Creating shared value / SCR
Redefying capitalism and reconsidering its role in modern society is rather significant nowadays. Nowadays business should move toward social needs. Only companies which policies are aimed on society, the companies that include corporate social responsibility into their business strategies have an opportunity to become leading companies in any industry. There are several clusters that can help implement the corporate social responsibility program. To such clusters one includes not only small companies, but educational, economic and environmental institutions as well. The shared value theory is not to consume but to help others. For example, a businessman instead of buying a field can help a farmer with tools. He will obtain a good partner in such a way. However, it is significant to understand that not every institution can fit into the shared value theory. When speaking about schools, not every school can become a partner of a company. When a mayor requests a company to finance a new primary school, it cannot be a part of the corporate social responsibility. The authors of the article state:
“Productivity and innovation are strongly influenced by "clusters", or geographic concentrations of firms, related business suppliers, service providers, and logistical infrastructure in a particular field”
On the contrary, not every establishment can become such a cluster. A primary school cannot be called a cluster because a primary school is insignificant for any company. The point is that even a shared value theory supposes to receive some revenue or the company should theoretically have some benefits from it. Hence, a primary school cannot be a part of a corporate social responsibility program.
When speaking about the establishing a primary school, it is significant to explain counter arguments. Some state that corporate social responsibility is not effective and it does not help anyone. Some say that such researchers are capitalists who are not willing to share their money. On the contrary, I would say that such people are realists who understand the value of money. When we look at the case of establishing a primary school from the point of view of agents who will be working there, as well as from the point of view of stockholders whose money will be spent for a primary school establishment. Neither is in benefit. Stakeholders will only lose their money. Besides, agents who will work in a school will not get any revenue for the work simply because it is not his or her responsibility to perform this task. Researchers state that in this case, top managers of corporation will spend someone else’s money for social interest. When we are speaking about social responsibility, a manager or a corporate executive will use stockholders’ money to build a school or other establishment. As a consequence, these actions will lead to the prices increasing. This will negatively influence customers of the company. Moreover, the wages of employees will become lower.
When look into the nearest future, the only effect it will have is the economic loses and free advertisements of the company: in this case, the company will be seen as a volunteer that is willing to help the others. On the contrary, such strategy can play vise versa: the company may be seen as funding a primary school to show how generous the CEO is and how he or she worries about children. in this case, the employees will, obviously, be unsatisfied with their salaries and the company’s reputation may be damaged.
Theories of moral / what is not for sale
There are different aspect and definitions of what ethnics is. It is worth to mention that business ethnics is rather complicated. When speaking about business ethnics, it is necessary to mention five theories: utilitarianism, rule based morality, a rights approach, virtues and virtuous characters and social justice.
The theories can explain what is happening in modern society. As known, almost everything can be bought and sold: beginning from a place on one’s forehead for an advertisement to the right to shoot an endangered black rhino. The only thing you need is money, much money. Nowadays, people are trying to sell everything they can, especially in the period of the world economic crisis. One can explain such phenomenon from the point of view of the utilitarianism theory. The theory is based on the idea that everything should be done for one’s happiness. Nowadays, money is in great value and some people think that being rich is the thing that can make anyone happy. Hence, people are striving to get more and more money, to become richer. Another theory that can be applied is the social justice theory. When speaking about rich and poor, one sees that there is not only a big gap between them, but most of business is made for rich being happy. The point is that there is not alternative for poor: they have to buy products made for them. On the contrary, there is a wide range of choice for those who have money. The social justice theory states that people should be treated equally regardless the differences between them.
When speaking about the Bangladesh case, it is possible to outline two theories that can be applied in this case. In my opinion, the first ethnic theory that has not been taken into account in this case is the Kant’s rule based morality. According to this theory one should understand what can be controlled and what not. Besides, when making a decision, one should take into account all possible variants and solutions. The authorities of plants, after several inspections and warnings, did not take into account the workers’ safety in case of fire. The second theory that can be applied in this case is the social justice theory. It is easy to notice that workers in Bangladesh were not being treated as the ones in other countries, in the United States of America. The social justice theory states that all people should be treated equally, that is how their rights can be protected. There has been many mistakes made by local authorities as well as by the owners of companies. The main mistake is that local authorities did not pay attention to workers, their safety and rights.
In some cases the codes of conduct may help solve some issues or teach employees to communicate with each other. Nowadays when most of the biggest companies are multinational or international, a leader should be able to make the employees if not friends but good coworkers. This will help to increase the quality and speed of producing good or providing services. Codes of conduct are mostly based on ethnical codes. However, these two are different. this is the main idea of the article: to show the difference between ethnical codes and codes of conduct and the effectiveness of the latter. When speaking about the Bangladesh case, one may undoubtedly state that there was no code of conduct. First, managers and employees could not communicate to each other. Second, as it has been already mentioned above, the authorities of the company did not pay attention to life safety of the employees. Codes of conduct should not include what should be done in cases of emergency. However, it seems that in Bangladesh they should have. On the other hand, this is not only the mistake of Bangladesh authorities but the owners of the companies as well. the code of conduct exist to teach people to cooperate and not put them under pressure or damage their lives. The article showed the effectiveness of codes of conduct and the Bangladesh case showed how harmful it may be not to have the one.
Methods to protect your interests / joint venture
Joint venture is one of the strategies to cooperate with international companies.
Purpose of the joint venture:
- A more complete saturation of the market country location JV goods, services that are the subject of the joint venture .
- Attraction in the country advanced technology, management experience, additional material and financial resources.
- Expansion of the export base
- Reduction in imports due to the release of import-substituting products
- Expansion of markets
- Tax optimization .
Defining the goals of the joint venture:
- Analysis of indicators of potential joint venture : expenses , profit, profitability, return on investment , etc.
- Search and select a foreign partner or partners.
- Preparation and signing of the letter of intent .
- Feasibility study of a joint venture .
- Preparation of draft constituent documents .
- Harmonization proposals for the establishment of a joint venture in government , if it is necessary for the legislation of the location of the future joint venture.
- Founding documents of the joint venture
- Registration of a joint venture in accordance with the legislation of the location of the joint venture.
However, the joint venture means some risk for a businessman. That is why, there are several recommendations how to protect oneself. First one should demand a veto right in an intellectual property or marketing plan cases. Besides, there should be “reserved matters” such issues should be solved not by the board of directors but all the joint stakeholders. There are many recommendations and when a businessman follows all them, one’s rights will be protected.
Resources:
Friedman M. The social responsibility of business is to increase its profits. New York Times Magazine
n.a. A note of five traditional theories of moral reasoning n.d.
n.a. Impact of codes of conduct n.d.
Porter M. R. Kramer M.R. Creating shared values.
