Corporate Governance and Ethics in Modern Business Practices

This essay delves into the multifaceted realm of corporate governance and ethics, examining the pivotal role consumers play in shaping ethical business practices. It underscores the significance of ethical principles and sustainability in modern organizations, highlighting how consumers, through t...Read More

Running head: CORPORATE GOVERNANCE AND ETHICS
Corporate Governance and Ethics
Name of the Student
Name of the University
Author Note

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Answer 1
A consumer has a very significant role to play towards incorporating ethical practices
into business operations. A consumer is a fundamental group which needs to be taken care of in
order to assure that a business functions appropriately (Weiss 2014). A business cannot fulfill is
primary objective of making profit without have a loyal and established consumer base.
Therefore a consumer has the power to ensure that businesses incorporate ethical principles and
sustainability towards their operations. Ethics and Sustainability is the primary need of modern
day business organizations to fulfill its corporate social responsibility.
CSR is also a significant objective of business organization which not only helps to
ensure social indulgence and promotion of goodwill but also enhances profit making by giving
the organization a distinct feature in the eyes of its employees, investors and consumers
(Noorman 2014). In democratic societies with market economics the consumers pays a key role.
The demand for a particular product is created by the consumers. In relation to such demands the
organizations respond by trying to stimulate and feed the demand. A company can be severely
punished by the consumer if they start to ignore and boycott the products provided by it because
of its unsustainable or unethical behavior. Demands of the consumers on the other hand are
influenced by the organization through the creation of wants and promotion of a certain model of
lifestyle. Therefore a contradictory role is played by the consumer towards deterring or
promoting sustainability.
Although most polls provide that the consumers are only willing to purchase products
which have been produced sustainably and by an organization which has a ethical reputation in
the society, practically such results are not reflected as consumers often look at other aspects

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such as price, utility and durability of products more than sustainability. The engagement of a
company towards producing sustainable products depends upon the demand created by the
consumers in relation to the product. Where consumers demand sustainable products the
organization would have no other option other than incorporating a sustainable approach towards
production. In the same way consumers have the power to influence the organization to
incorporate ethical principles into their operations. When consumers would want to get
associated only with those organizations that have an enhanced ethical reputation the
organizations would automatically ensure the promotion of ethical principles within its
workplace as well as its surroundings. Ethics in organization can include just and fair workplace
polices which have been incorporated for the development of its employees and other
stakeholders.
Answer 2
This section of the paper is in relation to a crisis which have been experienced by a
business. For the purpose of this part the organization which has been selected is Samsung and
the crisis which has been faced by the organization was in relation to the Samsung Galaxy Note
7 scandal. Samsung is a large multinational company which deals in various sectors such as
shipping, construction and electronics. The organization operates at every corner of the Globe
and has an employee base of 500000 all over the globe. The founder of the company was Lee
Beyung Chul and the foundations of the company have been laid in the year 1938. Samsung
electronics is one of the leading smart phone produces in the smart phone industry where its
main competitor is Apple (Samsung.com 2017).

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According to Reporters (2017) the company have faced a major crisis in relation to its
flagship smart phone Samsung galaxy note 7. The phone had been reported to overheat and
explode on various circumstances. Such explosion had caused significant injuries to the
consumers. Upon investigation it had been discovered that the phone had faulty battery design
which caused the phone to overheat. It had been accused that the organization was impatient with
the launch of the smart phone which did not give the company enough to test the phone and be
satisfied in relation to its safety. The decision was taken by the efficient board of the
organization mostly to launch the phone before the launch of Apple iPhone 7 and 7 plus by its
competitors.
The organization did not pay the required attention in relation to the safety of its newly
launched product and as a result had to suffer significant financial as well as reputational losses.
All of the stakeholders of the organizations were adversely affected by its decision to launch the
phone without adequate testing. The organization had to recall all the Note 7 manufactured by it
for a security inspection. The defect in the Notes also affected other smart phones of the
organization as the sales of the company declined drastically. The shares of the organization also
took a deep plunge and almost fell by 3.4% and the organization suffered a financial loss of 4.4
billion only in the process of recall. The organization as a response to the crisis repaid all the
customers who had been suffered by the use of the phone. It also assured the customers that it
would not let such mistakes get repeated and successfully launched Samsung S8 and S8 plus
after all test had been passed by the smart phones.
The actions of the organization was against the provisions of consumer guarantees as
provided by the Australian Consumer Law stated in Schedule 2 of the Competition and
Consumer Act 2010. According to the provisions it is the duty of manufactures to provide the

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consumers goods which are safe for their use. In case any damaged is caused to the goods or the
users because of a manufacturing defect, it is the duty of the manufacturer to provide repair,
replace and refund in relation to the goods as well as additional compensation for the damage
incurred by the user. Therefore it is the liability of Samsung to pay all the users who have
suffered damages due to the usage of the phone compensation in Australia.
Answer 3
Leaders and managers in an organization definitely influence ethics within the
workplace. Generally the ethical tone of the business is established by their frontline manager
which includes the incorporation and implementations of specific philosophies which wither
ignore or support universal ethical principles (Trevino and Nelson 2016). Core ethical benefits
which establish the culture of the organization are also promoted by the managers and leaders.
These leaders themselves are influenced by eminent leaders and managers and influence those
who are lead by them.
The greatest influence on employee ethics is through the ethical behavior of the managers
and leaders themselves. “Actions speak louder than words” and irrespective of whatever a person
says people would only believe a person based in their actions. Where a sales managers indulges
into actions like lying, deceiving or cheating the employees would also be likely to use such
actions in relation to the business operations. Communication also has a significant role to play
in relation to the promotion of ethics within a workplace. Although it is necessary for words to e
supported by action the policies and procedures of the organization have to be appropriately
communicated by the managers to the employees in order to be implemented properly.

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The process of evaluation and rewards implemented by leaders and managers also help
in the promotion of ethics within the workplace. Ethical behavior has to be evaluated and reward
and unethical behavior has to be punished. The managers and stakeholders have a legal
obligation of taking care of the internal and external stakeholders of the organization. They have
the responsibility of operating the business in behalf of its stakeholders. The internal
stakeholders of the organization include suppliers, investors, employees and shareholders. The
external stakeholders of the organization include service users, consumer and the society as
whole. In relation to the internal shareholders of the organization it is the duty of the mangers to
abide by the provisions provided by the Corporation Act 2001 (Cth).
The legislations provides rules in relation to the duties of the managers and the
relationship of the organization with its employees and other internal stakeholders. The managers
thus according to the provisions of the Act have to work in the best interest of the organization.
The Australian Consumer Law lays downs provisions through which the managers must provide
good quality consumer goods for the consumers. The organization also has the responsibility
under Environments Protection and Biodiversity Act1999 to take care of the Environment in all
their operations.
One of the most ethical organizations operating in Australia is the Australian National
Bank. The organization has a strong code of conduct for its employees. Through the code of
conduct the organization makes it very clear that it is not going to tolerate any behavior which is
unethical in nature. The code of conduct comprises of several principles primarily for the
promotions of ethics. The organization aims to promote, honesty fairness and integrity within its
work culture. As per the code of conduct no employee is to indulge in any activity which is
against legal provisions. The organization also through its code of conduct promotes the right of

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privacy and confidentiality of the service users. The organization also imposes strict punishments
for the non compliance of the code (Nab.com.au 2017).

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References
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management. Nelson Education.
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sustainability in the age of globalization. Oxford University Press.
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Kolk, A., 2016. The social responsibility of international business: From ethics and the
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Reporters, T. (2017). Samsung apologises for Galaxy Note 7 and corruption scandals. [online]
The Telegraph. Available at: http://www.telegraph.co.uk/technology/2017/03/24/samsung-
apologises-agm-galaxy-note-7-corruption-scandals/ [Accessed 7 Nov. 2017].
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[Accessed 7 Nov. 2017].
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