Chapter 3 - The role of governance and ethics in the strategy process Flashcards
What is corporate governance?
System by which companies are directed and controlled
What is the purpose of corporate governance?
Monitor those parties within a company who control the resources owned by investors
What is the objective of corporate governance?
Contribute to improved corporate performance and accountability in creating long-term shareholder value
What are the characterstics which are important in the development of an appropriate moral stance?
Fairness
Openness/transparency
Innovation
Scepticism
Independence
Probity/honesty
Responsibility
Accountability
Reputation
Judgement
Integrity
What is corporate social responsibility?
Firm’s obligation to maximise its positive impacts upon stakeholders while minimising the negative effects
What is Carroll four part model of CSR?
Philanthropic responsibilities
Ethical responsibilities
Legal responsibilities
Economic responsibilities
What are the four possible strategies that the organisation can adopt with regard to CSR according to Carroll?
Reaction
Defence
Accomodation
Proaction
What is sustainability?
Use of resources in such a way that they do not compromise the needs of future generations
What is ESG?
Environmental, Social and Governance
What are the key reasons behind why businesses have sustainability plans?
Compliance
Reputational risk
Cost-cutting and efficiency
What are the ten elements of organisational sustainability?
Board and senior management commitment
Analysing key sustainability drivers
Intergrating the drivers into strategy
Ensuring sustainability is responsibility of everyone
Breaking down target and objectives
Processes that enable issues to be taken into account clearly
Extensive and effective sustainability training
Sustainability targets in performance appraisal
Champions to promote sustainability and celebrate success
Monitoring and reporting sustainability performance
What is the impact of technologies on CSR?
Quicker scrutiny
Greater stakeholder engagement
More integrated CSR practices
Improved measurement
Increased openness in ecosystem
What is corporate ethics?
Application of ethical values to business behaviour
What are the key areas included in code of corporate ethics?
Purpose and value of business
Employees
Customer relations
Suppliers
Shareholders
Society
Implementation
What does Johnson, Scholes and Whittington define an ethical stance as?
Extent to which an organisation will exceed its minimum obligations to stakeholders
What are the four possible ethical stances?
Short term shareholder interest
Longer term shareholder interest
Multiple stakeholder obligation
Shaper of society
What are the 8 steps to resolving ethical conflicts?
- Gather all relevant facts
- Establish ethical issues involved
- Refer to relevant fundamental principles
- Follow established internal procedures
- Investigate alternative courses of action
- Consult with appropraite persons within the firm
- Obtain advice from professional institutes
- If matter is unresolved, consider withdrawing from the engagement team/assignment/role
