CORPORATE GOVERNANCE AND ETHICS
1. Why are ethical dilemmas and moral mazes a huge problem and how would you handle these in a business?
2. You should be able to discuss the power that shareholders have and how governance rules or principles influence power relations in organisations.
3. How can companies pro-actively identify risks and assess their impact on a business before they become problematic?
4. How can risk be mitigated so that sustainability can be achieved?
Ethical dilemmas are the facts of the business environment and they can be very tricky to resolve and find a path which is ethically and morally correct.
The issue with the ethical dilemmas is that they often conflict with the business and profits.
But the one point formula for resolving ethical dilemmas is to focus and follow company’s ethical policies and the vision statement.
If one is not able to take a conscious decision, the issue should be raised to the next higher manager or the ethics manager or the HR department for help and clarity. Normally the ethical policies of the organizations clearly mention how to resolve and how to act in case of an ethical dilemma.
Q2). You should be able to discuss the power that shareholders have and how governance rules or principles influence power relations in organizations.
Shareholders are the owners of any company. A small company may have one shareholder, the owner of the company and who maintains the total business and operation of the company. The public companies may have thousands of shareholders. Such shareholders may be minority shareholders with very little percentage of shares also. But they play important roles in case of acquisition or takeover threats. The shareholders also are important for financing, operations, Governance aspects of the company.
All the major business decisions and strategies are informed to the shareholders and they have the voting rights in the major decisions of the company.
Q3). How can companies pro-actively identify risks and assess their impact on a business before they become problematic?
Any good and efficient business organization, before implementing any major decision does the analysis to understand the implications of this decision on the company business and its brand.
The risks of any decisions can be gauged with the help od the tools like SWOT analysis and Porter’s five factor formula.
- Porter’s Five factor analysis: In this analysis the industry position with respect to five factors, Customer’s buying powers, Supplier Buying Power, Threat of substitute, Threat of New Entrants and Existing Industry competition are studied in depth and then position with respect to these five threatening forces is analyzed.
- SWOT analysis: SWOT is the acronym for Strengths, Weaknesses, Opportunities and Threats. The industry position is studied against it strengths, its weaknesses, the opportunities available and any threats available. Based on the strength of these four factors the industry position is analyzed.
Q4). How can risk be mitigated so that sustainability can be achieved?
Risk mitigation planning is the process of developing options and actions to enhance opportunities and reduce threats to project objectives. Risk mitigation implementation is the process of executing risk mitigation actions. Risk mitigation progress monitoring includes tracking identified risks, identifying new risks, and evaluating risk process effectiveness throughout the project
The risk mitigation process involves:
Risk Identification: Identify all possible risks and their sources.
Risk Impact Assessment: Assess the impact on business, finances and any other possible impact.
Risk Prioritization: Prioritize the risks for their impact on the business.
Risk Tracking: Keep tracking the risks about their happening and the effect.
Risk Mitigation Plan: Once they happen do what is planned to mitigate it.