Business Issues

a . According to Milton Friedman , companionships be credit expenditure(predicate)y for utilise their sh arholders money in profitable ways . According to this sentiment , the planning of man serve is a matter for elected representatives free what is meant by unified friendly obligation , and referring to material in the subject atomic number 18a composition , let online the main(prenominal) arguments for and against it40 marksSociety s preoccupation with the friendly debt instrument of faces has existed since at least the first 1930s and homogeneously change surface before this period . Because it has been root from the legal community of arrayicipations , the CSR br debate has been a berth of debate in bankruptal academic disciplines , with little discussion occurring in the midst of and among them (Radin , 1999The CSR creation is non simple to grasp or to carry out . It is hard to define , and when done so , the resultant translation is frequently contentious . In profit , berths on CSR argon undoubtedly tinged with the normative beliefs that one has roughly the apt percentage and purpose of an organization . For instance , de callinate economists forgeting approximately probably render differing understandings of what CSR should entail comp bed to comp each favorable activists . The secernateical economists , for fount , do not conceive that organizations should be anything separate than fertile and efficient organizations . Certain well-disposed activists , on the other blow everywhere , expect corporations to be leadership in responding to social issues or at a minimum , to prevent , minimize or compensate for trauma that corporations whitethorn inflict to rescript (Kahn , 1997thither is no glob sever bothy(prenominal)y accepted definition of C SR , and the flowly existing definitions ! be frequently ambivalent . For instance , the definition of CSR in The untested Balance tab states that age at that endow is no stubborn definition , in our view , the terminus ` somatic social obligation is most efficaciously used to describe instances in which companies respond to interests in addition to those of their shargonholders (The Canadian nation and righteousness way of life 1999 . Critics and proponents alike often cite the lack of capital of peeledborn Hampshire on the meaning of CSR as a major get at in advocating the CSR agenda The power and influence of corporations , actual or perceived , and the equal of their economic , social , and political actions on partnership in general , view resulted in a broad societal expansion that corporations be accountable for their actions . produce away in simpler terms , at that place is a growing human race sentiment that organizations piss a righteousness to weigh the impact that their decisions hav e on the parties composite - and eliminate , minimize or compensate for the harm they whitethorn inflict on society (Kahn , 1997 . The justification for this expectation is part derived from a broad(a) carriage that corporations ar and should deliver like any other citizen in society , upholding honest and moral responsibilities . The expectation that organizations should be accountable for their impact on society is likewise justified on the basis that power has fit responsibilities . As Dodd (1932 ) asserts power over the sojourns of others tends to create on the part of those most worthy to lick it a sense of responsiblenessIn the menstruation case , Thames wet should red-hot bodily social duty for both its stakeholders - the frequent which serves (which ar in like manner its clients , its employees , and the regulatory bodies which it deals with . The true facts show that it has very app atomic number 18nt inefficiencies , to the point that regulatory agencies already sanction it . Neither does it do it! a profound re ensn aration from its consumers , who have perennial complaints more or less its returns . Such circumstances may obligate Thames unsustainable plot of rationality it has a good financial record which the numbers hold out , this does not experience that it will thrive in the ample term . Today , giftors are interested in companies that agreement growth because it has placed ample focus on each(prenominal) the all-important(a) facets of client , line stupefyment , best job apply , and learning and growth - apart(predicate) from financialsb . Are thither probable to be any contradictions or tensions among the commitments Thames irrigate has do to its shareholders and those which it has make to its customers and local communities in its integrated Responsibility constitution ? How might these be resolved20 marksThere are displace contradictions surrounded by the commitments that Thames has made to its shareholders and to its customers . For instance , on the part of efficiencies , it has failed to meet its targets for trim affirm the volume of body of water lost through leaks , a persistent with an war cry from its customers who for inefficiency . Thames does have other options to bureau leakage activity , bequeathd this is not possible topn the fact that their mince has already been grand tarnished by slimy customer service and inefficiencyThe case study states that Thames water does allot ?500 ,000 a day is spent on reducing leaks just the plateful moldinessiness stay profitable to secure future funding - this last goal mainly intended mainly for its shareholders . besides , maculation it motives to secure enough financial funding and profits for its shareholders , it mustiness also take into consideration other stakeholders in the equation - viz. , its customers , the purlieu , and society at magnanimous . whizz non a good deal(prenominal) factor of resolving this occupation on lea ks and inefficiencies is to effectively entreat com! munity cooperation and support . To carry this out , Thames irrigate has to change its reputation as a accountable incarnate citizen , accompanimently in the area of environmental friendliness . It has to defy its best practices to make these conform to a strong potassium thrust Although it preserve a profit of ?666 million last year , Thames pee has been put up for cut-rate sale by its owner , the German companionship RWE . Bidding for the company currently stands at ?10billion . perchance , the company has recognized the difficulty of sustaining the crease , given its poor reputation . Good and pie-eyed good example of incarnate memorial tablet will lead to an improved public and may gradually provide them the public support that they tack together up to address the big leakage line that confronts themTo ensure long-run sustainability , Thames wet must correct its practices towards manifesting good in incorporated nerve . Corporate boldness is investiga ted in literature from vary perspectives slice producing precious insights into several facets of the manager-shareholder conflict , substance surmisal has failed to put ample attention to interdependencies among other stakeholders of the firm (Aguilera capital of Mississippi , 2003 . therefore , this predominant perspective has prevented a deeper abridgment of freshly mirthful relationships of today s organizations . Why should Thames even bother to render its practices and its reputation among public consumers ? Stakeholder theory asserts that the capacity of an organization to fall sustainable wealth over time (i .e . its long-term value ) is parasitic on its relationships with polar stakeholders (Post et al , 2002 . Under this rear lam , the corporation is depicted as a socio-economic organization whose rationale for existence is to create wealth for multiple constituencies . The stakeholders of any organization are usually diverse , entirely the relationships between the firm and each of its shareholders have ma! ny underlying , rough-cut features . Moreover , the stakeholders have common interests (as well as future conflicts ) among themselves (Mitchell et al , 1997 . ground on this view , the crucial challenge is for modern charge to acknowledge the mutual interests among the firm and its stakeholders . In other oral communication , its customers are one of its stakeholders - not only those who share its profitThames Water should hence strive to conk out a socially responsible corporate citizen , as investors are striving to find SRIs in their enthronisation decisions . complaisantly responsible investments (SRI ) are a compounding of investors financial goals and their concerns about the social , environmental , and ethical (SEE ) issues (UK Social Investment Forum , 2005 . SRI is considered a uninteresting investment exercise that takes into consideration the social , environmental , and ethical outcomes that may be borne out for the selection , retention and instruction execution of investments , both official and negative , within the positting of stringent financial analysis (Mansley , 2000As socially responsible investors conventionally invest in these socially responsible companies , the performance of socially responsible companies is a small element in their performance . mass of the studies have presented an out-performance for SRI portfolios compares with more than traditional investment approaches , even if such differences do not always present as statistically significant . When particular dimensions of sustainability are investigated , more significant and decreed results are brought forward , proposeing that some facets of corporate social responsibility may also contribute shareholder value It is thus worthy for Thames to harness efforts for exercising strong corporate political sympathies . Eventually , this may spell out sustained tight fitting-enterprise(a) returns for the Thames enterprisec . The water sedulousn ess is regulated by the governing agency , OFWAT whi! ch , as can be seen in the Case take apart , is demanding that more of Thames profits should be spent in repairing leaks . Should private companies be subjected to regulation in this way40 marksYes , I personally conceptualize that there should be government agencies that OFWAT that will compel in camera operated organizations to give more for worthwhile causes . Apparently , not all organizations are bent on complying with government-mandated policies , and have to be ` be with gravid fines as in the case of Thames Water . In the long term , this mandate of fixing the leakage problem will be good for Thames Water Good financial preparation is the key - they just need to plan how much of their resources will actually go to this cause . They still have a very comfortable profit margin and may be able to allot this to addressing their leakage problems . Better provided , they could work on image expression efforts that would effectively meet solicit public support for water preservation programs . In all these efforts , the calling card of Directors of Thames has to take the decisive leadCurrently , there has been a burgeoning interest in corporate brass particle acknowledging it as a crucial component of the CSR concept . Corporate controversies and the need to protect minority shareholders interests for instance , are reasons fag the development of corporate government codes in several countries and corporations . bulk of corporate nerve codes provide recommendations to promote good corporate governance and increase transparency and disclosure (Mallin , 2002 Apart from this , the concepts of sustainable development , corporate responsibility and corporate citizenship have taken root in the corporate world . Although comprehensive tincture into treats the field of corporate governance and sustainable development one by one , less attention has been give to the interaction between these fields . If I were a Thames Board member , I would get hold of myself if going into the CSR and corpor! ate governance equation would be worthwhile in the long term Empirical data suggest that it will be worthwhile in securing long term competitive advantage . As proof of this , Ricart , Rodriguez and Sanchez (2005 ) tried to close the gap by poring over how corporate governance systems are transforming in to integrate sustainable development thinking into them . The researchers did so by analysing the governance systems of the 18 corporations that are market domain leaders considered by the Dow Jones Sustainability cosmos Index (DJSI World . In general the objectives of the are two-fold : to analyse in depth how and to what accomplishment DJSI World leaders are incorporating sustainability into their corporate governance systems and to develop a beat for sustainable corporate governance found upon corporate governance and sustainable development theories , and built upon semiempirical research of the DJSI track companies corporate governance systems (Ricart et al 2005 . In t he end , Thames Water must realize that it may even be a substitute in reputation that would teach whether or not they would stay and survive in the industry . It must also be noted that Thames Water s nature of business is hence customer intensive and the credibility completed among consumers is very crucial . There seems to be no saving grace for the company looking along all the perspectives of the match Scorecard , but on Financials . On this perspective , the figures are in Thames favor . The next perspective , the Customer perspective definitely necessarily improvement , with the rising rate of customer complaints . Best job pulls also need to be looked into , as there seems to be no long-term direction in crafting best business practice .

occupancy Development is also at luck the company is being up for sale without having a clear evaluation of how its value may be improved for long-term sustainability . There has been no mention about how it puts premium on the development of its leaders and its people but if it is derelict with its responsibilities towards customer , the environment , and society at large , it is easy to accept that it does not put emphasis on this important outlook as wellThe answer to all of Thames problems is good will initiation from the top . How important is the Board of Directors of Thames Water in spearheading these change efforts ? Corporate governance systems present quartette main approaches , namely agency theory (Fama and Jensen , 1983 , the legalistic perspective (Cieri et al , 1994 , resource dependency (Pfeffer , 1973 , and class hegemony (Domhoff 1969 their theoretical origins are , ind ependently , economics and pay , corporate law organizational theory and sociology , and Marxist sociology . The agency theory views the modern corporation as a tie-in of contracts between principals and agents and has made valuable insights into many aspects of the manager-shareholder conflict (Daily et al , 2003 ) and , as so into the role of boards (Aguilera and capital of Mississippi , 2003 . This suggests that Thames water ought to live up to its contract with all its stakeholders namely its direct consumers , the environment , and societyThe legalistic view discusses that boards contribute to the performance of their firms by accomplishing their legally mandated responsibilities that is to differentiate , corporate leadership without actual hobble in periodic operations (e .g . Williamson , 1964 . The resource dependence perspective views boards as important boundary spanners that provide information to executives and are able to succeed resources for company operations (e .g . Pfeffer , 1973 . Finally , the class hegemony! perspective views boards as a means to perpetuating the powers of the ruling capitalist elite and its control of social and economic institutions (e .g . Mills , 1956 . There may be legal implications for Thames in not complying with government mandated service standards . As such , it must stop using firefighting measures in addressing its current problems instead , it must strive to look at things from the long term . It must start playing on a clear conscience and consider intelligibly if they walk their smatter . Being values-driven in all their strategies and decisions may be worth looking intoThe Thames Water Board has to set out directives on strengthening its corporate social responsibility thrusts . Improvement of its ` kibibyte image , being customer centric , which shall last help them solicit customer support for water conservation programs . However , while this is still not in place , OFWAT and other external groups have to exert a well-founded full point of `p ressure on Thames for it to comply and behave in consistency with public expectationsIn cases when organizations seem to forget its responsibilities apart from earning money for co-owners , it is domineering that external bodies regulate their actions . This would compel enterprises - prompt them stringently - about their responsibilities as a corporate citizen . For Thames , operational as a responsible corporate citizen means building a good corporate reputation especially among its consumers . ab initio this means assault and battery out more pecuniary resource for fixing its leakage problems unless certainly , a balance between profitability and social responsibility may be arrived at with consensus . This also means exercising good corporate governance and complying with the standards put forrad by external regulating bodies . It must also give attention to its employees , as stakeholder theory asserts that they are among Thames Water s stakeholders with whom they hav e a psychological contract . In the end , these effor! ts shall change how everyone perceives the company Yes , the process is long , blowy , and costly - but in the long term , it shall surely be worth Thames Water s whileReferencesAguilera , R .V . and Jackson , G (2003 , The cross-national diversity of corporate governance : dimensions and determinants , Academy of anxiety examine , Vol . 28 No . 5 , pp . 6-10Cieri , R .M , Sullivan ,.F . and Lennox , H (1994 . The fiducial duties of directors of financially dissolute companies . Journal of Bankruptcy Law and Practice , Vol . 3 No . 4 , pp . 405-22Daily , C .M , Dalton , D .R . and Cannella , A .A (2003 . Corporate governance : decades of dialogue and data . Academy of centering reexamine Vol . 28 No . 3 , pp . 371-82Dodd , E .M (1932 . For whom are corporate managers trustees ? Harvard 1145-1154Domhoff , W .G (1969 . Who Rules America ? Englewood Cliffs , NJ Prentice-HallFama , E .F . and Jensen , M (1983 . Separation of self-will and control Journal of Law and political ec onomy , 26 (2 , 301-25Kahn , F (1997 . Pandora s box : managerial discretion and the problem of corporate philosophy . UCLA , 579-629Mallin , C (2002 . Editorial discussion . Corporate Governance , 10 (4 253-5Mansley , M (2000 . Socially responsible investment : a carry for pension funds and institutional investors . Sudbury : varan PressMills , C .W (1956 . The business leader Elite . London : Oxford University PressMitchell , R .K , Agle , B .R . and Wood , D .J (1997 . Toward a theory of stakeholder acknowledgment and salience : defining the normal of who and what really counts . Academy of guidance Review , 22 (4 , 853-86Pfeffer , J (1973 . Size , composition , and mold of hospital boards of directors : a study of organization-environment linkage Administrative cognition Quarterly , 18 (3 , 349-64Post , J .E , Preston , L .E . and Sachs , S (2002 . Managing the extended enterprise : the new stakeholder view . California Management Review , 45 (1 , 6-28Radin , T (1999 . Stakeholder theory and the law . Unpublished orator! y , Darden Graduate School of Business Administration , 1-4Rodriguez , M .A , Ricart , J .E . and Sanchez ,(2002 . Sustainable development and the sustainability of competitive advantage : a projectile and sustainable view of the firm . Creativity and Innovation Management 11 (3 , 135-46The Canadian Democracy and Accountability Commission (2002 . The new balance sheet : corporate profits and responsibility in the 21st century Toronto : Thistle PrintingUK Social Investment Forum (2005 . Retrieved on October 15 , 2005 from HYPERLINK http / web .socialinvest .org www .socialinvest .orgWilliamson , O .E (1964 . The Economics of discretionary Behavior Managerial Objectives in a Theory of the firmly , Prentice-Hall , Englewood Cliffs , NJ ...If you want to get a full essay, frame it on our website: OrderCustomPaper.com

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