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Business Ethics
Assignment#2

Group Members
Javeria Jalil (160034)

Faiza Hasanat (160013)

Rida Zahid (160023)

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Table Of Contents

1. Question#1 What value is added on the top of the secular view by Islamic perspective
on managing stakeholder interests that may converge or collide situation?

2. Question#2 Identify any local firm of your choice and discuss the management of their
stakeholder’s interest based upon your learnings from the article.

3. References
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Article

A Stakeholder Theory Of The Modern Corporation: Kantian Capitalism

Question#1

What value is added on the top of the secular view by Islamic perspective on managing
stakeholder interests that may converge or collide situation?

Answer

Stakeholders

Stakeholders are basically the people or the groups of people that can directly or
indirectly effect and be affected by the decisions, strategies, objectives, ideas, goals and
achievements of organization . It includes:

Primary stakeholders

1. Owners
2. Suppliers
3. Employers
4. Customers

Secondary stakeholders

1. Government
2. Political groups
3. Financial community.
4. Activist groups.
5. Customers advocate groups.
6. Unions.
7. Trade associations.
8. Competitors

Primary stakeholders and secondary stakeholder’s interests are very important in a

business. The interests of all types of stakeholders whether they are primary or secondary ; may
be difficult to elaborate and define if they are "hidden” with the openly stated aims of the
organizations or groups involved.
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Secular view of ethics

In which ethics is totally based on Human Faculties like logics, Empathy, Reasons or
Moral Intuition, and not derived from supernatural revelation or guidance. Secular ethics is
basically moral philosophy’s branch and is not connected with religions.

For instance,

In the article “ A Stakeholder Theory Of The Modern Corporation: Kantian

Capitalism” , the writer is continuously defending stakeholder model on secular perspectives
instead of religious point of views. He gives his logics in failing the economic model and for
fending stakeholders theory.

Religious view of Ethics

Ethics that arrived from purported supernatural revelation or guidance. Ethics that is
based on religion. For Example:- Islamic ethics , Christian ethics, Confucian ethics etc. In this
we will be keeping our focus on Islamic Ethics.

Further Explanation

People usually consider Islam and Secularism as two different antagonistic systems but
these two systems have so much common things. Secularism and Islam share common
intolerance towards those who are involved in unethical acts. But secularism considers Islam as a
private affair.

Secular view is close to the Islamic view but Islam adds value with reward and
punishment. Values that are added on the top of the secular view by Islamic perspective on
managing stakeholder interests that may converge or collide situation are as follows:

Firm betrothal with its Employees

In non Islamic areas ethical standards like hiring, firing, wages, Promotions, etc are often
dictated by the behavior of the managers, In Islam it is compulsory that all muslims or
employees should be treated equally well .

As in Quran,

“Allah commands you to render back your trusts to those whom they are due; and when
you judge between man and man, that you judge with justice.” 4:58

In Islam manager must have to keep fairness and justice while assessing one person’s
performance against other. The concept of Fair wages, Respect for employee’s beliefs,
Accountability, benevolence, accountability, Right to privacy for employees is are also
significant factors
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1. Fair wages

If the wage level is less the labours and employees will not be able to feel motivated to
put effort to work. In Islam wages must be set in equitable manner.

“On the Day of Judgment, The Prophet will be witness

against One who employs a laborer and gets the full
work done by him but does not pay him his wages”. hadith no 3.430

Manager should have to respect employees beliefs and muslim employees should be given
time off for prayers, should be given respite if they are sick and vice versa.

2. Accountability

In Islam, accountability is highly significant. Everyone in the firm can cheat each other
behind each others back, but they will be accountable for their actions in front of Allah.
As hadith 3.480

“Prophet never used to withhold the wages of any person”

Islam adds value in stakeholder theory by that managers must have to take care of their
employees integrity by placing undue pressure on them or force them to do something that is
against their will.

3. Consultation

As it is stated that employees must participate in decision making similiarly in Islam it

has been said in (Quran: Surah 42, Verse 38)

“And their business is conducted through consultation”.

Furthermore in another place in (Quran: Surah 49 Verse 10)

“The believers are nothing else than brothers. So make re-conciliation between your
brothers and fear Allah , that you may receive mercy”.

Relationship with suppliers

As in stakeholders theory, suppliers ; they will determine the quality and price of the final
product. Similarly in Islam suppliers are actually the consequential units of firm and they curtail
the probability of failure by providing right kind of stuff. While dealing with suppliers firms
should have to be fair and not take advantage of one’s clout.
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To avoid future misunderstandings we can have a written prove written in Quran(002:282)

Yusafali

“O ye who believe! When ye deal with each other, in transactions involving future
obligations in a fixed period of time, reduce them to writing Let a scribe write down
faithfully as between the parties: let not the scribe refuse to write: as Allah Has taught him,
so let him write. Let him who incurs the liability dictate, but let him fear His Lord Allah,
and not diminish aught of what he owes.”

In addition the merchants are prohibited from interfering with the free market system
through a specific type of brokering.

Allah’s messenger said:

“The townsman should not sell for a man from the dessert; leave the people alone; Allah
will give them provision from one another.” Hadith 31.19.34

Relationship with the Customers

Customers are the one who will decide whether the firm will earn revenues or not
because they are the one who buy the firm products. As it has been stated in the article that by
paying attention to the customers needs, manager can automatically addresses the needs of the
suppliers and the owners well in Islam

“ Saying of Prophet (pbuh) , “All merchants are resurrected on the day of judgments as
sinners, except for those who feared Allah, treated their customers well and weretruthful”2003:7

Relationship with the Owners

Islam adds value to the stakeholder theory by providing with guidelines and track to
follow in case of owners islam encourages partnerships. Monopolies are discouraged in Islam.
The owners are advised to pursue their activities under the certain rules and regulation in Islam.
For example ,In case of partnership there are ways like qard Hassan, Murabahah,sadaqah etc .

Relationship with the Competitors

As stakeholder theory works equally well in monopoly contexts and monopolies are
discouraged in Islam. As it has been advised that firms should have to eliminate their competitors
and by eliminating their competitors, firms can then reap above average economic returns
through hoarding and monopolistic pricing. But in Islam hoarding and monopolies are
discouraged.
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The role of Management

To put Islam to complete way of life the significant component in leading or managing
the firm. In others context raising profit with ethical views is the ultimate goal of organization
because in the end you’ll receive profit and satisfaction but in islam the just leaders are promised
with Jannah and they are under the shade of Allah. They enjoy the satisfaction, profit, Jannah
and safety and guidance.

Conclusion

End conclusion is that secular business morality is utilitarian and is beneficial for society
as well as buyers and sellers but it fails for humanity and long time work. Islam provides you
with satisfaction, patience, and other moral values that one cannot get from secular ways.

Question#2

Identify any local firm of your choice and discuss the management of their stakeholders
interest based upon your learnings from the article.

Answer:

NADRA: NATIONAL DATABASE AND REGISTRATION AUTHORITY

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NADRA is the top leading system in the sector of global identification and specialized
in extensive experience in designing, implementing and operating solutions for corporate and
public sector clients.

In 1973 Bhutto raised the issue of absence of statistical database of the people of
Pakistan, and claim that this country is operating in the utter darkness, in Parliament to the
people of Pakistan. And then government started issuing national identity cards to its citizens and
performing government data bases of the people in the government computers.

There are many Information technology companies in Pakistan and NADRA is one of
them . Furthermore NADRA employs specialized workers . NADRA is included in the top best
50 companies of world in the field of secure document solution integration in 2005 and 2006.

Strategic Partners of NADRA

1. Bureau of Policy Research and Development.

2. Directorate General Civil Defense.
3. Directorate General of Immigration and Passport.
4. Directorate General Federal Investigation Agency.
5. National Police Academy.
6. National police Foundation.
7. National Database and Registration Authority.
8. Narcotic division.
9. Civil Armed Forces.

NADRA has a mixture of typical bureaucratic hierarchical structure with the combination
of modern matrix structure. With the base at corporate headquarters NADRA operates in a
matrix structure with the regions which are geographically located. The Chairman NADRA, Mr.
Usman Y. Mobin, is determined to instill in NADRA a culture of ethics & clean Administration.

Company way of working:

1. Relationship with the Customers

NADRA is working with many different local, international and corporate clients.
NADRA is organizing different projects in its dealing with its clients. NADRA is providing ease
to their customers by introducing new ways for example establishes hotlines for complaint
registration and enquiry, introduces CNIC verification through SMS, ID card delivery made
convenient etc . Customers are the basic unit of the organization so they are trying to create
strong relationship with them.
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2. Relationship with the Employees

They are keeping good relationship with their employees but few factor makes them not
competitive one in dealings with employees like long hours and demanding more for employees.
Infact working as an employ in NADRA is a competitive task to some extent . Furthermore there
are no possibilities of promotions of NADRA’s employees; job structure is not in a proper
manner and politics are also involved in NADRA. So if we compare it with the article the point
is that manager cannot deal stakeholder equally and one will gain something on the loss of
someone else and managers in NADRA are not dealing them smartly plus corruption is the
notorious factor which is against ethical behavior.

Problems with Employees

In one of the review

“I am working here since last 6 and half years but I am still waiting for my personal
and professional growth. Here is not any rewards and appreciation or promotion. I am still
working on same position with almost same salary.”

One of the pros for the employees of NADRA is that they provide free transport and free
ID cards for their employees and diminish the bad faith in their firm.

3. Relationship with Owners

NADRA owners are keeping good partnership with their partners. Owners advocates the
stakeholders and Partners of their firm and passes good and competitive orders and follow the
rules and regulations of the firm . One wrong act is corruption that should have to be eliminated.

4. Relationship with Suppliers

Suppliers are the significant units of NADRA and NADRA is basically a governmental
agency so at some extent is following the ethical rules and regulations governed by the
government of Pakistan. As in article the suppliers are important unit and firm should have to be
fair with them so in NADRA there are divisions like Head of Finance wing, head of operating
wing, head of human resource wing and head of planning and development wing. So everyone
have certain obligations that should be fulfilled and NADRA should try their best to create better
relations with suppliers because suppliers are also NADRA’s stakeholders.
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References

1. (©NATIONAL DATABASE AND REGISTRATION AUTHORITY, 2015 )

2. (©National Database & Registration Authority, 2016 )
3. www.indeed.com.pk/cmp/Nadra/reviews?
4. (Asad, 2011)/Business Ethics In Islam
5. (Bekun, 1997)/Islamic Business ethics