Managing Business Ethics

Managing Business Ethics

Question 2     

There are several definitions for corporate social responsibility but they all have the same concept. One of the definition states that Corporate Social Responsibility is the perpetual engagement to act ethically and assist in developing the economy. As this is happening, the same business is expected to enhance the families of the employees and the society. Another approach would be to define it as how businesses operate their processes to give an outcome, which will be beneficial to the society. Similarly, it could also be defined as businesses volunteering to help maintain a sustainable environment and a good society. It is a concept whereby companies decide voluntarily to contribute to a better society and a cleaner environment (Yakovleva, 2001). However, this definition can be challenged in some countries. This is because according to the same countries, corporate social responsibility is a requirement of the law and not voluntary.

The selected case study is of a multinational company called Rio Tinto. It is one of the best companies in the world, which is good in establishing, mining and processing minerals from the earth. These minerals are aluminium, energy products, copper, diamonds, gold and iron. Its main operations are in Australia and North America, specifically in Canada. Other countries are in South America, Asia Europe and southern Africa. This company has more than thirty three thousand employees. Rio Tinto could be referred as a socially responsible company because it has participated in so many charitable organizations and other organizations that are focused on making the society a better place to live (OECD, 2001).

According to Yakovleva (2001), Rio Tinto Company has joined the following organizations: International Business Leaders Forum (IBLF), Transparency International and United Nations Global Compact. IBLF is a non-profit organization that aims to enhance good business practices. These practices are intended to help both the business and the community. Rio Tinto is a partner in this organization because it would like to take part in achieving this objective. Transparency International is an organization that fights corruption worldwide. Rio Tinto has joined this organization because it wants to eradicate corruption in the society. By doing this, Rio Tinto has started this eradication in the company. On March 2010, four workers were sent to jail because of receiving bribes worth thirteen million dollars (OECD, 2001). This act shows that sincerity of the management in fighting corruption.

This company joined the UN global compact to help in achieving its mission. This agency aims at addressing human rights issues, which are being neglected. Other objectives are anti- corruption campaigns and attending to unaddressed labor complains. Due to the great participation in social responsibility, Rio Tinto is now proud because one of its plants in Zimbabwe won an award. Murowa Diamonds took home the Zimbabwean Chamber of Commerce award, which they scooped in 2009. The award was because they company had participated in helping people who live with HIV/AIDS and cared about their employee well being (Yakovleva 2001).

Reasons for corporate social responsibility are several. According to these reasons, it can be concluded that corporate social responsibility is generally a combination of pragmatic, strategy and practicing ethics. This is because different countries require businesses to engage in social responsibility for various reasons. Some countries do it because it is pragmatic, others will do it as an ethical practice while others do it as a strategy of achieving certain objectives.

OECD (2001), states that the stakeholders of Rio Tinto Company are located worldwide, since it is a multi-national company. Stakeholders are vital to this company because they assist in their service deliveries in those host countries. Business relationships are also strengthened through stakeholders. Some of the stakeholders are Carbon neutral Festival International de Jazz de Montreal in Canada, BIXI self-service bicycle rental system in Canada and Carbon Pool project in Australia. Other external stakeholders are local communities, organizations, industries, governments and various suppliers of energy. These stakeholders are important because they assist in reducing any emissions made.

Question 3

From the case study of Rio Tinto Company, conclusion can be made that there are four types of social responsibilities (Yakovleva, 2001). The first one is environmental responsibility. The community requires or even demands businesses to practice responsible behavior in the environment. Conclusive findings have been done by a PricewaterhouseCoopers. They found out that the top most priority for companies in the USA is minimizing the rate of carbon released. Rio Tinto is also part of this objective and that is why it has energy providers as stakeholders, to help in achieving this goal. Global warming, environmental pollution and sustaining the environment are other challenges faced by the environment. Companies and Business entities are being called upon to assist in controlling and eliminating these challenges.

The second social responsibility is human rights responsibility. In today’s world, business has been globalized. For example, equipment can be bought in Australia but it was manufactured in Japan. Human rights responsibility ensures that human rights are being respected and observed from all angles of doing business. Major businesses have received repulsion because of using sweatshops and acquiring resources, which have been received from maltreated employees. This has triggered stern rules for employee protection from supplier exploitation. Rio Tinto has joined UN Global Compact to protect human rights and labor rights (Yakovleva, 2001).

The third social responsibility is financial responsibility. This is a very fundamental thing in financial responsibility. Financial responsibility counters the challenges of fraudulence in accounts department. The business is able to keep track and proper accounting of funds. This is why Rio Tinto has collaborated with Transparency International. Another way used to ensure financial responsibility is that businesses and companies are required to use internal and external auditors, to verify use of funds and that there is no tax evasion. Employees are required to have a watchful eye in situations that look suspicious. They then should report to the management for further investigations. This will help to reduce elite crimes, which are common in big businesses and companies. Offenders of this responsibility should face the law and be punished.

The fourth responsibility is political responsibility. Businesses have found it difficult to do business with dictatorial regimes. It has been observed that it is hard to maintain corporate social responsibility. Various companies think that doing business with these regimes assists in developments and instill rights in that particular country. People have opposed associating with dictatorial regimes business wise. This is because dictatorship does not respect human rights and labor rights hence defying corporate social responsibility. Several western countries have done this on some African countries. Rio Tinto Company only associates with countries that do not practice dictatorial rule.

OECD (2001) concludes that Rio Tinto Company is a viable company to invest in because of acceptable income statements. Due to the good policies put in place, the company is recording high profits and good strategies to keep the company going. For example, it has diverse stakeholders who also have good financial reports, investing in the company. For example in the year 2010, the net profits owned by stakeholders were fourteen thousand three hundred and twenty four thousand dollars, at the end of the year. The total assets in this company at the end of year 2010 were, one hundred and twelve, four hundred and two thousand (Yakovleva, 2001). It is therefore recommendable to invest in this company because it has a strong financial position that is stable and reliable.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

References

OECD. (2001). Corporate Social Responsibility: Partners for Progress. Austria: OECD publishing.

Yakovleva, N. (2001). Corporate social responsibility in the mining industries. New York, NY: Ashgate publishers