Business Ethics: Samsung Bribery Issues and Stakeholder Impact

This report discusses the ethical issues in the Samsung bribery scandal and its impact on stakeholders. It explores business ethics principles and the importance of ethical decision making. The report also provides recommendations for improving ethical practices and enhancing brand image.

Business Ethics
Assessment 2- Business Report
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EXECUTIVE SUMMERY
Business ethics includes the code of conduct, moral and social values. Business
ethics principles are correlated to every investors, employee and customers. Business
ethics can be defined as the moral standards of the business as well as their
employees. Business ethics are the key aspect of the individual’s morale judgment, their
right and wrong decisions. Business ethics strengthen the client loyalty, retain good
employee, and avoid legal problem and positive work environment.
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Table of Contents
INTRODUCTION...........................................................................................................................3
PART 1
PART 2
PART 3
CONCLUSION ...............................................................................................................................3
RECOMMENDATIONS
REFERENCES................................................................................................................................4
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INTRODUCTION
Business ethics defined to the application of moral value and ethical principal
applying business process. Business ethics is the study of business policy, business
activities and business situations. It is known as proper business policies related to
potentially hazardous issues like bribery, insider trading, corporate governance etc.
Business ethics is included in the code of conduct, moral and social values. Business
ethics principles are correlated to every investors, employee and customers. Business
ethics are the key aspect of the individual’s morale judgment, their right and wrong
decisions. Business ethics strengthen the client loyalty, retain good employee, avoid
legal problem and positive work environment. Business ethics can be defined as the
moral standards of the business as well as their employees. Business ethics includes
various morale principles that determine wrong and right behavior in the business. It
also includes the questions of justice, equity and fairness of the business operations.
Ethical decision making is very important in every organization because without this it
can create many ethical issues, cultural differences.
PART 1
Explanation of ethical issues in the Samsung Bribery issues
As we all know Samsung which is Electronics Company is a multinational
company originated from South Korea founded in 1938 by Lee Byung–chul. Initially
Samsung has started the career from trading industry and soon diversified itself to
textiles, retail and insurance. As of now Samsung holds the greatest installation base
from customer and revenue (Yu and Gray., 2016). Samsung is distributed among
several business units such as Electronics, Semiconductors, insurances, home
appliances and several others. The Samsung company has faced major ethical issues
such as perjury, embezzlement, concealing criminal profits, hiding assets oversees.
Stakeholders of the organization also affected by this scandal and the company had
loss the trust from stakeholders. By the ethical issue as prejury the other employees
and stakeholders misunderstood by all the policies and operations of business. This
scandal was a very big blast to Samsung’s reputation.
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Samsung Company handle this ethical issues by following various strategies. After the
scandal, Samsung company takes necessary action to overcome the all the losses and
additional barriers between the company and its stakeholders, employees and other
customers. Samsung decides to follow all the necessary guidelines and business
ethics , rules and regulations in their organization (Saadah., 2018). They apologized to
the stakeholders. Samsung also take extra precautions to avoid the corruptions and any
type of errors in their workspace.
Corporate Governance
Corporate governance is the great mixture of process, laws or rules by which
organization or businesses are regulated, operated or controlled. It is also said that
corporate governance includes all the internal and external factors which can affect the
interest of a organization’s stakeholder, customers, shareholders, government
regulators, management and suppliers (Kwak., 2017). It is a combination of effective
processes and mechanism in which business run. It is a great rule, principles and
structures that identify the various participants in the business such as directors,
auditors, managers etc. it also involves the procedures and rules for creating decisions
in corporate affairs. Corporate governance is essential in every organization because of
conflict arises between stakeholder’s interests. Corporate governance helps to define
the corporation’s objectives in a very effective way. This involves monitoring the
policies, practices, decisions and actions of the stakeholders. Samsung Company’s
board of director had a responsibility to create a framework for corporate governance.
Corporate governance also build the guidelines for organization like plans, action,
performance management, executives concession decision, explicit and implicit contract
between the stakeholders and the companies (Yun and et.al., 2018).
Perfect corporate governance is a enforced and well defined structures that
operates for the benefits of all of them. They focused on following all the ethical
standards, formal laws and best practices. There are many principles of corporate
governance that is
All the shareholders and stakeholders should be treated fairly and equally and also
provide those equal rights and guidance about how to exercise it. The board of directors
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should have to ensure that the fairness, transparency, accountability and diversity within
corporate governance. Company must determine a code of conduct for executives and
board members. Company should have to ensure that all the corporate governance
procedures and policies must be disclosed to specific or relevant stakeholders.
When a company follow good practices using a UK Current corporate governance
code as a guide-
Director contracts and remuneration- According to UK’s corporate governance
the remuneration of the directors should be design to promote and support strategy and
enhance long term sustainable success (Lohrey and et.al., 2019). The director of the
organization should not be indulging in deciding his own remuneration. The decision of
deciding remuneration should be transparent and taken by following all the set of
procedures. But by following the UK corporate governance company should have to
follow lengthy and complex procedures for deciding remuneration. According to the UK
corporate governance the remuneration committee majorly focus on independent
judgment. Pension rated are also defined according to the work force. Remuneration
should involve the capacity to withhold or recover performance related payments.
Role of Chairman
The chairman of the company should have to take necessary action to promote
sustainable success of the business. They also focus on fincnacng values for
shareholders and customers. They take necessary actions to ensure that the business’s
value, strategy and purpose are aligned to the workforce practices and policies and
corporate culture (Whincop., 2017). They control operations and maintained
engagement with stakeholders and shareholders.
Committee structure
As per the UK governance the company is established their committee structures by
following all the rules and regulation. Well organized and well defined committee
structure is the main identity of corporate governance rules. If the company adopts UK
corporate governance code for deciding their committee structure then company should
have to take extra concern about it.
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PART 2
It is necessary for business to act and work in ethical way so that they are able to create a
positive image in mind of people. Also, it enables in competing in market with other companies.
By working ethically it is easy to generate profit and attract people. Besides that, there is positive
impact on company stakeholders as well. In order to do so there are several business ethics
theory which can be followed. Likewise, in case of Samsung bribery it can follow certain
normative and descriptive theory which is as below
Normative theory- these theories focus on moral values rather than moral obligation. It argue on
what is good rather than what is right depending on human nature and experience of what is
good. There are many theories in this such as
Virtue ethics- it is a philosophy developed in Greek time which state that human being acquire
virtue by practice. This means by being honest, brave, etc a person develop a moral character.
Thus, if they face any ethical dilemma then with help of virtue ethics they will make right
decision.
Deontology- this ethical theory uses rules to distinguish what is right and wrong. It state that
people simply just follow the rule and do their job. It doesn’t require weighing the costs and
benefits of a situation. This avoids subjectivity and uncertainty because a person only have to
follow set rules. However, sometimes not following of rules may result in critical consequences
which is not right..
Ethical egoism- the theory state that people have ought to pursue their self interest and no one
has right or obligation to promote other self interest. It is concerned with that how people behave
in particular situation. Here, Lee Jan young saw his own benefit by taking bribery politician.
Thus, no one is having right to obligation of self interest of Lee Jan young.
Descriptive theory–it is a theory which study people view about moral ethics. It describe that jow
people behave and what moral standards they follow. So, it analysis people view on moral. In
this there are some theory like
Unitarianism- the theory determine right from wrong with help of outcomes. It depicts that one
will produce more good with more number. Basically, it is based on cost and benefits of results.
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Here, in case of Samsung bribery on basis of outcome it was analysed that he has done wrong by
taking bribery. This is because from bribery he was benefited and company faced loss.
Individual Factor- in this there are basically three factors which highly impact on ethical
behavior of individual. These are morals, value and social factors. It result in behaving in
unethical way. Thus, it becomes difficult for person to decide what is wrong and right.
Situational factors – there are some situationak facto as well which impact on ethical decision of
person. They are demographic such as age, gender and personality factors.
Therefore, it is analysed That in Samsung bribery caee Unitarianism and ethical egoism
theory is applicable. This is because decision taken by Lee Jan young was in his self interest and
after result it was stated that it was done for personal benefit.
PART 3
In a company stakeholders play a vital role. This is because they provide crucial data and info
and also engage in decision making. Alongside, stakeholders also help in forming of ethics
practices and policies. So, if there is any change in ethics it highly impact on stakeholders.
Usually, there are two types of stakeholders which are internal and external. Internal are those
who exist within organization like employee, investor, manage etc whereas external are entity
outside business such as government, supplier, customer etc their perception highly matters in
the growth and development of compias they arw directly related with it. In addition, when there
is change in perceptive of one of them then it highly affect on others as well. They are
interrelated with one another. Both internal and external stakeholders influence on decision
making.
It is analysed that there is great impact of ethical practices on internal and external stakeholders.
This can be identified that if Samsung take right decision and do good in favor of people then it
create a positive image in industry. The customers start buying their products. Besides that,
employee put more effort in achieving goals and objectives. Similarly, investors start investing
more within company. Their expectations increases and business get more funds for expansion.
Likewise, for external stakeholders ethical practices allow them to engage with company.
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Government start supporting them and allow to enter in other markets. They invest in Samsung
by buying shares.Customer promote it on social media. Along with it, supplier also support by
supplying more products and advertising in effective way. However, more supplier try to
collaborate with Samsung and sell their products and services. This, it leads to creating a strong
brand image in mind of stakeholders.
On other hand, the following of unethical practices highly impact on stakeholders in negative
way. This is because it create a negative image of Samsung as they take decision which is wrong
and not as per moral ethics. It is evaluated that taking of bribery by Top management led to
create a negative culture. Employee behavior is highly affected and they start expecting same
from other manager as well. So, a negative image is developed. Alongside, investor do not like to
invest further as they think it is not worth. They have suffer a great loss. Hence, in future
investor do not invest in it. Moreover, government need to take strict action against Samsung as
tthey think that company has down wrong. So, with that they closely monitor business action and
activities. It result in doing frequent inspection and making repprt on it. So, in eyes of
government company value is decreased. Customer does not buy company product and service
as they their perception is entirely changed. In this case as well Samsung note 7 was having issue
in its battery. Thus, they boycott Samsung products and complain about it. The supplier also
stops selling of Samsung products as company do not listen to them.
Thus, Samsung bribery ethical practice led to creating a negative impact on internal and external
stakeholders. The customers did not buy their products and it led to decline in sales and profits.
The investor also took out money they have invested in it and it led to lack of funds within
Samsung. The government took strict action against it and Lee Jan young was sentenced to 5
year jail. Also, the co CEO re-signed from his post as he said that company needs a new leader.
But positive impact ws that company earned a high profit in third quarter under a new leadership
regime.
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CONCLUSION
From report it is concluded that Samsung top management did not follow the business ethics.
They focus on their own gain which resulted in loss of business. CSR refer to conceof being
accountable to society along with stakeholders and public. Also, there are several theory of ethics
which can be followed and applied by Samsung like Unitarianism, ethical egoism etc there will
be positive impact on company stakeholders like promotion of products, more investment,
growth opportunities, etc if ethical practices are followed. But it will create negative impact on
stakeholders such as poor brand image due to unethical practices.
RECOMMENDATIONS
However, there are certain recommendations which can be followed by Samsung in regards with
ethics and improving their Brand image in the market. They are described as
Samsung BOD should form strict ethical practices and policies to be followed by all. This will
enable in working in ethical way and focusing in moral values rather than on moral obligation.
The company can take strict action against those who are not working in ethical way or is
engaged with any third party. For this they can form a committee which should look whether
ethical practices are followed or not. By regularly monitoring it will help in proper following of
ethics within overall organization.
Organization must improve its brand image in market by engaging in many CSR activities. They
should highly contribute towards society which will help Samsung to regain trust of customer
and stakeholders.
The company must ensure that proper ethical practices are been followed. This can be done by
taking feedback from internal and external stakeholders.
Samsung must conduct a press conference and apologise immediately if the management found
that unethical practice are followed. It will be useful in creating a positive image in mind of
people that business emphasis of moral values.
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REFERENCES
Books and journals
Moon, B.L. and Nolan, E.G., 2019. Ethical issues in art therapy. Charles C Thomas Publisher.
Navalta, J.W., Stone, W.J. and Lyons, S., 2019. Ethical issues relating to scientific discovery in
exercise science. International Journal of Exercise Science, 12(1), p.1.
Pozgar, G.D., 2019. Legal and ethical issues for health professionals. Jones & Bartlett Learning.
Lee, Z.H., Reavey, P.Land Caplan, A.L., 2019. Ethical issues in aesthetic and reconstructive
surgical innovation: Perspectives of plastic surgeons. Plastic and reconstructive
surgery, 143(1), pp.346-351.
Boiral, O., Heras-Saizarbitoria, I. and Bernard, J., 2019. Ethical issues in the assurance of
sustainability reports: Perspectives from assurance providers. Journal of Business
Ethics, 159(4), pp.1111-1125.
Yu and Gray., 2016. Succession Planning at Samsung: The Merger Formula of Cheil
Industries and Samsung C&T.
Saadah., 2018. The Impact of Samsung Scandal in South Korean Corporate Culture: Is
Corporate Governance Necessary?. Global Strategis. 11(2). pp.126-134.
Kwak., 2017. Corporate influence on the media in South Korea: The case of
Samsung. International Journal of Media & Cultural Politics. 13(1-2). pp.25-37.
Yun and et.al., 2018. Benefits and costs of closed innovation strategy: Analysis of
Samsung’s Galaxy Note 7 Explosion and withdrawal scandal. Journal of Open
Innovation: Technology, Market, and Complexity. 4(3). p.20.
Lohrey and et.al., 2019. Coming to grips with corporate governance in local
government. Australian Journal of Public Administration. 78(4). pp.596-612.
Whincop., 2017. Corporate governance in government corporations. Routledge
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