With the start of the new millennium, the world has seen rapid change and change in the approach of the manufacturing industry with regards to sustainable development. Formerly, lone voices were urging a concern for the environment with a thought for sustainable development while improving business performance are now coalescing into a “movement”- new thinking and new ways of approaching old problems have made it perfectly possible to address these issues together, most effective when planned as part of a total review of the life-cycle of products and their manufacturing and delivery processes- and this movement being called Green Productivity. The global economy is coming under growing pressure to pay for the restoration of damaged environments. But this economic engine is being asked to help solve other pressing problems at the same time. The challenge is to solve all of these problems in a sustainable manner, so as to generate Continue reading
Business Ethics
Case Study: Corporate Social Responsibility at The Body Shop
The Body Shop (TBS) has developed 2500 stores in 60 countries with a range of over 1,200 products in approximately 30 years, and is the second largest cosmetic franchise in the world. After the first TBS’s outlet founded in 1976, the company has experienced rapid growth and with expanding rate of 50% annually. When its stock first obtained a full listing on the London Stock Exchange, its price increased by more than 500%. In 1999, TBS was even voted as the second most trusted brand in UK by the Consumers Association. The founder, Anita Roddick had received numerous awards including Dame Commander of the British Empire for her contributions. TBS’s success is hard to observe from the extrinsic value but the ethical value which make the success of TBS so legendary and inspiring. Anita Roddick, founder of TBS first entered the industry by using £4,000 to open a small stand-alone Continue reading
Importance of Audit Independence for Stakeholders
The importance of audit independence can be categorized into four reasons: Firstly, audit independence can hold the public confidence and avoid interest conflicts; Secondly, audit independence can help auditors to provide high quality financial report and avoid scandals like ‘Enron bomb’; Thirdly, the development of no-audit services make it more difficult but more important to maintain audit independence; Lastly, audit independence can improve the quality of audit and it can assist managers to make strategy formulations. Stakeholders make economic decisions by taking advantage of financial reports. Whether those reports are related and reliable are questions. Audit can help to solve this problem. However, auditor fails to fulfill the duty if they cannot remain independence in the conducting process. On one hand, report users will doubt this kind of dependence if they thought auditor and consigner belong to the same party. On the other hand, when auditor cannot keep an unbiased Continue reading
Importance of Ethical Climate in Business
A strong ethical climate is a system of informal rules concerning the stakeholders’ behavior in internal or external environments. In such an environment, organizational leaders take the initiative to shape or support the ethical environment. Ethical climate corresponds to organizational personality, which has a direct impact on both organizational success and employee satisfaction. Ethical climate represents common values and beliefs that hold an organization intact. Given that employee and customer dissatisfaction are some of the causes of turnover and loss of trust respectively, leaders at all levels of an entity must be aware of their predefined roles and responsibilities in preserving an ethical workplace setting that can improve both customer experience and employee satisfaction. While most managers or organizational leaders recognize the significance of ethical climate in customer and employee satisfaction, some fail to realize the direct impact they have is shaping it. Therefore, shaping ethical climate is one of Continue reading
Relevance of Ethics in the Age of Technology
Unprecedented in its speed and scope, scientific and technological progress is one of the most obvious realities of the modern time. Technology enormously increases the productivity of social labor, expanding the scale of production. It has achieved incomparable results in mastering the forces of nature. Moreover, technology has become the basis of the complex mechanism of the modern development. A country that fails to provide a sufficiently high rate of scientific and technological progress and incorporate its results in various areas of public life is condemned to be a underdeveloped and dependent state with a subordinate position in the world. In the recent past, it was common to praise the scientific and technological progress wildly as the sole source of the overall progress of the humankind. It is the view of the scientism, especially the natural sciences, as a superior and absolute social value. However, the rapid development of science Continue reading
Earnings Management – Meaning and Mechanism
The relationship between managers and shareholders in the business world cannot be disputable. This relationship is interpreted under Agency Theory. They are very dependent each other, even somehow there exist conflict of interest among these two parties. In example the shareholders put on trust to agency by contributing huge amount of money in terms of paid up capital, so that agency can generate business and obtain profit and increase the firm’s value as principles return. Meanwhile agency (managers) is dependent to the principles for remunerations and bonuses as compensation. Because of the great pressure from principles (shareholders) towards the high performance of firms values, so agency commonly practice earnings management in order to be sustained in market place. Earnings management may involve manipulation of accounting record, intentional omission or intentional misapplication of accounting o accounting principles. Earnings management is defined as the intentional misstatement of earnings leading to bottom line Continue reading