chapter-11 becg ppt

8/2/2019 Chapter-11 Becg Ppt

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P R E P A R E D B Y :

H I R A L S H A H

M A Y A N K P A N C H A L

D A R S H I L K H A D K H A D

Chapter-11Ethics and Corporate Governance


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Ethics and corporate governance

Ethics :

'moral values and principals'.It is a decision of choosingright among wrong and right.

Corporate governance :

An lnternal system encompassing policies,process andpeople,which serves the needs of shareholders,and otherstakeholders,by directing and controlling managementactivities.


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SIGNIFICANCE OF ETHICS IN CORPORATEGOVERNANCE

Ideally,corporate governance should aim to integrate and directthe resources and efforts of a company in a manner that enablesit to accomplish its vision,mission and goals.

However,attaining vision and mission needs the support of

appropriate company strategy and policy which should beethically correct-for sustainibility.

Businesses fails because of:- lack of transperancy in operations.

- closed-loop opeartions to benefit fewprincipal stakeholders.

- cutting corners of regulatory provisions.- lack of care for investing public.


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Ethics equally applicable to all business

Finance

Manufacturing

Service

IT-industries

Any other institutions or orgs.

System

Through which these businesses produce &distribute goods and services in a society andserve its customers,employees,suppliers and allother stakeholders.


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Business goals with Ethics and CG

Ethics and corporate governance should be reflected incompanys business goal.

It is not enough for a company to create environmental &socialvaluesthrough in CSR programme;it is necessaryto build and implement these concepts into thecompanys corporate governance strategy.

Business practice for good governance must show deepconcern and respect-expressed through dailybnessprocesse for the welfare of employees,associates,its socialenvironment,for the needs of its customers,and for the

environment and ecology.


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Contd

It should also be commited to ethical practises forpricing and supplies,for regulations which haveevolved with a view to take care of potential risks anddamages to investors,society,other stakeholders.


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VALUE CREATION

BRAND VALUE

SOCIAL VALUE

ECONOMIC VALUE

ETHICS GOVERNANCE


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ADDING VALUE TO THE ORGANISATION IN ETHICALSUSTAINABLE MANNER

In a competitive,free market environment,a company muststand the test of BRAND IMAGEfor success in the marketplace.

Brand image is mostly the result of SOCIAL VALUEcreations which in turns attractscustomers,clients,employees,vendors alike.

If social value is the force that drives the company in theexternal market,ECONOMIC VALUE is important for its

stakeholders.


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CORPORATE GOVERNANCESTRUCTURING

The basic purpose of corporate governance structuringis..

To motivate and control executive and employees torespect and retain fair business practices.

Effectively utilise various resourses.

To maximise efficiency of a business foreconomic,moral,social and environmental benefits ofthe stake holders.

WITH CHANGING BUSINESSENVIRONMENT,THE TASK OF CORPORATEGOVERNANCE MUST ALSO CHANGE.


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Contd..

- Without ethical guidance,governance would loose its directionand purpose.

- Companies would fail to create value themselves without holdingonto moral principles and ethical standards for decisions andactions.

- In fact,CG is the journey towards creating sustainable growththrough continuous value edition to the organisation-creating anenvironment beyond the self; creating faith in the collectiveentity and creating a sense of spiritualism whilst doing things.


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Ethically a business must:

Adopt a transperant policy of management and governance abiding byrules & regulations and laws,codes of best practices and the principle ofholistic approach.

Adopt a principle approach to product/service design for customers andconsumption by the society.

Be fair inbness goals,and transparent in market dealings.

Listen to and communicate with people and customers with honesty andintegrity.

Make efforts to reach out to all in the community and the society.

Protect and promote health and safety,enironment in the society becausethey are the base support on which businee stands and grows.


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Components of Japanese CG

Leadership charged with moral responsibility

Deep concern&care for employees

Respect for customers

Commitment for fair bness practice Exellence through creativity

Discipline in thoughts,deeds&actions

Consciousness for social responsibility


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Improving ethics in corporate

In improving the corporate governance via ethical means it is importantto first understand the important features of modern features such as:

Not confined to one locationContinuously changing environment and economical conditions

A business is greatly affected by the global financial and business

environmentThus model of corporate governance should that which is robust enough toadapt to situational variations with assured sustainability of businessA good corporate governance need to ensure that business process are:

Fair and Transparent

Respectful to customs and culture of the countryFollowing government regulations, trade agreements, tariffs, labourlaws etcConcerned about interest of minoritiesConcerned about well being of society


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The aim of good corporate governance is to create not only economic

value but also social value for the sustainability of the business.This dual aim could be achieved only through the means of ethics andethical conductThe companies may try to achieve the short term economic advantageby overlooking ethical responsibility but it cannot be sustained to long

term. Many companies such as Enron, Lehman brothers have faced this.In indian, many organisations still do not fully apreciate the sinificanceof ethics in corporate governance and this is evident from the reportsabout violation of tax, pension fund etcSuch behavior affects the interest of shareholders,society,suppliers,employes etcThe good governance is the proper mixture of ethics and managementto achieve the companiys mission and vission


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Holistic nature of corporate governance

Governance

Big S Big S

Regulators/society

Enviroment


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The three essential component of the corporate governance are:SocietyEnvironmentStakeholders

The aim of corporate governance should be to:To promote culture of ethics in corporate decision and actionsEnsure fairness. Justice and equity to all connected with the

businessCorporate governance must also go beyond the law because loopholes of the laws are sometimes used for unethical practicesCorporate governance should be empathic to the interest ofemployees and society along with enhancing the earnings of the

shareholders and promoters


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Along with improving internal enviroment companies shouldalso focus on improving external factors such as:governmentrules and regulations, trade pacts, labour laws etcMost of companies rely on feedback control system of ethics togovern the internal factors however instead companies should

use feed-forward which tend to rely on prevention of causes andpromotion of ethical cultureThe governance of internal controls is largely focused oncontrolling financial irregularities to control the damages tostakeholdersThe governance of external controls is largely focused onethical compliance to laws, agreements , social cultures, interestof those who affect the business etcCSR are also considered by many companies to achieve socialvalue


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Total ethical practice(TEP)

It s a new strategy introduced to promote ethical practices

The aim of TEP is to prevent the occurrence of misconduct,ensure just and equitable protection,promote fairnessfocus on the vision and mission of the company


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Steps in TEP

Identify moralguidelines for

governance andoperations

Monitor measurecontrol and preventwrongdoings

Manage the executionand operation byethics driven policydeployment

Understand ethicalimplications anddirections of theseexecutive process

Identify executiveprocesses that arecritical for success


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Another important aspect of corporate governance is leadership.

leadership refers to the top managementThe task of leadership does not only include controlling the acts in theorganization but also to contribute to policy framing that ensure fairnessand justice in the organizationLeaders should believe that the value of organization is not only indistributing dividends or carrying out expansion but to create sustainable

value for self and societyLeaders are expected to establish and maintain equilibrium of objectivesthat are beneficial for not only shareholders but also other stakeholderslike employees, customer, society etc.Thus good corporate governance means the companies should carry out

their business in ethical way by controlling internal and external factors toobtain proper balance between its vision mission and benefit of society

chapter-11 becg ppt

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