Business Ethics and Corporate Governance Assignment

Presented by: Group 2

Ashmeet Singh 15PGHR14

Maitrayee Ghosh 15PGHR24

Saatvik Lahoti 15PGHR39

Akshay Kumar Singh 15PGHR40

Swatah Siddha Borkotoky 15PGHR49

Himani Sharan 15PGHR55

 1. What according you are “corporations”?

Answer: It is defined as one company or a bunch of people coming together to accomplish one
purpose and are recognized as one unit by law. It is a legal entity that is separate and distinct
from its owners.

Broadly, Corporations are classified as:

 Whether or not they can issue stock

Allowed to issue stock - Stock Corporations, owners are called “Stockholders”
Not allowed to issue stock – Non Stock Corporations, “members” of corporation
 Whether or not they are for profit
“For profit”
"Not-for-profit" corporations

Other than this, corporations are classified as:

Partnership entities
Sole prorietary entities
limited Liability entities
Public limited entities
 2. What are “corporation’s” roles and responsibilities with
regard to society at large? In other words, how do you
visualize business-society relationship?

The role of business in an open market economy system is to create wealth for shareholders,
employees, customers and society at large. While all businesses have an implicit set of inherent
values, the number of businesses that have formally written values and principles is rapidly
increasing. These principles have become more and more explicit and provide the framework for
corporate behaviour beyond their legal obligations. At the same time, growing numbers of
companies have been adding environmental and social indicators to their economic and financial
results in reports that are often entitled social reports or sustainability reports. Indeed, sustained
profits and principles are mutually supportive and an increasing number of companies view
corporate responsibility as integral to their systems of governance. This is part of the
requirements for doing business in today's global economy.

1. Employees demand their company to be socially responsible.

2. Consumers expect better business practices
3. It creates competitive immunity
4. Capitalism and societies are evolving
5. It is a moral imperative

Responsibility Towards Responsibility Towards Responsibility Towards

Customers employees Shareholders

Customers is the king who are

responsible to create the
goodwill of the organization.
Providing customer satisfaction
is the ultimate aim of all the
economic activities. Poor
quality, failure to give
measures, lack of services,
misleading of dishonest
advertising are some of the
examples of the violation by
business of its obligations
towards the customers of its
products.
Workers manpower is
backbone of any corporate
and the manage ment
should treat the workers
fairly by involving them in
decision making processes.
The management should
fulfill the following
obligations toward its
employees
In case of public limited
companies, management
should be responsible to
the shareholders, they
should work as agents of
shareholders.
Some of the responsibilities of the Corporations are:

Preservation of Local Environment

Take care of the surroundings in the company to provide healthy environment to workers, as well as take care of the natural
resources so that they don’t get polluted by activities of company

Provide Adequate Service Benefits

Workers should provide the service benefits such as thehousing facilities , medical benefits , insurance cover and retirement
benefits .These benefits helps them to feel secure in the organization.

Opportunity for Growth

The management should help the workers by providing training and other means to improve their skills, educations and
enjoyment of freedom to the greatest possible extent.

Recognize The Workers Participation

The organization should recognize the participation of the workers in their decision making process regarding their fair wages,
easy meeting of their superiors for working or personnel related problems.

Best Utilization of Resources

All the resources used by the organization belong to the society. Management should also consider the best possible utilization of
the resources such as capital, raw material, machines and technology used by the organization.

Creates Employment

It is the responsibility of a management to provide the employment opportunities in the area where it is functioning.
 3. How well or otherwise do you think corporations are
fulfilling these roles and responsibilities?

Corporations have multiple stakeholders and the corporation’s values decide the priority order
of these stakeholders. The stakeholders can be investors, employees, profits, environment,
customers, amongst others.

Taking the case of the movie ‘The Corporate’, the Saigal group put the interests of the investors
and the company’s profits foremost. Customers, central for any business, were not as important,
whereas they should have been the top priority. It was because of this that they sold drinks with
contaminated water which was harmful for the health and safety of the public.

Another key stakeholder who was ignored by the Saigal group was the employees, a very key
stakeholder for any business. Even when a board of director leaves the company because he was
not in favor of using contaminated water, the company did not care. They do not want an
employee to be retained at the cost of profit. Yet another example is when the management puts
the entire blame on an employee, Nishigandha to save the reputation of the company.

This example shows that there is a gap on the part of the company between their ethical values
and their profit motive. Hence it can be said that the corporations are not fulfilling their roles and
responsibilities. This is where corporate governance comes in, which ensures that all the
corporations fulfil their ethical responsibilities along with their motive of profit making.
 4. Finally, do you think Corporate Governance provides a
master key for unlocking the full potential of companies for
creating social/public good?

Corporate governance is the way a corporation polices itself. In short, it is a method of governing
the company like a sovereign state, instating its own customs, policies and laws to its employees
from the highest to the lowest levels. Corporate governance is intended to increase the
accountability of your company and to avoid massive disasters before they occur.

Corporate Governance ensures that public interest is taken care of along with the shareholders’
interests. When corporate governance is done properly, it allows the corporation to work
smoothly due to the existence of a clear level of accountability and communication amongst the
organization, as well as people understanding what their roles and responsibilities are.

Corporate governance gives the minimum and not the maximum requirement or check for the
company and what the company can do for the society. This allows the companies to have inner
motivation to perform the best for their interest and for the society.

Thus, corporate governance is needed for:

1. Investors and shareholders of a corporate company need protection for their investment
due to lack of adequate standards of financial reporting and accountability.
2. Corporate governance is considered as an important means for paying heed to investors’
grievances.
3. The importance of good corporate governance lies in the fact that it will enable the
corporate firms to (1) attract capital and (2) perform efficiently. This will help in winning
investors confidence.