Business Ethics and Social Responsibility in Marketing Lesson 3.pptx

Business Ethics and Social Responsibility in Marketing Lesson 3

1. Corporate Governance

2. Corporate Governance a system by which companies are directed and controlled by the management in the best interest of the shareholders and others ensuring greater transparency and better and timely financial reporting.

3. The Board of Directors are responsible for governance of their companies.

4. Corporate Governance needed to create a corporate culture of consciousness, transparency and openness. It refers to the combination of laws, rules, regulations, procedures and voluntary practices to enable the companies to maximize the shareholders long term value.

5. It should lead to increasing customer satisfaction , shareholder value and wealth.

6. Corporate Governance Parties

7. 1. SHAREHOLDERS – those that own the company

8. 2. DIRECTORS – Guardians of the company’s assets for the shareholders.

9. 3. MANAGERS – they are the ones who use the company’s assets.

10. 4 Pillars of Corporate Governance

11. 1. Accountability Corporate accountability refers to the obligation and responsibility to give an explanation or reason for the company’s action and conduct.

12. ACCOUNTABILITY In brief: 1. The board should present a balanced and understandable assessment of the company’s position and prospects;

13. 2. The board is responsible for determining the nature and extent of the significant risks it is willing to take;

14. 3. The board should maintain sound risk management and internal control systems ;

15. 4. The board should establish formal and transparent arrangements for corporate reporting and risk management and for maintaining an appropriate relationship with the company’s auditor;

16. 2. Fairness Fairness refers to equal treatment , for example, all shareholders should receive equal consideration for whatever shareholdings they hold.

17. In addition to shareholders, there should also be fairness in the treatment of all stakeholders including employees, communities and public officials . The fairer the entity appears to stakeholders, the more likely it is that it can survive the pressure of interested parties.

18. 3. Transparency A principle of good governance is that stakeholders should be informed about the company’s activities, what it plans to do in the future and any risks involved in its business strategies .

19. Transparency means openness, a willingness by the company to provide clear information to shareholders and other stakeholders . For example, transparency refers to the openness and willingness to disclose financial performance figures which are truthful and accurate.

20. Disclosure of material matters concerning the organization’s performance and activities should be timely and accurate to ensure that all investors have access to clear, factual information which accurately reflects the financial, social and environmental position of the organization.

21. Transparency ensures that stakeholders can have confidence in the decision-making and management processes of a company.

22. 4. Independence A quality that can be possesses by individuals and is an essential component of professionalism and professional behavior.

23. It refers to the avoidance of being unduly influences by a vested interest and to being free from any constraint that would prevent a correct course of action being taken.

24. It is an ability to “stand apart” from inappropriate influences and be free of managerial capture, to be able to make the correct and uncontaminated decision on a given issue.

25. Corporate Governance Establish Strategic Direction Ensure Compliance with Policies, Standards & Procedures Execute Strategy & Manage Risks

26. 1. Good Board Practices 2. Control Environment 3. Transparent Disclosure 4. Well-Defined Shareholder Rights 5. Board Commitment Elements of Corporate Governance

27. 1. Clearly Defined Roles and Authorities 2. Duties and responsibilities of Directors 3. Board is well structured 4. Appropriate composition and mix of skills Good Board Practices

28. 1. Appropriate Board procedures 2. Director Remuneration in line with best practice 3. Board self-evaluation and training conducted Good Board Procedures

29. 1. Internal control procedures 2. Risk management framework present 3. Disaster recovery systems in place Control Environment

30. 4. Media management techniques in use 5. Business continuity procedures in place 6. Independent external auditor conducts audits Control Environment

31. 7. Independent audit committee established 8. Internal audit finction 9. Management information systems established 10. Compliance function established Control Environment

32. 1. Financial information disclosed 2. Non-fictional information disclosed 3. Financials prepared according to International Financial Standards (IFRS) Transparent Disclosure

33. 4. Companies Registry fillings up to date 5. High-Quality annual report 6. Web-based disclosure Transparent Disclosure

34. 1. Minority shareholder rights formalized 2. Well-organized shareholder meetings conducted Well-Defines Shareholder Rights

35. 3. Policy on related party transactions 4. Policy on extraordinary transactions 5. Clearly defines and explicit dividend policy Well-Defines Shareholder Rights

36. 1. The Board discloses corporate governance issues and has created a corporate governance committee 2. The company has a corporate governance champion Board Commitment

37. 3. A corporate governance improvement plan has been created 4. Appropriate resources are committed to corporate governance initiatives Board Commitment

38. 5. Policies and procedures have been formalized and distributed to relevant staff 6. A corporate governance code has been developed Board Commitment

39. 7. A code of ethics has been developed 8. The company is recognized as a corporate governance leader Board Commitment

40. Conclusion

41. Failure in Corporate Governance is a real threat to the future of every corporation.

42. With effective CG, Companies can gain competitive advantage and generates positive reaction in the market.

43. Companies should adopt Environmental, Whistle blowing & Ethical training programs.

44. ASSESSMENT: One whole yellow pad paper

45. Activity 1: Performance Task Answer each of the following questions in three to five sentences. 1. What will you do if you have been blamed for something that you did not do? Explain. 2. Have you lost somebody’s property which you just borrowed? Explain what happened. 3. Do you return the change money to your parents when they ask you to buy something for them? Explain why or why not.

46. 4. If you accidentally broke one of the figurines in a store and no one sees you, what will you do? 5. Your friends just had an argument and disagree on something. As their mediator, will you listen to just one of them or to the both of your friends’ arguments? Explain.

47. 6. Mae’s teacher entrusted her to check the class test papers including hers. Upon checking she noticed that her scores are not good and this could eventually make her fail the subject so she decided to change some answers to make them correct. Is Mae’s actions valid? Explain.

48. Activity 2: True/False 1. When a manager is not bias, he/she is fair. 2. Ted showed transparency when he reimbursed his expenses without showing official receipts. 3. An employee is accountable to pay whatever company property he/she has damaged or lost. 4. Fairness is shown when one listens to the two sides of a story.

49. 5. Accountability is shown when one admits his/her mistakes and is responsible for it. 6. Betty exercised fairness when she paid the right amount of an item purchased. 7. Transparency is shown when the accountant hides the records from the other shareholders of the company.

50. 8. Bobby is exhibiting transparency when he holds up an open bidding for the company’s next project. 9. Mina should pay the money collection that she lost in the restaurant, being the treasurer of the lending company where she works. 10. A boss may choose who among the employees will be given 13 th month pay.