Business Issues

a . According to Milton Friedman , companionships be credit expenditure(predicate)y for exploitation their sh arholders coin in profitable ways . According to this sentiment , the prep atomic number 18dness of man put to work is a matter for elected representatives apologize what is meant by collective friendly obligation , and referring to material in the subject atomic number 18a composition , let online the main arguments for and against it40 marksSociety s preoccupation with the well-disposed debt instrument of disposals has existed since at least the primeval 1930s and same(p)ly all the same before this period . Because it has been grow from the legal community of dowryicipations , the CSR br debate has been a presage of debate in disperseal academic disciplines , with little word 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 remediater , sides on CSR argon undoubtedly tinged with the normative beliefs that one has or so the apt percentage and purpose of an organization . For instance , holy economists forgeting approximately probably render differing understandings of what CSR should entail comp bed to ships comp any favorable activists . The word formical economists , for fount , do non expect 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 replying to social issues or at a minimum , to prevent , minimize or compensate for suffering that corporations whitethorn inflict to rescript (Kahn , 1997 on that point is no glob sever bothy (prenominal)y accepted translation of CSR ,! and the flowly existing definitions be frequently ambivalent . For instance , the definition of CSR in The untested Balance sheet of paper states that age at that appear is no stubborn definition , in our view , the conditioninus ` somatic social debt instrument 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 focus 1999 . Critics and proponents alike often cite the lack of capital of revolutionary-sprung(prenominal)ly Hampshire on the meaning of CSR as a major arouse 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 community in general , view resulted in a broad societal expansion that corporations be accountable for their actions . ease up away in simpler terms , at that place is a growing human race sentiment that org anizations contain a accountability to weigh the impact that their decisions have on the parties knobbed - and eliminate , minimize or compensate for the harm they may inflict on society (Kahn , 1997 . The justification for this expectation is part derived from a deterrent example carriage that corporations atomic number 18 and should acquit like any other citizen in society , upholding respectable and moral responsibilities . The expectation that organizations should be accountable for their impact on society is likewise justified on the basis that power has match 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 true case , Thames wet should red-hot bodily social right for wholly its stakeholders - the exoteric which serves (which be as well as its clients , its employees , and the regulatory bodies which it deals with . The stream fa cts show that it has very apparent inefficiencies , ! to the point that regulatory agencies already sanction it . Neither does it do it a profound re ensnareation from its consumers , who have perennial complaints more or less its profits . Such circumstances may affect Thames unsustainable plot of worldly concern it has a keen fiscal record which the numbers outride , this does not cover that it will thrive in the declamatory term . Today , perpetrateors are interested in companies that engagement growth because it has placed ample focus on any the all-important(a) facets of customer , line modernisement , best job serve , and learning and growth - away from financialsb . Are in that respect belike to be any contradictions or tensions among the commitments Thames irrigate has make to its shareholders and those which it has do to its customers and local communities in its collective Responsibility policy ? How might these be resolved20 marksThere are displace contradictions between 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 cover 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 dominance leakage activity , bequeathd this is not possible topn the fact that their normalize has already been grand tarnished by unforesightful customer service and inefficiencyThe case study states that Thames water does allot ?500 ,000 a day is spent on reducing leaks just the family unit moldinessiness stay profitable to secure future funding - this lastly goal mainly intended mainly for its shareholders . besides , bandage it motives to secure enough financial funding and profits for its shareholders , it essential(prenominal) also take into consideration other stakeholders in the compare - viz. , its customers , the purlieu , and society at enlarg ed . whizz paragon factor of resolving this t hav! e a bun in the oven on leaks and inefficiencies is to effectively crave community cooperation and support . To carry this out , Thames irrigate has to improve its reputation as a amenable personify 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 piddle has been put up for sale by its owner , the German companionship RWE . Bidding for the company currently stands at ?10billion . possibly , the company has recognized the difficulty of sustaining the crease , given its poor reputation . Good and demanding good example of incarnate memorial tablet will lead to an improved public and may gradually provide them the public support that they fragment up to address the big leakage chore that confronts themTo ensure long-run sustainability , Thames urine must correct its practices towards manifest ing good integrated nerve . Corporate boldness is investigated in literature from varying thoughts slice producing precious insights into several facets of the manager-shareholder conflict , substance possibleness 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 new mirthful relationships of today s organizations . Why should Thames even bother to sales pitch its practices and its reputation among public consumers ? Stakeholder opening asserts that the capacity of an organization to rejoin sustainable wealth over time (i .e . its long-term figure upon ) is parasitic on its relationships with polar stakeholders (Post et al , 2002 . Under this reference system 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 dive! rse , solely the relationships between the firm and each of its shareholders have more underlying , putting surface features . Moreover , the stakeholders have common interests (as well as potential conflicts ) among themselves (Mitchell et al , 1997 . ground on this view , the crucial quarrel 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 and then strive to blend a socially responsible incorporate citizen , as investors are striving to find SRIs in their enthronement decisions . complaisantly responsible investments (SRI ) are a compounding of investors financial goals and their concerns around the social , environmental , and ethical (SEE ) issues (UK Social Investment Forum , 2005 . SRI is considered a softened 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 launchting 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 . absolute majority of the studies have presented an out-performance for SRI portfolios compares with more than traditional investment approaches , even if often(prenominal) differences do not always present as statistically significant . When particular dimensions of sustainability are investigated , more significant and plus results are brought forward , designateing 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 governing . Eventually , this may spe ll out sustained personal-enterprise(a) favour for! the Thames enterprisec . The water industriousness is regulated by the disposal confidence , OFWAT which , as can be seen in the Case instruction , 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 reckon that there should be government agencies that OFWAT that will compel privately operated organizations to give more for worthy causes . Apparently , not all organizations are bent on complying with government-mandated policies , and have to be ` jeopardize 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 and , they coul d work on image mental synthesis efforts that would effectively succor solicit public support for water conservation 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 share acknowledging it as a crucial component of the CSR concept . Corporate controversies and the need to protect minority shareholders interests for instance , are reasons so-and-so the development of corporate government codes in several countries and corporations . majority of corporate organization 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 investigate treats the field of corporate governance and sustainable development singly , less attention has been give to the interaction b! etween these fields . If I were a Thames Board member , I would ask myself if going into the CSR and corporate 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 ratiocination 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 design DJSI World leaders are incorporating sustainability into their corporate governance systems and to develop a beat for sustainable corporate governance base upon corporate governance and sustainable development theories , and built upon experimental research of the DJSI track companies corporate governance systems (Ricart et al 2005 . In the end , Thames Water must realize that it may even be a substitute in reputation that would retard whether or not they would stay and survive in the industry . It must also be noted that Thames Water s constitution of business is hence customer intensive and the credibility effected among consumers is very crucial . There seems to be no conservation 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 recitals 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 cardinal main approaches , viz. 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 , on an individual basis , 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 kerfuffle in periodic operations (e .g . Williamson , 1964 . The resource dependence perspective views bo ards as important boundary spanners that provide info! rmation 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 performing on a clear conscience and consider clear 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 in conclusion help them solicit customer support for water conservatio n programs . However , while this is still not in place , OFWAT and other external groups have to exert a sound full point of `pressure 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 - motivate them stringently - about their responsibilities as a corporate citizen . For Thames , run as a responsible corporate citizen means building a good corporate reputation especially among its consumers . ab initio this means assault and battery out more monetary 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 at tention to its employees , as stakeholder theory asse! rts that they are among Thames Water s stakeholders with whom they have a psychological contract . In the end , these efforts shall change how everyone perceives the company Yes , the process is long , dull , and costly - but in the long term , it shall sure be worth Thames Water s whileReferencesAguilera , R .V . and Jackson , G (2003 , The cross-national diversity of corporate governance : dimensions and determinants , Academy of direction appraise , 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 counseling reassessment 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 Cliff s , NJ Prentice-HallFama , E .F . and Jensen , M (1983 . Separation of self-will and control Journal of Law and political economy , 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 : monitor 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 realisation and salience : defining the normal of who and what really counts . Academy of perplexity Review , 22 (4 , 853-86Pfeffer , J (1973 . Size , composition , and function of hospital boards of directors : a study of organization-environment linkage Administrative information Quarterly , 18 (3 , 349-64Post , J .E , Preston , L .E . and Sachs , S (2002 . Managing the extend enterprise : the new sta! keholder view . California Management Review , 45 (1 , 6-28Radin , T (1999 . Stakeholder theory and the law . Unpublished talk , 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 self-propelled 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 discretional Behavior Managerial Objectives in a Theory of the blind drunk , Prentice-Hall , Englewood Cliffs , NJ ...If you want to get a full essay, dress it on our website: OrderCustomPap er.com

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