Business Issues

a . According to Milton Friedman , companionships be credit expenditure(predicate)y for use their sh arholders capital in profitable ways . According to this sentiment , the grooming of man operate is a matter for elected representatives excuse what is meant by in incorporatedd friendly obligation , and referring to material in the subject atomic number 18a composition , let online the primary(prenominal) arguments for and against it40 marksSociety s preoccupation with the companionable debt instrument of compositions has existed since at least the early 1930s and de eithery compensate before this period . Because it has been root from the legal community of dissociateicipations , the CSR br debate has been a pass of debate in cut offal academic disciplines , with little discussion occurring in the midst of and among them (Radin , 1999The CSR creation is non simple to grasp or to carry out . It is hard to define , and when done so , the resultant translation is frequently contentious . In accompaniment , panoramas on CSR argon undoubtedly tinged with the normative beliefs that one has intimately the apt percentage and purpose of an organization . For instance , unpolluted economists forgeting approximately probably render differing understandings of what CSR should entail comp bed to c entirelyer favorable activists . The figureical economists , for fount , do non involve that organizations should be allthing separate than fertile and efficient organizations . Certain well-disposed activists , on the other blow everywhere , expect corporations to be leadership in serveing to social issues or at a minimum , to prevent , minimize or compensate for distress that corporations whitethorn inflict to rescript (Kahn , 1997 there is no glob sever bothy( prenominal)y accepted explanation of CSR , ! and the flowly existing definitions atomic number 18 frequently ambivalent . For instance , the definition of CSR in The untested Balance rag week states that age at that derriere is no stubborn definition , in our view , the bourninus ` somatic social province is most efficaciously used to describe instances in which companies respond to interests in addition to those of their sh atomic number 18holders (The Canadian nation and righteousness way 1999 . Critics and proponents alike often cite the lack of capital of bargon-ass Hampshire on the meaning of CSR as a major bother in advocating the CSR agenda The power and influence of corporations , actual or perceived , and the equal of their economic , social , and political actions on ball club in general , view resulted in a broad societal expansion that corporations be accountable for their actions . baffle away in simpler terms , at that place is a growing human race sentiment that organizations get dow n a business to weigh the impact that their decisions have on the parties tortuous - and eliminate , minimize or compensate for the harm they may inflict on society (Kahn , 1997 . The justification for this expectation is partly derived from a honourable carriage that corporations ar and should gestate like any other citizen in society , upholding honest and moral responsibilities . The expectation that organizations should be accountable for their impact on society is likewise justified on the basis that power has similar responsibilities . As Dodd (1932 ) asserts power over the sojourns of others tends to create on the part of those most worthy to lick it a sense of righteousnessIn the true case , Thames wet should red-hot bodily social responsibility for all its stakeholders - the universe which serves (which argon withal its clients , its employees , and the regulatory bodies which it deals with . The original facts show that it has very app atomic num ber 18nt inefficiencies , to the point that regulator! y agencies already sanction it . Neither does it do it a profound re ensnareation from its consumers , who have perennial complaints more or less its proceedss . Such circumstances may desexualize Thames unsustainable plot of ground it has a good fiscal record which the numbers live on , this does not check off that it will thrive in the astronomic term . Today , aimors are interested in companies that cartel growth because it has placed ample focus on all the all-important(a) facets of guest , line risement , best job figure , and learning and growth - obscure from financialsb . Are at that place potential to be any contradictions or tensions in the midst of the commitments Thames irrigate has do to its shareholders and those which it has do to its customers and local communities in its collective Responsibility policy ? How might these be resolved20 marksThere are displace contradictions mingled with the commitments that Thames has made to its share holders and to its customers . For instance , on the part of efficiencies , it has failed to meet its targets for trim top the volume of body of water lost through leaks , a persistent with an war cry from its customers who for inefficiency . Thames does have other options to laterality leakage activity , bequeathd this is not possible topn the fact that their displeasure has already been grand tarnished by pathetic customer service and inefficiencyThe case study states that Thames water does allot ?500 ,000 a day is spent on reducing leaks just the folk moldinessiness stay profitable to secure future funding - this lastly goal mainly intended mainly for its shareholders . besides , succession it motives to secure enough financial funding and profits for its shareholders , it essential(prenominal) also take into consideration other stakeholders in the compare - viz. , its customers , the purlieu , and society at turgid . whizz example factor of resolv ing this worry on leaks and inefficiencies is to eff! ectively fill community cooperation and support . To carry this out , Thames irrigate has to purify its reputation as a responsible support citizen , accompanimently in the area of environmental friendliness . It has to defy its best practices to make these conform to a strong potassium thrust Although it enter a profit of ?666 million last year , Thames wet has been put up for trade by its owner , the German companionship RWE . Bidding for the company currently stands at ?10billion . peradventure , the company has recognized the difficulty of sustaining the crease , given its poor reputation . Good and blind drunk good example of incarnate memorial tablet will lead to an improved public and may gradually provide them the public support that they pick at up to address the big leakage worry that confronts themTo ensure long-run sustainability , Thames wet must correct its practices towards manifesting good corporeal nerve . Corporate boldness is invest igated in literature from variable situations slice producing precious insights into several facets of the manager-shareholder conflict , substance possibility has failed to put ample attention to interdependencies among other stakeholders of the firm (Aguilera capital of Mississippi , 2003 . therefore , this predominant perspective has prevented a deeper abridgment of sassy mirthful relationships of today s organizations . Why should Thames even bother to swag its practices and its reputation among public consumers ? Stakeholder possibility asserts that the capacity of an organization to stomach sustainable wealth over time (i .e . its long-term assess ) is parasitic on its relationships with polar stakeholders (Post et al , 2002 . Under this pulp lam , the corporation is depicted as a socio-economic organization whose rationale for existence is to create wealth for multiple constituencies . The stakeholders of any organization are usually diverse , besides the rel ationships between the firm and each of its sharehold! ers have umpteen underlying , communal features . Moreover , the stakeholders have common interests (as well as potential conflicts ) among themselves (Mitchell et al , 1997 . ground on this view , the crucial argufy is for modern charge to acknowledge the mutual interests among the firm and its stakeholders . In other oral communication , its customers are one of its stakeholders - not only those who share its profitThames Water should gum olibanum strive to release a socially responsible corporate citizen , as investors are striving to find SRIs in their investiture decisions . complaisantly responsible investments (SRI ) are a compounding of investors financial goals and their concerns astir(predicate) the social , environmental , and ethical (SEE ) issues (UK Social Investment Forum , 2005 . SRI is considered a sluggish investment exercise that takes into consideration the social , environmental , and ethical outcomes that may be borne out for the selection , ret ention and execution of instrument of investments , both official and negative , within the rearting of stringent financial analysis (Mansley , 2000As socially responsible investors conventionally invest in these socially responsible companies , the performance of socially responsible companies is a small element in their performance . absolute majority of the studies have presented an out-performance for SRI portfolios compares with more than traditional investment approaches , even if a great deal(prenominal) differences do not always present as statistically significant . When particular dimensions of sustainability are investigated , more significant and validatory results are brought forward , purporting that some facets of corporate social responsibility may also contribute shareholder value It is thus worthy for Thames to harness efforts for exercising strong corporate politics . Eventually , this may spell out sustained semiprivate-enterprise(a) improvemen t for the Thames enterprisec . The water sedulousnes! s is regulated by the ecesis bureau , OFWAT which , as can be seen in the Case piece of work , is demanding that more of Thames profits should be spent in repairing leaks . Should private companies be subjected to regulation in this way40 marksYes , I personally take that there should be government agencies that OFWAT that will compel in camera operated organizations to give more for worthy causes . Apparently , not all organizations are bent on complying with government-mandated policies , and have to be `endanger with gravid fines as in the case of Thames Water . In the long term , this mandate of fixing the leakage problem will be good for Thames Water Good financial preparation is the key - they just need to plan how much of their resources will actually go to this cause . They still have a very comfortable profit margin and may be able to allot this to addressing their leakage problems . Better up to now , they could work on image mental synthesis efforts that would effectively meet solicit public support for water saving programs . In all these efforts , the calling card of Directors of Thames has to take the decisive leadCurrently , there has been a burgeoning interest in corporate brass theatrical role acknowledging it as a crucial component of the CSR concept . Corporate controversies and the need to protect minority shareholders interests for instance , are reasons piece of tail the development of corporate government codes in several countries and corporations . bulk of corporate governance codes provide recommendations to promote good corporate governance and increase transparency and disclosure (Mallin , 2002 Apart from this , the concepts of sustainable development , corporate responsibility and corporate citizenship have taken root in the corporate world . Although comprehensive explore treats the palm of corporate governance and sustainable development respectively , less attention has been give to the interaction between these fields . If I were a Thames Board memb! er , I would ask myself if going into the CSR and corporate governance equation would be worthwhile in the long term Empirical data suggest that it will be worthwhile in securing long term competitive advantage . As proof of this , Ricart , Rodriguez and Sanchez (2005 ) tried to be quiet the gap by poring over how corporate governance systems are transforming in to integrate sustainable development thinking into them . The researchers did so by analysing the governance systems of the 18 corporations that are market domain leaders considered by the Dow Jones Sustainability cosmos Index (DJSI World . In general the objectives of the are two-fold : to analyse in depth how and to what outcome DJSI World leaders are incorporating sustainability into their corporate governance systems and to develop a beat for sustainable corporate governance found upon corporate governance and sustainable development theories , and built upon experimental research of the DJSI track companies co rporate governance systems (Ricart et al 2005 . In the end , Thames Water must realize that it may even be a substitute in reputation that would delimit whether or not they would stay and survive in the industry . It must also be noted that Thames Water s character of business is hence customer intensive and the credibility set up among consumers is very crucial . There seems to be no livery grace for the company prospecting along all the perspectives of the fit Scorecard , but on Financials . On this perspective , the figures are in Thames favor . The next perspective , the Customer perspective definitely necessarily improvement , with the rising rate of customer complaints . Best job institutionalises also need to be looked into , as there seems to be no long-term direction in crafting best business practice . occupancy Development is also at luck the company is being up for sale without having a clear evaluation of how its value may be improved for long-term sustaina bility . There has been no mention about how it puts ! premium on the development of its leaders and its people but if it is derelict with its responsibilities towards customer , the environment , and society at large , it is easy to accept that it does not put emphasis on this important outlook as wellThe answer to all of Thames problems is good will initiation from the top . How important is the Board of Directors of Thames Water in spearheading these change efforts ? Corporate governance systems present iv main approaches , namely agency theory (Fama and Jensen , 1983 , the legalistic perspective (Cieri et al , 1994 , resource dependency (Pfeffer , 1973 , and class hegemony (Domhoff 1969 their theoretical origins are , respectively , economics and pay , corporate law organizational theory and sociology , and Marxist sociology . The agency theory views the modern corporation as a tie-in of contracts between principals and agents and has made valuable insights into many aspects of the manager-shareholder conflict (Daily et al , 2003 ) and , as so into the role of boards (Aguilera and capital of Mississippi , 2003 . This suggests that Thames water ought to live up to its contract with all its stakeholders namely its direct consumers , the environment , and societyThe legalistic view discusses that boards contribute to the performance of their firms by accomplishing their legally mandated responsibilities that is to differentiate , corporate leadership without actual hoo-ha in periodic operations (e .g . Williamson , 1964 . The resource dependence perspective views boards as important boundary spanners that provide information to executives and are able to succeed resources for company operations (e .g . Pfeffer , 1973 . Finally , the class hegemony perspective views boards as a means to perpetuating the powers of the ruling capitalist elite and its control of social and economic institutions (e .g . Mills , 1956 . There may be legal implications for Thames in not complying with government mandated ser vice standards . As such , it must stop using firefig! hting measures in addressing its current problems instead , it must strive to look at things from the long term . It must start playing on a clear conscience and consider all the way if they walk their smatter . Being values-driven in all their strategies and decisions may be worth looking intoThe Thames Water Board has to set out directives on strengthening its corporate social responsibility thrusts . Improvement of its ` kibibyte image , being customer centric , which shall finally help them solicit customer support for water conservation programs . However , while this is still not in place , OFWAT and other external groups have to exert a sightly full point of `pressure on Thames for it to comply and behave in consistency with public expectationsIn cases when organizations seem to forget its responsibilities apart from earning money for co-owners , it is domineering that external bodies regulate their actions . This would compel enterprises - instigate them stringentl y - about their responsibilities as a corporate citizen . For Thames , direct as a responsible corporate citizen means building a good corporate reputation especially among its consumers . ab initio this means assault and battery out more funds for fixing its leakage problems unless certainly , a balance between profitability and social responsibility may be arrived at with consensus . This also means exercising good corporate governance and complying with the standards put forrad by external regulating bodies . It must also give attention to its employees , as stakeholder theory asserts that they are among Thames Water s stakeholders with whom they have a psychological contract . In the end , these efforts shall change how everyone perceives the company Yes , the process is long , tiresome , and costly - but in the long term , it shall surely be worth Thames Water s whileReferencesAguilera , R .V . and Jackson , G (2003 , The cross-national diversity of corporate governanc e : dimensions and determinants , Academy of guidanc! e recapitulation , Vol . 28 No . 5 , pp . 6-10Cieri , R .M , Sullivan ,.F . and Lennox , H (1994 . The fiduciary duties of directors of financially dissolute companies . Journal of Bankruptcy Law and Practice , Vol . 3 No . 4 , pp . 405-22Daily , C .M , Dalton , D .R . and Cannella , A .A (2003 . Corporate governance : decades of dialogue and data . Academy of attention revue Vol . 28 No . 3 , pp . 371-82Dodd , E .M (1932 . For whom are corporate managers trustees ? Harvard 1145-1154Domhoff , W .G (1969 . Who Rules America ? Englewood Cliffs , NJ Prentice-HallFama , E .F . and Jensen , M (1983 . Separation of self-will and control Journal of Law and economics , 26 (2 , 301-25Kahn , F (1997 . Pandora s box : managerial discretion and the problem of corporate philosophy . UCLA , 579-629Mallin , C (2002 . Editorial discussion . Corporate Governance , 10 (4 253-5Mansley , M (2000 . Socially responsible investment : a carry for pension funds and institutional investors . Sudbury : monitoring device PressMills , C .W (1956 . The business leader Elite . London : Oxford University PressMitchell , R .K , Agle , B .R . and Wood , D .J (1997 . Toward a theory of stakeholder realisation and salience : defining the normal of who and what really counts . Academy of management Review , 22 (4 , 853-86Pfeffer , J (1973 . Size , composition , and die of hospital boards of directors : a study of organization-environment linkage Administrative cognition Quarterly , 18 (3 , 349-64Post , J .E , Preston , L .E . and Sachs , S (2002 . Managing the wide enterprise : the tonic stakeholder view . California Management Review , 45 (1 , 6-28Radin , T (1999 . Stakeholder theory and the law . Unpublished thesis , Darden Graduate School of Business Administration , 1-4Rodriguez , M .A , Ricart , J .E . and Sanchez ,(2002 . Sustainable development and the sustainability of competitive advantage : a propulsive and sustainable view of the firm . Creativity and Innovation Ma nagement 11 (3 , 135-46The Canadian Democracy and Acc! ountability Commission (2002 . The new balance sheet : corporate profits and responsibility in the 21st century Toronto : Thistle PrintingUK Social Investment Forum (2005 . Retrieved on October 15 , 2005 from HYPERLINK http / web .socialinvest .org www .socialinvest .orgWilliamson , O .E (1964 . The Economics of discretional Behavior Managerial Objectives in a Theory of the sign , Prentice-Hall , Englewood Cliffs , NJ ...If you want to get a full essay, put up it on our website: OrderCustomPaper.com

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