Corporate performance governance bus ethics
This presentation is the property of its rightful owner.
Sponsored Links
1 / 18

CORPORATE PERFORMANCE, GOVERNANCE & BUS ETHICS PowerPoint PPT Presentation


  • 59 Views
  • Uploaded on
  • Presentation posted in: General

CORPORATE PERFORMANCE, GOVERNANCE & BUS ETHICS. SPRING 2007 BUS 189 DR. MARK FRUIN. NIKE: THE SWEATSHOP DEBATE. NIKE: QUINTESSENTIAL GLOBAL CORP ESTAB BY PHIL KNIGHT, UO BUS STUDENT & TRACK STAR SUCCESS ON THE BACKS OF THE POOR? EXPLOIT THE POOR TO MAKE MILLIONS?

Download Presentation

CORPORATE PERFORMANCE, GOVERNANCE & BUS ETHICS

An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -

Presentation Transcript


Corporate performance governance bus ethics

CORPORATE PERFORMANCE, GOVERNANCE & BUS ETHICS

SPRING 2007

BUS 189

DR. MARK FRUIN


Nike the sweatshop debate

NIKE: THE SWEATSHOP DEBATE

  • NIKE: QUINTESSENTIAL GLOBAL CORP

    • ESTAB BY PHIL KNIGHT, UO BUS STUDENT & TRACK STAR

    • SUCCESS ON THE BACKS OF THE POOR?

    • EXPLOIT THE POOR TO MAKE MILLIONS?

    • 2004: $12 BILLION IN REVENUES

      • ROIC 17.5 PERCENT

      • SELL PRODUCTS IN 140 COUNTRIES

      • FABLESS OR NO MFG OF ITS OWN


Ernst young confidential report

ERNST & YOUNG CONFIDENTIAL REPORT

  • NOV ‘97 GLOBAL EXCHANGE RPRT LEAKED

  • SUBCONTRACTOR’S VIETNAM FACTORY

    • 9,200 WORKERS MAKING 40,000 SHOES/MONTH

    • YOUNG WOMEN, 65 HOUR WEEKS, @$10/WEEK

    • DANGEROUS WORKING CONDITIONS

  • NIKE’S RESPONSE

    • CODE OF CONDUCT 4 NIKE SUBCONTRACTORS

    • ANNUAL INDEPENDENT AUDITS

    • OSHA STANDARDS ENFORCED


The issues

THE ISSUES

  • WHEN IS IT WRONG TO MAKE MONEY?

  • WHAT’S THE “RIGHT” SPLIT OF PROFITS BETWEEN MANAGEMENT & LABOR?

  • WHAT ARE HUMANE WORKING CONDITIONS?

  • IS PROFIT MAXIMIZATION THE ONE & ONLY MEASURE?

  • IF MORALITY IS AN ISSUE, WHOSE MORALITY?

    • PRODUCERS?

    • WORKERS?

    • CONSUMERS?


Corporate governance

CORPORATE GOVERNANCE

  • BALANCING INTERNAL & EXTERNAL STAKEHOLDERS

    • INTERNAL

      • SHAREHOLDERS

      • EMPLOYEES

      • MANAGERS

      • BOARD MEMBERS

    • EXTERNAL

      • CUSTOMERS

      • SUPPLIERS

      • UNIONS

      • LOCAL COMMUNITIES

      • CREDITORS


The impossible balancing act

THE (IMPOSSIBLE?) BALANCING ACT

  • IDENTIFY STAKEHOLDERS

  • INDENTIFY THEIR (CONFLICTING) INTERESTS & CONCERNS

  • IDENTIFY WHICH CLAIMS ARE MOST LIKELY TO BE BROUGHT FORWARD

  • IDENTIFY WHICH STAKEHOLDERS ARE MOST IMPORTANT; PRIORITIZE

  • IDENTIFY RESULTING STRATEGIC CHALLENGES


Shareholders

SHAREHOLDERS

  • SHAREHOLDERS PROVIDE RISK CAPITAL

  • GET PROPERTY RIGHTS IN RETURN

  • IN USA, MANAGEMENT HAS PRIMARY OBLIGATION TO SHAREHOLDERS

    • ELSEWHERE, SHAREHOLDER RIGHTS LESS IMPORTANT THAN WHAT?

  • SHAREHOLDERS BENEFIT BY RECEIVING

    • DIVIDENDS

    • SHARE PRICE INCREASES


Profits short or longterm

PROFITS - SHORT OR LONGTERM?

  • ROIC IS NEAR UNIVERSAL MEASURE OF PROFITABILITY

  • IN GENERAL, A PROFITABLE FIRM IS

    • IN A GROWING INDUSTRY

    • EXCELLING IN BASIC BUILDING BLOCKS OF COMPETITIVE ADVANTAGE: F-L STRATEGIES

    • TAKING MARKET SHARE FROM RIVALS (THROUGH B-L STRATEGIES)

    • PERHAPS CONSOLIDATING INDUSTRY

    • PERHAPS DEVELOPING NEW MARKETS & BUSINESSES (THROUGH C-L STRATEGIES)


Profits or profit growth

PROFITS OR PROFIT GROWTH?

  • CURRENT PROFITABILITY CAN COME AT EXPENSE OF FUTURE PROFITS

  • STAKEHOLDERS DIFFER W/ RESPECT TO EMPHASIS: PROFITS OR PROFIT GROWTH

    • INTERNAL STAKEHOLDERS

      • EMPLOYEES WANT?

      • MANAGERS?

      • BOARD MEMBERS?

    • EXTERNAL STAKEHOLDERS

      • UNION OR EMPLOYEE ASSOCIATIONS?

      • CREDITORS?

      • LOCAL COMMUNITIES?


Strategies must be legal

STRATEGIES MUST BE LEGAL

  • GOVERNMENTS ARE PRIMARY ACTORS IN REGULATING BUSINESSES

  • (BUT GOVERNMENTS ARE ONE OF MANY STAKEHOLDERS & REMOTE AT THAT)

  • GOVERNMENT LAWS & POLICIES

    • ANTITRUST/ANTICOMPETITION LAWS

    • OSHA & ENVIRONMENTAL LAWS

    • FRAUD (CIVIL & CRIMINAL)

      • WHISTLEBLOWERS

      • HOW INCENTIVIZE WHISTLEBLOWERS & THEIR LAWYERS?

    • LABOR LAWS


How theories of the firm affect ethics

HOW THEORIES OF THE FIRM AFFECT ETHICS

  • AGENCY THEORIES

    • SEPARATION OF OWNERSHIP & CONTROL

    • HOW DO PRINCIPALS (SHAREHOLDERS) ENSURE THAT AGENTS ACT APPROPRIATELY?

    • INFORMATION ASYMMETRY BTWN PRNCPLS-AGNTS

  • TRANSACTION COST THEORIES

    • HOW FAR TO GO IN THE INTEREST OF MINIMIZING TRANSACTION COSTS?

  • BLACK BOX/ECON 101 THEORIES

    • FIRM AS BLACK BOX (INPUTS & OUTPUTS W/O RECOGNIZING NATURE OF ORGANIZATIONS

  • GUIDED EVOLUTION THEORIES

    • WHAT VALUES, GOALS & BEHAVIORS ENCOURAGED?


Governance mechanisms as solution

GOVERNANCE MECHANISMS AS SOLUTION

  • ALIGN PRINCIPALS & AGENTS

  • MEASURE, MONITOR & MANAGE AGENTS

    • BOARDS OF DIRECTORS

      • INSIDE & OUTSIDE DIRECTORS; #’s & INFO ASYM

    • STOCK-BASED COMPENSATION

      • WHEN JUSTIFIED, HOW MUCH & HOW EXPENSED?

    • AUDITORS & FINANCIAL STATEMENTS

      • HOW CONSISTENT, DETAILED & ACCURATE IS INFO?

    • TAKEOVER CONSTRAINTS

      • RISK OF BEING TAKEN OVER FORCES FIRMS TO KEEP BOOK VALUE ABOVE VALUE OF SHARES

    • STRATEGIC CONTROL SYSTEMS

      • BALANCED SCORECARD: EFFICIENCY, QUALITY, INNO & C.R.

    • EMPLOYEE INCENTIVES (PAY 4 PERFORMANCE)

      • ESOPs AS POSITIVE INCENTIVE; STOCK OPTIONS ANOTHER


Ethical issues

ETHICAL ISSUES

  • SELF-DEALING

  • INFORMATION MANIPULATION

  • ANTICOMPETITIVE BEHAVIOR

  • OPPORTUNISM

  • FRAUD (RELATED TO OPPORTUNISM)

  • ENVIRONMENTAL DEGRADATION

  • SUB-STANDARD WORKING CONDITIONS

  • CORRUPTION

  • (ALL BASED ON NOTIONS OF WHAT IS RIGHT & WRONG; CULTURE/INSTITUTIONS DIFFER)


Ethical models

ETHICAL MODELS

  • FRIEDMAN DOCTRINE: INCREASE (MAX) PROFITS AS LONG AS RULES OF GAME OBSERVED

  • UTILITARIAN ETHICS: BENTHAM ET AL

    • MAXIMIZE GOOD, MINIMIZE HARM

    • NOT ALWAYS EASY TO CALC COSTS-BENEFITS

  • RIGHTS THEORIES

    • INDIVIDUAL RIGHTS V. COLLECTIVE GOODS

  • JUSTICE THEORIES

    • JOHN RAWLS: GOODS & SERVICES DISTRIBUTED EQUALLY EXCEPT WHEN UNEQUAL DISTRIBUTION MAXIMIZES ADVANTAGE

    • VEIL OF IGNORANCE = IMPARTIALITY

      • EVERYONE MAX LIBERTY IF COMPATIBLE W/MAX FOR OTHERS

      • ONCE BASIC EQUALITY ENSURED, INEQUALITY ALLOWED IF IT BENEFITS EVERYONE (UNEQUAL OPPOR=MOTIVATION)

    • DISTRIBUTIVE JUSTICE; PROCEDURAL JUSTICE


Behaving ethically

BEHAVING ETHICALLY

  • HIRING & PROMOTING

    • THESE PROCESSES REPRODUCE ORGS

  • ORGANIZATIONAL CULTURE

    • WORLDVIEW, VALUES & FEELINGS (GEERTZ)

  • LEADERSHIP

    • WALKING THE TALK

  • DECISION-MAKING PROCESSES

    • QUESTIONS TO ASK ONESELF

      • DOES DECISION CONFORM TO FIRM & COMMUNITY VALUES

      • WILLING TO MAKE DECISION KNOWN TO ALL STAKEHOLDERS

      • WOULD FAMILY AND FRIENDS APPROVE


Behaving ethically ii

BEHAVING ETHICALLY II

  • ETHICS POLICE OR OMBUDSMEN

    • MANY FIRMS HAVE INDEPENDENT ETHICS OFFICERS

  • STRONG CORPORATE GOVERNANCE

    • STRONG BOARD OF (OUTSIDE) DIRECTORS

    • SEPARATION OF CEO AND CHAIRMAN POWERS

    • COMPENSATION COMMITTEE OF OUTSIDE DIRECTORS

    • AUDIT COMMITTEE OF OUTSIDE DIRECTORS

    • INDEPENDENT AUDITORS

  • MORAL COURAGE

    • FIRMS CAN ENCOURAGE INDIVIDUALS TO BEHAVE ETHICALLY BY NOT RETALIATING

    • REQUIRE INDIVIDUALS/FIRMS TO REPORT UNETHICAL BEHAVIOR


Nike again

NIKE AGAIN

  • IS IT ETHICAL FOR NIKE TO MARK UP ITS COSTS BY 100%?

  • IS IT ETHICAL FOR NIKE TO OUTSOURCE PRODUCTS IN ASIAN SWEATSHOPS?

  • IS IT ETHICAL FOR NIKE TO HIDE BEHIND MFG SUBCONTRACTORS?

  • SHOULD THE U OF OREGON PROFIT FROM NIKE’S SUCCESS?

    • SUPPORT FLA (Fair Labor Assoc) or WRC (Worker Rights Consortium)?

    • HOW MUCH $ TO ACCEPT & FOR WHAT ENDS?

    • UO ATHLETIC DIRECTOR’S RECENT RESIGNATION


Final questions

FINAL QUESTIONS

  • RELATIONSHIP BETWEEN STRATEGY AND ETHICS

    • LET FIRMS DECIDE ON A FIRM-BY-FIRM BASIS?

    • IF LAWS ARE PASSED, THEY SHOULD BE VIGOROUSLY ENFORCED (ETHICS POLICE)

    • ONE SET OF LAWS/STANDARDS FOR HOME & ANOTHER OVERSEAS: NECESSARY 4 SUCCESS?

    • LOCAL RESPONSIBILITIES & GLOBAL NECESSITITIES

      • CAN FIRMS HONOR THEIR RESPONSIBILITIES AT HOME & BE SUCCESSFUL GLOBALLY?


  • Login