The concept of Stakeholder Expectation and Business Governance
Business ethics is a concept that describes the conduct of individuals in the business field (Norman, 2013, 652). It also illustrates the principles that any organization should have a focus on in the company to their dreams. According to research, it has been revealed that the behavior portrayed by individuals is usually related to their specific fields. Among the things that influence the virtues in any organization include the business designs, regulations in the business field and the political perspective in the organization. Through business ethics, some virtues are legalized by the business community while others are condemned as well. Business ethics also define the responsibilities and the rights to be enjoyed by the employees in any organization. In addition, the virtues are believed to determine the relation between the businesses and their consumers. In return, they determine the fate of any business organization. The paper gives a review on the effects that business ethics have on business organizations, the ethics that should be emulated by the various business stakeholders, the responsibilities of the business community with respect to business ethics. It also gives an insight on the business virtue with respect to the ABC leaning limited.
ABC learning organization was a childcare based organization in Australia (Lane, 2016, 237). It gave care to children aged between six weeks to five years. It was founded by Eddie Groves in 1998 as a privately-owned organization. There was high demand for childcare services in Australia and as a result, the ABC Company was listed in the Australian Stocks Exchange. Later the organization collapsed with the main reason being the uncontrolled expansion that was undertaken by the management. This resulted in over-borrowing by the organization. There was in return there was a huge accumulation of interests by the loans. The collapse can also be blamed on the weak relationship between the administration and the stakeholders. This made hard for the organization to monitor its activities as well as those of their employees. As a result, the company ended up making losses in its financial calculations for example in May 2010 the company posted a loss of $1.7 billion (Lane, 2016, 243). The paper uses the ABC learning organization as a study to emphasize various business virtues.
The first business ethics is integrity (Burcea, Croitoru, 2014, 142). Integrity is considered as a character through which any individual adheres to morality in his or her activities. This virtue is mostly executed in a situation where a consumer or an employee seeks favor that ought not to be given. The virtue also portrays transparency and authenticity in the daily activities of the stakeholders in the business field. The existence of this virtue in any business organization assures progress and development. The success of the business is realized because the various stakeholders abide by the terms of the business. In return, there is a smooth run of the business activities and high-quality services are offered. With respect to this virtue, there is a good relationship between the various organs of an organization since they are all transparent to one another. On the other hand, hypocrisy in business leads to failure. The failure may result from the corruption that is enacted in the business process. With reference to ABC learning limited the management posted a profit of huge amounts of money while as in reality some ABC canters were incurring losses. A good example is the 2009 case where the management showed that the organization was making profits while as some investigators claimed that the organization was suffering losses in some of its centers (Johnson, 2012, 2). As a result, the organization was unable to see the challenges within that led to the losses incurred in the 2010 financial statement of about $1.7 billion. The hypocrisy character led to the collapse of the organization later.
Corporate social Responsibility (CSR) also serves as an important factor in any business organization. The CSR discusses the goals of the business aimed at making a positive change in the society. By doing so it describes the chances that the business has for expansion through innovation and commitment. It also ensures that the organization fulfills its obligations to the society (Khan, Khan, Ahmed & Ali, 2012). Among the key obligations include the observance of human right of the people in the society and taking care of the environment surrounding the organization. As a result it sets the business on a high standard since it is able to develop good relationship with the society.
The other virtue in business is the productivity of the stakeholders (Weis, 2014, 18). The virtue results from other virtues namely loyalty and creativity within the stakeholders. As a result of the stakeholders being in possession of this virtue, they develop confidence in the organization and do always work for the common good of the organization. Therefore, they offer and give their best in a bid to help realize the business’s goal. The results are usually positive since they boost the business income and enhance its growth. In some cases, the stakeholders especially, the employees may decline their commitment to their responsibilities in the business. This situation may be triggered by some failure in the business administration. Among the key issues that may lead to such a situation include poor pay and lack of attention to the employee’s issues. The decline affects the flow of information through the organization which in return affects the business performance. It may also damage the relationship between the administration and the various stakeholders in the business field. In the ABC learning organization there was a poor relationship between the administration and the various stakeholders in the organization. As a result, decisions could be made without the involvement of the administration. The organization laid its focus on dominating the learning market without consulting the parents whose main agenda was high quality services (Sumsion, 2014, 214). Due to the difference in interests the organization ended up not meeting its goals since it was not satisfying their consumers demand. In addition, critiques were being made on ABC learning organization for giving low wages to its employees and cutting on its spending. This was viewed as the source of its initial huge profits. Following this exploitation, there was a decline in the quality of education and care offered by the workers (ABC learning, 2017).
In business organizations, honesty has to be one of the most upheld behaviors for the realization of the goals of the organization. There have been cases where businesses do post false calculations of their profits. This is mostly done by the management to overshadow the possible failure of the businesses. The dishonest act gives the general public a false notion about the business growth (Clarke, Dean, 2014, 17). More so the act leads the government in making the wrong revenue estimates. The wrong perception affects the business since the management tends to relax after having solved the tension that would accompany the real projection of the company. In addition, the challenges leading to the loss are ignored until an irreversible situation is reached. In the ABC learning continued to post profits despite the huge debts that had accumulated a sizable amount of interest. These false estimations lead to its receivership in 2008 after it was unable to cater for it services following financial constraints (ABC learning, 2017). In addition, as a result of the dishonesty, the employees developed a negative attitude towards the organization activities. In a research conducted on 20 employees, fifteen were not in support of child care organizations (Rush, Downie, 2006, 19). This shows the negativity towards the organization following its false actions.
The organization should be responsible for its resources to avoid their wastage (Business Ethics, 2018). Every organization should safeguard its resources to avoid their misuse by the various stakeholders in the specific business. By doing so the organization will help save finances that could have been used to purchase misused materials and use the money for other purposes. Furthermore, the virtue will help inculcate the art of responsibility within the members of the organization. This aids in the realization of the company’s goals since most of its resources will remain intact. With reference to the ABC learning the organization was irresponsible with the resources it had since money transactions were being made to various companies without putting into consideration the debt crisis that was facing the organization. Among the questionable transactions made include transactions to Autostock, Queensland Maintenance Services, and transaction to the Brisbane Bullets Basketball team (Case Study of ABC learning Centers Collapse, 2011). There were also claims that some of the stakeholders sold the organizations land without orders from neither the administration nor having held a meeting to discuss the issue with the various stakeholders. The massive misappropriation of the organization resources leads to the bankruptcy of the organization and hence its failure to deliver child care services.
Organizations should embrace good governance as a way of ensuring progress in the business (Business Ethics Standards, 2018). Good governance in any cooperation ensures that there is close monitoring of the business activities. In addition, it ensures that some vices are not conducted within the organization. The vices may include bribery and the bad relationship between the producers and the consumers. The monitoring also ensures compliance with the law for example in payment of taxes. Organizations that uphold good governance often realize success as a result of the smooth working environment. On the contrary organization with poor governance develops challenges that deter them from achieving their dreams. ABC learning company can serve as an example of a poorly managed organization. Following the organization’s poor leadership, it focused its attention on expansion other than on first solving the matter at hand (Mitu, 2015, 5). In addition, poor leadership leads to poor planning where the company over borrowed without having the capacity to repay the loans. This led to the fall and receivership of the company in 2008. There was also an overvaluing of the business capability of enlarging to an international company yet it lacked enough funds to facilitate the growth. Poor leadership leads to the collapse of companies and to the wastage and misuse of the resources.
Entrepreneurship has become the best investment to make in the current world. Following this fact, there is the need for investors to put into consideration some factors before making any decision concerning their businesses. This brings about the need for the investors to learn business ethics. Using the knowledge gained from the ethics they will be able to develop rational decisions about their business. In return, their businesses will realize success in helping them to achieve their dreams in life. The success also offers them an opportunity to show their abilities to the world and to make changes to people’s ways of living. On the other hand, the government should put in place measures that will help curb bad leadership in organization and misconduct since the two serves as the leading factors to organizations failure. Business stakeholders should take it as a responsibility to learn and develop good business ethics in order to give high quality services to their clients.
List of References
ABC Learning Centers on the brink of collapse, (2008) Retrieved from www.smartcompany.com.au
ABC Learning, (2017) Retrieved from en.m.wikipendia.org/wiki/ABC-Learning
Burcea, N. & Croitoru, I. (2014) “Business Ethics.” Journal of public administration, finance and law, Issue 4, pp 139-143
Business ethics standards: Good Corporation. (2018) retrieved from www.goodcorporation.com
Business Ethics: Wikipendia. (2018) Retrieved from en.m.wikipendia.org/wiki/Business-Ethics Case study of ABC learning centers collapse. (2011) Retrieved from rayanbaaqeel.blogspot.com
Clarke, F. & Dean, G. (2014) Corporate Collapse: Regulatory, Accounting and Ethical Failure. New York: Springer Science Business Media, pp. 9-29
Johnson, R. (2012) “Current affairs in auditing.” Wiley higher education, pp. 1-3
Khan, T., Khan, A., Ahmed, S. & Ali, M.(2012) Corporate Social Responsibility(CSR)-Definition, Concepts and Scope (A Review). Universal journal of management and social sciences, Vol. 2 No. 7. Pp.41-52
Lane, R. (2016) Unexpected corporate failures in Australia through the decades-commonality of causes. Australia: James Cook University, pp 1-292. Retrieved from https://researchonline.jcu.edu.au/46597/
Mitu, I. (2015) “Case Report ABC Learning: Collapse of an Entrepreneurial Venture.” Internship Report of MBA, pp. 1-10
Norman, W. (2013) “Business Ethics.” The International Encyclopedia of Ethics, pp. 652-668
Rush, E. & Downie, C. (2006) “ABC Learning Centers: a case study of Australia’s largest childcare corporation.” The Australian Institute, pp. 1-47
Sumsion, J. (2012) ABC learning and Australian early education and care: a retrospective ethical audit of a radical experiment. Pp.209-225
Weiss, W. (2014) Business Ethics: A Stakeholder and issues management approach. San Francisco, California: Berrett-Koehler Publishers, Inc. pp. 1-52
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