Answer to question no-1

Question - Outline and critically discuss the Clarkson Centre for Business Ethics' 'Core Principles for
Stakeholder Management'.

A stakeholder is any individual or group whose interests affect or are affected by the operations of a
business. However, in business ethics, stakeholders are mainly thought of normatively as sources or
objects of a company's ethical duties.

Now I discuss seven core principles for stakeholder management:

Principle 1- Management should acknowledge and actively monitor the concerns of all legitimate
stakeholders and should take their interests appropriately into account in decision making and operations.

Principle 2- Managers should listen to and openly communicate with stakeholders about their respective
concerns and contributions, and about the risks that they assume because of their involvement with the
corporation.

Principle 3- Managers should adopt processes and modes of behavior that are sensitive to the concerns
and capabilities of each stakeholder constituency.

Principle 4- Managers should recognize the interdependence of efforts and rewards among stakeholders,
and should attempt to achieve a fair distribution of the benefits and burdens of corporate activity among
them, taking into account their respective risks and vulnerabilities.

Principle 5- Managers should work cooperatively with other entities, both public and private to ensure
that risks and harms arising from corporate activities and minimized and, where they cannot be avoided,
appropriately compensated.

Principle 6- Managers should avoid altogether activities that might jeopardize inalienable human rights
(e.g. the right of life) or give rise to risks which, if clearly understood, would be patently unacceptable to
relevant stakeholders.

Principle 7- Mangers should acknowledge the potential conflicts between (a) their own role as corporate
stakeholders, and (b) their legal and moral responsibilities for the interests of stakeholders, and should
address such conflicts through open communication, appropriate reporting and incentive systems and,
where necessary, third-part review.

Answer to question number – 2

Question - Explain the reasons behind the increasing interest in the practice of corporate governance.

Corporate governance is a system that aims to instill policies and rules that helps maintain the
cohesiveness of an organization. It exists to help hold a company accountable, while helping them steer
clear of financial, legal, and ethical pitfalls.

Interest in the corporate governance practices of modern corporations, particularly in relation to

accountability, increased following the high-profile collapses of a number of large corporations in 2001–
2002, many of which involved accounting fraud; and then again after the financial crisis in 2008. In below
I critically discuss why increasing interest in the practice of corporate governance.

1.Separations between ownership and control

In the past most companies were managed by their owners or closely monitored by a small number of
shareholders. Today, however, most people in western countries own shares. Koehn (2001) reported that
studies in the United States have shown that the business section of newspapers is now the first page
read by more than 25 percent of readers. As a result, the way companies govern themselves has come to
the forefront of public scrutiny, because the latter has a stake in the way companies are managed.

2. The birth of the supernational corporations

Recent changes in the global business environment such as the end of the Cold War, global economic
liberalism, the economic conglomeration of Western Europe, the rapid advancement in technology, and
the explosion of e-commerce shifted the power towards large global corporations.

3. Increase in reported corporate failure and crisis

There has been an increase recently in reported failure and crisis of well-known companies such as the
Maxwell Group and its implications on the pension fund of the Mirror Group newspapers, the collapses
of the Barings Bank and the Bank of Credit and Commerce International. All the latter examples were a
result of management incompetence, fraud and abuse of power. In addition, a large body of research on
organizational failure provides evidence to suggest that top management attitudes and behavior are often
the cause of such failure.

Answer to question no – 3

Question - Briefly discuss the current ethical dilemmas facing by the HR managers

A problem in the decision-making process between two possible but unacceptable options from an ethical
perspective.

The major ethical issues that have to be deal by the human resource management are a concern with the
privacy issues, cash and compensation plan, employment issues, safety issues, race and disability,
performance appraisal and employee's responsibility (Johnston, 2018)

The current ethical dilemmas facing by the HR managers fall into four broad areas:

1. Ethics and relations with employees

2. Ethics and relations with communities

3. Ethics and environmental issues

4. Ethics and the consequence of globalization

1. Ethics and relations with employees

In an age of flexibility and downsizing, the psychological contract between employee and firm has been
greatly weakened. Jobs are no longer for life; conversely, firms can no longer expect the same degree of
loyalty from employees.

There has been an increasing divergence between managerial and employee pay; the latter has tended
to stagnate, ostensibly to ensure greater competitiveness and to reduce inflation (but also reflecting the
reduced bargaining power of employee’s collectives).

2. Ethics and relations with communities

The second current ethical dilemma which is facing by the manager is ethics and relations with
communities. Many stakeholders are involved with the organization directly or indirectly. It is argued that
firms have a moral obligation to take account of those stakeholders who have direct or indirect interest
in their activities. In other words, firms should take into account the interest of legitimate stakeholders
irrespective of their capacity to make life difficult for management.

3. Ethics and environmental issues

There is the question of the physical environment. The consequences of large-scale environmental
degradation have become increasingly visible.

4. Ethics and the consequence of globalization

There are the ethical dilemmas posed by globalization. The reason behind that the globalization
integrates markets (and of consumer taste), rapid technological advance and interchange, and
increasingly mobile financial capital.

Answer to question no – 5

What, do you think, are the principal ethical challenges facing the practice of HRM? Give reasons for
your answer.

Wooten (2001) defined ethical challenges in HRM as: “the multifaceted demands placed on HRM
professionals in which personal, professional and organizational beliefs, expectations, values, and needs
conflict as a result of environmental influences upon HRM functions, duties, roles, services and
activities. “The 1992 "Ethical Issues in Human Resource Management" survey sought to discover
employment managers' perceptions of ethical issues. This survey basically replicated the 1991 SHRM/
CCH survey using members of the Employment Management Association. Based on their means, the
five most serious ethical situations reported by them are : 1) staffing based on favoritism, 2) sexual
harassment, 3) using discipline for managerial and non-managerial personnel inconsistently, 4) non-
performance factors used in appraisals, and 5) allowing differences in pay, discipline, promotion, etc.
due to friendships with top management. According to Wiley (1998, cit in Gramberg &Menzies,
2006) the situations where HR managers have less ethical conduct are related with Recruitment and
Selection, Conflict Management, Health and Safety, Reward Management and Labor relations.
Another study by Macklin (2007) noted that HR managers tended to identify three broad areas for
ethical problems 1) Clashes between justice and care, 2) morality (including justice) and 3)
organizational performance, confidentiality and honesty or openness.
 Answer to question no – 6

What do you under by the concept of ' fair trade'? Should this affect how firms do business in the
developing world?

Fair trade is an arrangement designed to help producers in growing countries achieve sustainable and
equitable trade relationships. Members of the fair-trade movement add the payment of higher prices to
exporters, as well as improved social and environmental standards. The movement focuses in particular
on commodities, or products that are typically exported from developing countries to developed
countries, but is also used in domestic markets (e.g., Brazil, the United Kingdom, and Bangladesh), most
notably for handicrafts, coffee, cocoa, wine, sugar, fruit, flowers, and gold. The movement seeks to
promote greater equity in international trading partnerships through dialogue, transparency, and respect.
It promotes sustainable development by offering better trading conditions to, and securing the rights of,
marginalized producers and workers in developing countries. Fair trade is grounded in three core beliefs;
first, producers have the power to express unity with consumers. Secondly, the world trade practices that
currently exist promote the unequal distribution of wealth between nations. Lastly, buying products from
producers in developing countries at a fair price is a more efficient way of promoting sustainable
development than traditional charity and aid.

Since fair trade helps stabilize incomes, many families can keep their children in school. It provides
supplies, scholarship programs and healthy meals. Fair Trade enables education for even the most
outlying communities. Fair Trade impacts workers, farmers and families.

Environmental protection is ingrained in Fairtrade. To sell Fairtrade products, farmers have to improve
soil and water quality, manage pests, avoid using harmful chemicals, manage waste, reduce their
greenhouse gas emissions and protect biodiversity.

Fair trade means that producers receive a guaranteed and fair price for their products regardless of the
price on the world market. The Fair-Trade Foundation promotes Global Citizenship by supporting
producers to improve their living conditions, by guaranteeing a fair, minimum price for their products.