in order to reduce interference of legal authorities in business
operations. As Vodafone is executing business at global level so for the accounting professionals
of entity it is vital to get knowledge of reporting system of those locations so that final accounts
can be formulated in appropriate format. In all the countries different accounting principles are
followed and financial reporting of all of them differentiate from each other. Due to this,
accounting professional get affected because accountants are mainly responsible for formulation
of final accounts so that all of them can be presented in front of external stakeholders (Yu, Kim
and Restubog, 2015).
For all the accountants in large multinational companies such as Vodafone it is very
important to make sure that they are complying with financial reporting standards of all the
countries where business is executed. It can help to present accurate information of position and
performance of the organisation in front of investors who are from different regions. With the
help of it they could be satisfied and more investment could be attracted toward the company. In
order to deal with all the impacts of globalisation on accounting profession currently enterprises
are following International Financial Reporting Standards (IFRS). With the help of it
international companies form consolidated final accounts in order to render appropriate business
information to stakeholders such as investors whether they are from local country or other. It also
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results in attraction of foreign investment as various other external parties show interest in
business if it is generating higher profits and providing transparent information to stakeholders
(Wilson, 2012).
If accounting professional in Vodafone are not able to comply with all the rules and
regulations of IFRS then it can result in inappropriate formulation of final accounts. For the
purpose of delivering accurate information to external stakeholders such as investors, customers,
suppliers and creditors it is very important to make sure that all of them are easy to understand. It
can help to retain them for a long period and enhance their interest in operational activities
(Akisik, 2013).
CONCLUSION
From the above project report it has been concluded that, globalisation helps business
entities to expand their business in different locations so that large market share can be captured.
With the help of it most of the organisations launch their products in such countries where the
are not executing business operations currently. It helps to attract large number of clients and
increase profitability so that performance of the entity can be enhanced. There are various
positive as well as negative impacts of globalisation on enterprises which includes increased
wealth, competition, price instability, job insecurity etc. In order to deal with negative
implications of it organisations have to take strict actions. Globalisation also affect accounting
profession because when companies become global then accounting professionals of those
entities are required to comply with standards of all the countries where business is operated.
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REFERENCES
Books and Journals:
Akisik, O., 2013. Accounting regulation, financial development, and economic
growth. Emerging Markets Finance and Trade. 49(1). pp.33-67.
Ang, R., 2016. Vodafone Global Telecommunications: Optimizing Operations. IUP Journal of
Operations Management. 15(4). p.46.
Hayakawa, K., Machikita, T. and Kimura, F., 2012. Globalization and productivity: A survey of
firm‐level analysis. Journal of Economic Surveys. 26(2). pp.332-350.
Jeníček, V., 2012. Globalisation–challenges, rewards, question. Agricultural Economics. 58(6).
pp.275-284.
Saka-Helmhout, A. and Ibbott, C. J., 2014. Network orchestration: Vodafone’s journey to
globalization. In Orchestration of the Global Network Organization (pp. 121-147).
Emerald Group Publishing Limited.
Shenkar, O., Luo, Y. and Chi, T., 2014. International business. Routledge.
Wilson, G. A., 2012. Community resilience, globalization, and transitional pathways of decision-
making. Geoforum. 43(6). pp.1218-1231.
Yu, K. H., Kim, S. and Restubog, S., 2015. Transnational contexts for professional identity
development in accounting. Organization Studies. 36(11). pp.1577-1597.
Online
Growth of Mc Donald's. 2014. [Online]. Available through:
<https://beyondphilosophy.com/successful-globalization-mcdonalds-can-company-
can/>
Growth of Marks and Spencer. 2019. [Online]. Available through:
<https://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/10737831/
Marks-and-Spencer-plans-massive-international-expansion.html>
Impact of globalisation. 2018. [Online]. Available through:
<https://www.kstatecollegian.com/2013/05/07/4-positive-impacts-of-globalization-on-
world-economy/>
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