Social Responsibility: The case of Bank of America’s Expansion
Introduction
With the emergence of the global world, businesses the world over have been compelled to offer competitive services. In the same strain, the protectionist systems adopted by countries have since been replaced by open market concepts that necessarily encourage capital flight and cross border investments. In addition, it has become easier for businesses to engage in capital borrowing at the international level. It is on this premise that this paper seeks to recommend for the Bank of America’s expansion into the international financial arena and more specifically to the BRICS nations which have been confirmed as having colossal resources in terms of business opportunities. The paper shall be divided into three main parts, these are, ethical leadership, organizational viability and legal and regulatory framework. Within the three broad groups, the paper shall examine the key considerations necessary and equally suggest three recommendations for the business to pursue. It is imperative to appreciate the special position the Bank of America holds.
Instead of limiting its abilities to its traditional market base, it is equally important to have the Bank spread its risks by venturing into other unexploited markets. Ideally, this paper seeks to examine the context of expansion even as the operating framework continues to experience changes which pile pressure on the organizations to consider the triple bottom line approach in their decisions. It is, however, noteworthy that most businesses are yet to relinquish the practices of yesteryears and live by the spirit and letter of the current ethical premises. In that regard, the Bank of America may want to consider this paper’s insight for its illuminating and pragmatic approach to balancing the triple bottom line elements (profits, people and planet) which in many cases often compete.
Ethical leadership considerations and recommendations
Foremost it is essential to appreciate the evolving ethical demands in modern business operations. With the introduction of the Sarbanes Oxley Act, organizations are caught in a catch twenty two situation in which they need to at the very least retain their levels of profits and at the same time observe ethical leadership and practices. Balancing profits and ethics is no easy task. It happens that the organizations that consider ethics lose out some business to the unethical organizations, who, end up with higher profits. It is these conflicts that occasion competitive situations for businesses. However, even as the Bank of America seeks to expand its services to tap into the increasing global capital consumers, it is imperative to consider key ethical issues. Equally, it is this paper’s submission that the organization must stick to the letter and spirit of their ethical policies and ideals. In that breadth, the Bank of America needs to consider three critical considerations that would determine their ethics or lack of it. The three inform the subject of the ensuing discussion.
- Ethical decision making: The increased information flow has occasioned a situation whereby the management has an enormous discretion in decision making. This discretion can be abused. The factors that encourage abuse of discretion include the increased pressure for performance and positive results. To manage the demands in the market, managers have resorted to making convenient decisions that do not necessarily observe the dictates of the ethical practices. It is imperative for the management of the Bank of America and especially the portion charged with the expansion program to undertake to reach decisions that are ethical in nature. In making decisions concerning the activities of the organization, it is critical that the management is guided by the need to observe general societal norms and practices that are acceptable and reasonable. On that premise, suffice it to say that the management must account for its decisions. This state of accountability would result into responsible management that is able to effectively deliver its mandates without unnecessarily breaking the law and ethical practices.
- Ethical management: Secondly, managers and employers are today compounded with intercultural contexts which demand for an application of multicultural approaches that are sensitive to all of the employees. Popular literature point to a direction in which managers and employees take advantage of the changing tides and confusing intercultural contexts to abuse and misuse their employees. Some of the managers have gone to the extreme and used blackmail and unscrupulous means to have their way with their juniors. Some of the abuses include sexual abuse and harassment, cultural intolerance and unnecessary dressing down of the employees. This submission recommends that employers and managers exercise the colossal power they often have over their employees with caution and restraint. In addition, employers are required to conform to the ethical principles and practices right from the recruitment stages to the work setup by the employees. This recommendation will come in handy even as the Bank of America seeks to expand into the BRICS market. Ideally, the managers must not only commit to observe due ethical practices in their relation to employees but also put it on paper that unethical mannerisms and unnecessary use of their authority would amount to offences in the workplace which are punishable. It would be essential to have the employer and the manager observe ethics despite the opportunities that often lend themselves to the employer or manager’s discretion.
- Criminal activities: Lastly, within the realm of ethical practices and leadership, it is critical to observe the need to undertake not to engage in activities that approach criminal boundaries. Such unethical practices are often conveniently manipulated into the system and let go undetected. The approaches are facilitated by factors such as weak regulatory systems and perhaps the fact that some of these activities are not statutory offences though on the surface they would easily fall under the realm of crime. Some of these cases involve money laundering activities often covered up in government and non-government backed deals. It is this paper’s submission that the Bank of America must retain its ethical idealism. It must not fall into the trap of ethical deceit and malpractices. In that context, it would be critical for the Bank of America to develop a list of unethical practices it condemns. Ideally, such a list should be the subject of continuous updating even as the world business structure changes. Some of the areas that would equally require ethical leadership include the use and consumption of the internet by Bank of America employees, the nature and character of the online transactions that the bank subscribes to, the honest declaration of income earned and consequential payment of taxes thereof, among other critical factors.
Ultimately, the onus lies on the leadership that would spearhead this expansion to put in place mechanisms to ensure that an ethical approach is implemented at least in the BRICS nations which badly need ethical applications given the relative ethical aloofness demonstrated by the organizations already in the nations.
Organizational Viability considerations and recommendations
It is essential to appreciate the traditional versus the modern objectives of business organizations. The traditional objectives focused essentially on the profits. However, the modern approach advocates for a triple bottom line premise that seeks to consider the planet and the people. While the planet is considered through environmental sustainability, the people are considered through ethical applications. On the other hand, the profits are considered through an application of viable processes. In that regard, it is critical to consider the viability of the expansion project. The ensuing discussion shall consider the viability in terms of three considerations and recommendations. These are the demographics, the economic capacities and the risks involved.
- Demographic considerations: demographics entail the consideration of matters of population. Among the BRICS nations, China itself boasts of a population of over two billion as at 2010. While the rest of the BRICS states are not as numerous, they are equally populous. This calls for an application of an organizational approach that is viable. One consideration the Bank of America needs to make relates to the target market. Since the main source of income for Bank of America remains loans, it must apply the information derived from the demographics well to device a system that would attract and retain the clients. In that context, this submission recommends that the application of the loan facilities relative to the demographics must be in order. The loan facilities available need to be tailored relative to the unique demands of the demographics in the BRICS region. Interestingly, the majority of consumers would fall in the medium to small scale consumers. It would, therefore, be necessary for Bank of America to ensure their products in the newly created market provide for the mentioned target markets. In order to meet the requirement of economic viability, the loans should be deliberately tailored and packaged to address the medium and small scale needs.
- Economic capacities of consumers: In addition to the demographics, it would be quite in order to consider the economic capacities of the consumers. In that vein, it would be essential to ensure that the consumers of the information can afford the products in terms of related costs in the long run. The loans availed can be recaptured and packaged in different ways in order to address the unique interests of the consumers of that region. In tackling the matters of economic capacities, fundamental determinants should be put in place seeking to estimate the ability of most of the dwellers in a particular area. This way, it would be easier to estimate the overall economic capacities of a given demography or geographic area. This paper equally submits that the costing model should be arrived at in consideration of the economic capacities of the targeted market. The paper submits that the BRICS consumers have the economic capacities given their blossoming economies which offer a number of opportunities in the near future. In addition, the capital flight has tended to favor the BRICS economies for their relatively undeveloped capital markets have less stringent laws and regulations in respect to legal requirements. These circumstances enable the BRICS market offer viable market opportunities for investment. In addition, the economic capacities of the populace are high enough to justify the establishment and positioning of the Bank of America within the states.
- Market risks involved: Lastly, within the area of organizational viability, it is imperative to consider matters of risks. Financial risk refers to the market risks of failure. It would be necessary to consider the risks attendant to investing in such markets. Indeed, the Bank of America would equally need to borrow funds for investment in these areas. In that vein, the market risks in the areas of investment would be needed to be able to make informed decision on what amounts to invest where and in what quantities. It is essential to note the critical role the experts play in analyzing the market risks. It is equally the responsibility of the professionals in the business to advice the organization accordingly. In that respect, it would be expected that the organization only invests in areas that have been analyzed and the risks identified. Identification of risks should equally extent to the consequential adoption of insurance measures, among other alternatives.
Legal and Regulatory considerations and recommendations
In the same context, it would be necessary to have a consideration of the legal framework within which the company would operate. Foremost, the company must take note of the fact that its domicile and headquarters is in the United States of America. In that vein, it is equally important to conform to the legal requirements imposed on foreign subsidiaries of local firms. Accordingly, conforming to the Securities and Exchanges Commission requirements remains mandatory. In addition, the Bank of America should be ready to meet all the accounting, auditing and taxation disclosure requirements. Operating within the legal realm would enable the organization conform to the legal requirements not only within the BRICS but also in the United States of America in respect to the requirements imposed on the subsidiaries located in foreign branches.
In the ensuing discussion, this submission shall discuss three legal requirements that it deems appropriate for the organization to observe. It is the contention of this submission that a thorough observation of the same would enable the organization meet the general legal requirements given its unique position in the international arena. In addition, this submission requires the Bank of America to conform to particular legal requirements found in the respective nations in which the operations are put in place.
- Equal Employment opportunities Act: One recommended legal requirement relates to the Equal Employment Opportunities Act, EEOA. According to EEOA, it is required that the Bank of America offer equal employment opportunities to the citizenry of the nations affected including the parent nation, that is, the United States of America. It is legally required that the organizational policies and principles are designed and implemented within the confines of the law. In that respect, issues of recruitment need to afford equal opportunities to the interested parties. In fact, the process should allow for reviews, appeals and inquiries concerning the transparency and equity in recruitment and related courses. It would be essential for the Bank of America to score a first by fully implementing and complying with the Equal Employment Opportunities Act provisions. Ultimately, the success of the organization would partly be attributed to its corporate image which it would derive from among other factors, observation of the due process of the law. Over and above that, it would be critical to inculcate in the organization the culture of obedience of the law for the overall benefit of the organization.
- Accounting bookkeeping and reporting standards: Secondly, the Bank of America would be required to conform to the accounting standards and submit returns in the context of the dual legal requirements. This is to mean for purposes of taxation, accountability and financial reporting, the company would be required to provide statements in both nations, at the parent operations in the United States of America and at the foreign branch in the country of operations. This approach calls for a multi-legal approach in which the standards and mundane requirements are harmonized. In addition, such situations dictate for preparation of separate accounting statements showing the foreign branch performance and the consolidated statement of accounts which portrays the situation of the entire organization. In this context, it would be imperative for the firm to ensure that its books of accounts are up to date as is legally required. Within the same strain, the firm must ensure that independent external auditors audit their reports and duly submit their annual auditor’s report. This would be essential in appreciation of the legal repercussions financial reports have on the general business. It would be expected that the company elect to subscribe to the position of the law that necessarily blends the multi-legal contexts involved.
- Sarbanes Oxley Act: Lastly, on legal requirements this paper recommends for a thorough consideration of the Sarbanes Oxley Act. It should be appreciated that the complicated environment in which businesses operated facilitated fraud through unethical behavior. In that context, while ethics remains largely a matter of corporate governance with professional dictates some matters though ethical in nature have been given statutory footing in the character of the Sarbanes Oxley Act. For purposes of this paper, whistle blowing and employee loyalty come in handy. The Sarbanes Oxley Act which was a direct consequence of the Enron scandal provides for the protection of the whistle blowers in the organization. Popular literature suggests that organizations are yet to appreciate whistle blowers. In fact, in most organizations the structuring appears to weaken the place and position of the whistle blowers. Organizations demand for employee loyalty. In that vein, organizations often require their employees to remain silent about the financial improprieties. However, this is not the ethical position neither is it the language and spirit of the Sarbanes Oxley Act. According to the latter, it is the duty of employees to bring out cases of improprieties perpetrated by the organization against the public. In that context, it should be appreciated that the law considers public good greater that individual selfish interest. This paper recommends for the full implementation of the Sarbanes Oxley Act in as far as the organization is concerned. The Bank of America needs to appreciate that being domiciled in the United States of America, an application of the Act is mandatory rather than optional.
Conclusion
The expansion of the Bank of America needs to assume an approach that is sensitive and embracive of the triple bottom line school of thought. This is to say that the organization needs to consider the people, the planet and the profits. The times when only profits informed all the considerations are long gone. This paper suffices as an example of the triple bottom line approach. It should be appreciated for its delicate and informed approach. In the long run, organizations suffice for purposes of profit making and this should determine the nature of their activities.
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