Stakeholder Relationships, Social Responsibility, and Corporate Governance, Essay Example

I learned how to identify the role played by stakeholder while maintaining business ethics. Additionally, a clear definition social responsibility and importance of stakeholder’ orientation was mentioned with relevant examples applying in the current business environments. In addition, I differentiated between primary and secondary stakeholders. Under the corporate governance, it provided a formalized responsibility to stakeholders. I learned how ethical misconduct and immoral decisions significantly affects the reputation of a company especially, when it damages the stakeholders’ confidence and worth. This leads to loss of both investor and consumer investment. For example, Toyota incurred a substantial damage to its reputation due to mechanical problems in their vehicles like sudden accelerations. Furthermore, the profits of Toyota dropped by 39% (Business Ethics, p.32). Reputation is one of the greatest intangible asset with a tangible value. Having a positive reputation is complex to measure but it is extremely valuable (Business Ethics, p.41). The role of Board of Directors was also discussed and greater demand for accountability and transparency.

1. The most important thing from this chapter that I learnt is how business ethics and issues revolve around relationships. All stakeholders define significant ethical issues in business through implementing a six-step framework. Each step is unique and carries a strategic point that needs to be incorporated by businesses in promoting the organizations future success while maintaining a solid reputation. This will aid in maintaining customer relation and commitment when dealing with the organization. I believe that in today’s businesses, having a good and effective corporate governance and understanding the usefulness of business ethics leads to the achievement of success and maximum profits.
2. On the topic of executive compensation, it was not clear on how it is linked to the overall performance of the country. Compensating executives may encourage them to concentrate company’s performance on the short-term at the expense of long-term performance. I agree with compensating executives, but having the Board of directors responsible for compensating managers is confusing. Many CEO’s received large bonuses as they voted for themselves while the companies requested for government bailouts (Business Ethics, p.42). These features need to be spelt out in order to reduce the inadequacies faced by accountants while computing financial statements to account for money reimbursed during a financial year.