CUNY Brooklyn College Ethical Audit Saudi Aramco Company Business Ethics Project

User Generated

ZbGhgbe

Business Finance

CUNY Brooklyn College

Description

Hi

i need project for business ethics subject (report+powerpoint presentation ) and it should about SAUDI Co i choose Aramco co

Comprehensive project guidelines are attached, Chapter slides are also attached; these slides are for your reference and might help you.

So you can use some vocabulary from the course slides

Unformatted Attachment Preview

Chapter 1 The Importance of Business Ethics ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. Learning Objectives  Explore conceptualizations of business ethics from an organizational perspective  Examine the historical foundations and evolution of business ethics  Provide evidence that ethical value systems support business performance  Gain insight into the extent of ethical misconduct in the workplace and the pressures for unethical behavior ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 2 Intro  The ability to anticipate and deal with business ethics issues has become a priority in the 21st century.  Demand for improved business ethics, greater corporate responsibility, and laws.  Highly visible business ethics issues influence the public’s attitude toward business.  Making good ethical decisions are just as important to business success as mastering management, accounting, marketing or financial management. ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 3 Intro  Ethical behavior requires understanding and identifying issues, areas of risk, and approaches to making choices in an organizational environment.  The field of business ethics deal with question about whether specific conduct and business practices are acceptable.  A salesperson omitting facts about a product’s poor safety  An accountant reporting inaccuracies in an audit report  A manufacturer intentionally concealing a safety concern to avoid a massive recall  By its very nature, the field of business ethics is controversial.  Values and judgments play a critical role in the making of ethical decisions.  All organizations have to deal with misconduct, even the most prestigious companies and organizations. ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 4 About this Chapter  Overview of business ethics.  Definition of business ethics and discusses why it has become an important topic in business education.  Evolution of business ethics in North America  Benefits of ethical decision making in business.  Framework for examining business ethics in this text. ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 5 Business Ethics  Business ethics comprises organizational principles, values, and norms that originate from individuals, organizational statements, or from the legal system that guide individual and group behaviour in business  Morals: a person’s personal philosophies about what’s right or wrong  Principles: Specific boundaries that should not be violated and become the basis for rules  Values: Existing beliefs and ideals that are socially enforced. Often based on organizational best practices (teamwork, trust, integrity)  Ethics - Behavior or decisions made within a group’s values by a group of people representing the business organization. ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 6 Business Ethics  Businesses should hire employees with sound moral principle. However, some special aspects need to be considered when applying ethics to business:  1. Businesses must earn a profit to survive, but these profits should not come from misconduct.  2. To be successful, businesses must address the needs and desires of stakeholders.  To address these unique aspects of the business world, society has developed rules, both legal and implicit, to guide businesses in their efforts to earn profits in ways that help individuals or society and contribute to social and economic well-being. ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 7 Why Study Business Ethics? A Crisis in Business Ethics  1. Ethical misconduct is a major business concern, and organizations are under greater scrutiny than ever by  The case of JP Morgan Chase  The conflict between U.S. regulators and Swiss banks  see figure 1.1  2. There is no doubt negative publicity associated with major misconduct lowered the public’s trust in certain business sectors.  3. Decreased trust leads to a reduction in customer satisfaction and customer loyalty, which in turn can negatively impact the firm or industry. ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 8 ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. Specific Issues  Misuse of company resources, abusive behavior, harassment, accounting fraud, conflicts of interest, defective products, bribery, and employee theft are all problems cited as evidence of declining ethical standards in business and in other areas like government or sports.  Product knockoffs: products that imitate physical appearance of other products although not copying the brand name or logo (AliBaba in China)  Accounting fraud: intentionally manipulating financial statements (Enron)  Bribery: giving or receiving something of value in exchange of an influence (NOLA Mayor, College Admission Scandal)  Abusive behaviour: aggressive, controlling, destructive acts (Domestic abuse by NFL stars and Pop stars)  Harassment: aggressive pressure or intimidation: (Physical, Psychological, Cyberbullying, HWE vs Quid pro Quo (USA Gymnastic National Team scandal, #MeToo Movement) ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 11 Specific Issues  Misconduct can occur in any organization (private companies, the public sector, military, sports, Showbiz, etc)  Regardless of an individual’s beliefs about a particular action, if society judges it to be unethical or wrong, new legislation usually follows.  Whether correct or not, that judgment directly affects a company’s ability to achieve its business goals ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 12 ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. Before 1960: Ethics in Business (theology)  Ethical issues related to business were often discussed within the domain of theology or philosophy.  Religious leaders raised questions about fair wages, labor practices, and the morality of capitalism.  The first book on business ethics was published in 1937 and covered 4 sections:  Fair service, fair treatment of competitors, fair price, moral progress in the business world.  Also demonstrated the necessity of the ethical treatment of different stakeholders. ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 15 The 1960s: The rise of Social Issues in Business  The American society witnessed the development of anti-business trend b/c many critics attacked the vested interests that controlled the economic and political aspects of society.  Decay of inner cities and growth of ecological problems such as pollution .  1962’s Consumer Bill of Rights: outlines 4 basic consumer rights (safety, information, choice, and to be heard).  Activities that could destabilize the economy or discriminate against any class of citizens began to viewed as politically unethical and unlawful. ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 16 The 1970s: Business Ethics as an Emerging Field  Business ethics began to develop as a field of study.  Universities began to teach about corporate social responsibility (an organization’s obligation to maximize its positive impact on stakeholders and minimize its negative impact).  Conferences were held to discuss the social responsibilities and ethical issues of business.  By the end of this era, major ethical issues have emerged (bribery, deceptive advertising, price collusion, product safety)  Business ethics became a common expression and academic researchers began to identify ethical issues and describe how business people might choose to act in particular situations. ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 17 The 1980s: Consolidation  Business academics, practitioners, and centers for business ethics provided publications, courses, conferences and seminars.  The Defense Industry Initiative on Business Ethics and Conduct (DII) was developed to guide corporate support for ethical conduct.  This era witnessed the rise of self-regulation as being in the public’s interest rather than regulation by government.  Many tariffs and trade barriers were lifted, and businesses merged and divested within an increasingly global atmosphere. ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 18 The 1990s: Institutionalization of Business Ethics  Administration continues supporting self-regulation and free trade.  However, many reforms were abolished (Arthur Levitt, SEC 1993)  Federal Sentencing Guidelines for Organizations (FSGO) set the tone for organizational ethical compliance programs in the 1990s.  The guidelines focus on firms taking action to prevent and detect business misconduct in cooperation with government regulation. ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 19 The 21st Century of Business Ethics  New evidence emerged in the early 2000s that not all business executives and managers have fully embraced the public’s desire for high ethical standards.  Highly publicized corporate misconduct and global accounting fraud at Enron, WorldCom, Tyco, Royal Ahold, Parmalat, etc)  Increase public and political demand to improve ethical standards in business   2008 financial crisis caused by systemic use of high-risk financial instruments such as CDS, risky debt, subprime lending, Asset-backed securities and corruption in major corporations.   Response: SOX (2002) that institutionalized the need to discover and address ethical and legal risk) Response: Dodd Frank Wall Street Reform and Consumer Protection Act (2010): designed to make the financial services sector more ethical and responsible. Further ethical issues revolve around the acquisition and sales of information  Facebook breach of trust (2019): sharing subscribers’ info with third parties plus accusations regarding role in election meddling and spread of disinformation. ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 20 ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. The Big 4 ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 24 Developing an Organizational and Global Ethical Culture  Ethical culture: Acceptable behavior as defined by the company and industry that captures the values and norms of the company  Encourages the use of principles for ethical reasoning  Companies are creating ethics programs for their employees and appointing ethics officers to oversee them  Globally, businesses are working together to establish global standards of acceptable behavior  Many companies demonstrate their commitment to acceptable conduct by adopting globally recognized principles, such as the United Nations’ Global Compact.  ISO 19600—a global compliance management standard  The UN Global Compact—a set of ten principles concerning human rights, labor, the environment, and anti-corruption ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 25 The Role of Organizational Ethics in Performance  Ethisphere brings together leading global companies to define and promote best practices for ethics and compliance; and helps to advance business performance through data-driven assessments, benchmarking, and guidance.  NiSource, a distributor of natural gas, electricity, and water in the Midwest and Northeast United States, has earned a place in Ethisphere’s “World’s Most Ethical Companies” for three consecutive years. ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 26 ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. Chapter 2 Stakeholder Relationships, Social Responsibility, and Corporate Governance ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. Learning Objectives  Identify stakeholders’ roles in business ethics  Define social responsibility  Examine the relationship between stakeholder orientation and social responsibility  Delineate a stakeholder orientation in creating corporate social responsibility ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 2 Learning Objectives (continued)  Explore the role of corporate governance in structuring ethics and social responsibility in business  List the steps involved in implementing a stakeholder perspective in social responsibility and business ethics ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 3 Stakeholders Define Ethical Issues in Business  Building effective relationships is considered one of the more important areas of business today.  In a business context, anyone with a “stake” or claim in some aspect of a company’s products, operations, markets, industry, and outcomes are known as stakeholders. ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 4 Relationships and Business  Relationships are associated with both organizational success and misconduct  Businesses exist because of organizational relationships between employees, customers, shareholders, and the community  Stakeholder framework identifies the internal and external stakeholders who agree, collaborate, and engage in confrontations on ethical issues  Allows organizations to identify, monitor, and respond to the needs and expectations of stakeholder groups ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 5 Stakeholder Theory  The survival and performance of any organization is a function of its ability to create value for all primary stakeholders  Approaches to stakeholder theory  Normative - Sets forth ethical guidelines that dictate how firms should treat stakeholders. Principles and values provide direction  Descriptive - Focuses on the actual behavior of a firm and addresses how decisions and strategies are made for stakeholder relationships  Instrumental - Describes what happens if a firm behaves in a particular way ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 6 Role of Stakeholders  The relationship between companies and their stakeholders is a two-way street. Foster decision making   The level of social responsibility of an organization can be assessed by scrutinizing its effects on the issues of concern to its stakeholders Stakeholders apply their values and standards to many diverse issues—working conditions, consumer rights, environmental conservation, product safety, and proper information disclosure—that may or may not directly affect an individual stakeholder’s own welfare.  provide both tangible and intangible resources that can be critical to a firm’s long-term success.  individual stakeholders with similar expectations about desirable business conduct may choose to organize into communities.  Ethical misconduct can damage a firm’s reputation, causing stakeholders to withdraw valuable resources. This gives stakeholders power over businesses. ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 7 ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 8 ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 9 Stakeholder Orientation  Degree to which a firm understands and addresses stakeholder demands can be expressed as a stakeholder orientation.  Consists of the following activities:  Organization-wide generation of data about stakeholder groups and assessment of the firm’s effects on these groups  Distribution of the generated data throughout the firm  Responsiveness of the organization as a whole to the data generated ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 10 Stakeholder Orientation  Given the variety of employees involved in the generation of information about stakeholders, it is essential the information gathered be circulated throughout the firm.  A stakeholder orientation is not complete unless it includes activities that address stakeholder issues.  Responsiveness processes may involve the participation of the concerned stakeholder groups.  A stakeholder orientation can be viewed as a continuum as firms adopt the concept to varying degrees. ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 11 Issues in Social Responsibility  Social responsibility rests on a stakeholder orientation.  Companies are looking at broader issues that consider the long-term welfare of society; each stakeholder is given due consideration.  Long-term relationships with stakeholders develop trust, loyalty and the performance necessary to maintain profitability.  Issues generally associated with social responsibility can be separated into four general categories: social issues, consumer protection, sustainability and corporate governance. ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 12 ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 13 Issues in Social Responsibility  Social issues are associated with the common good and deal with concerns that affect large segments of society and the welfare of our entire society.  There is a need to reflect on issues indirectly related to business, such as jobs lost through outsourcing, health issues, and gun rights when developing strategies in certain cases.  Issues that more directly relate to business include obesity, smoking, and exploiting valuable or impoverished populations, as well as a number of other issues  Another major social issue involves internet tracking and privacy and may soon become a consumer protection issue as the government is considering passing legislation limiting the types of tracking companies can perform over the Internet without users’ permission. ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 14 Issues in Social Responsibility   Consumer protection often occurs in the form of laws passed to protect consumers from unfair and deceptive business practices; these issues usually have an immediate impact on the consumer after a purchase.  Major areas of concern include advertising, disclosure, financial practices, and product safety  Because consumers are less knowledgeable, it is the responsibility of companies to take precautions preventing consumers from being harmed by their products.  Deceptive advertising has been a hot topic in the consumer protection area, and some advertising practices skirt the line between ethical and questionable behavior. For example, native advertising blends digital advertisements or company promotions with content on the website where it is featured. This may be construed as deceptive if consumers cannot tell the difference between the ad and the content.  Companies must be knowledgeable about consumer protection laws and recognize whether their practices could be construed as deceptive or unfair. ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 15 Issues in Social Responsibility  Sustainability is defined as the potential for the longterm well-being of the natural environment and businesses can no longer ignore the environment as a stakeholder.  Because sustainability is a major ethical issue, we will cover this topic in more detail in chapter 12.  Corporate governance involves the development of formal systems of accountability, oversight and control. Strong corporate governance mechanisms help remove the possibility for employees to make unethical decisions.  Research has shown that corporate governance has a positive relationship with social responsibility and we discuss corporate governance in more detail later in this chapter. ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 16 ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 17 Corporate Citizenship  Degree to which businesses strategically meet the economic, legal, ethical, and philanthropic responsibilities placed on them by their stakeholders  Dimensions  Strong sustained economic performance  Rigorous compliance  Ethical actions beyond what the law requires  Voluntary contributions that advance the reputation and stakeholder commitment of the organization ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 18 A selection of the world’s most ethical companies who have demonstrated their commitment to stakeholders. ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 19 Take a Guess… ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 20 Social Responsibility and the Importance of a Stakeholder Orientation  Many businesspeople and scholars have questioned the role of ethics and social responsibility in business because legal and economic responsibilities are accepted as the most important determinants of performance.  Milton Friedman  Adam Smith ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 21 Importance of Stakeholder Orientation in Social Responsibility  Friedman’s view - Stakeholders do not have any role in requiring businesses to demonstrate responsible and ethical behaviour  “the basic mission of business [is]…to produce goods and services at a profit, and in doing this, business [is] making its maximum contribution to society and, in fact, being socially responsible.” Friedman believes the market is a better deterrent to wrongdoing than new laws and regulations. ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 22 Importance of Stakeholder Orientation in Social Responsibility  Adam Smith’s view - Values that a firm should adopt to produce in a more socially responsible way correlates with the needs and concerns of the stakeholders  Adam Smith, one of the founders of capitalism, established expectations for motives and behaviors in his invisible hand theory. Smith distinguished justice as consisting of perfect or inalienable rights, from beneficence, consisting of imperfect rights that should be performed but cannot be forced. ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 23 Importance of Stakeholder Orientation in Social Responsibility  Stakeholder support for companies that are socially responsible enhances a firm’s profitability  Evidence suggests that caring about the well-being of stakeholders leads to increased profits.  The support stakeholders have for companies they perceive to be socially responsible can also serve to enhance the firms’ profitability. ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 24 Corporate Governance and Stakeholders  Corporate governance provides formalized responsibility to stakeholders  Directors and officers of corporations (Fiduciaries for the shareholders) have a duty of care, or duty of diligence, to make informed and prudent decisions.  duty of loyalty: all decisions should be in the best interests of the corporation and its stakeholders.  Two major challenges for boards of directors are officer compensation and the temptation to use knowledge about investments, business ventures, and the stock market to engage in insider trading. ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 25 Corporate Governance and Stakeholders (continued)  To remove the opportunity for employees to make unethical decisions, most companies have developed formal systems of accountability, oversight, and control—known as corporate governance.  1. Accountability refers to how closely workplace decisions are aligned with a firm’s stated strategic direction and its compliance with ethical and legal considerations.  2. Oversight provides a system of checks and balances that limit employees’ and managers’ opportunities to deviate from policies and strategies and that prevent unethical and illegal activities.  3. Control is the process of auditing and improving organizational decisions and actions. ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 26 Corporate Governance and Stakeholders (continued)  A clear delineation of accountability helps employees, customers, investors, government regulators, and other stakeholders understand why and how the organization chooses and achieves its goals.  Corporate governance establishes fundamental systems and processes for:  preventing and detecting misconduct  investigating and disciplining  recovery and continuous improvement. ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 27 Corporate Governance and Stakeholders (continued)  Corporate governance establishes systems and processes for:  Preventing and detecting misconduct  Investigating and disciplining  Recovery and  continuous improvement The development of a stakeholder orientation should interface with the corporation’s governance structure ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 28 Some of the elements in a corporate governance structure ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 29 Models of Corporate Governance  Shareholder model  Goal - Maximize wealth for investors and owners  Focuses on developing and improving the formal system for maintaining performance accountability between top management and shareholders  A shareholder orientation should drive a firm’s decisions toward serving the best interests of investors.  Stakeholder model  Adopts a broader view of the purpose of business because it must answer to other stakeholders  Promotes stakeholder welfare along with corporate needs and interests ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 30 Board of Directors  Responsible for the ethics of a firm’s actions  Have a fiduciary duty  Assume ultimate authority for their organization’s effectiveness and subsequent performance  Governed by the amendments of the Federal Sentencing Guidelines for Organizations (FSGO) ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 31 Demand for Accountability and Transparency  Directors today are increasingly chosen for their expertise, competence, and ability to bring diverse perspectives to strategic discussions  Outside directors are hired as they do not have vested interests  The concept of interlocking directorate is not illegal unless it involves a direct competitor  Interlocking directorate: Board members linked to more than one company ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 32 Executive Compensation  Compensation paid to executives of the company  Ratio between the salaries of the highest-paid executives and the median employee wage should be less  Stakeholders support high level of compensation only when it is linked to strong company performance ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 33 ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 34 - The purpose of this step is to identify the organizational mission, values, and norms that are likely to have implications for social responsibility. - Stakeholders have some level of power over a business because they are in the position to withhold, or at least threaten to withhold, organizational resources. - This step involves understanding the nature of the main issues of concern to primary stakeholders. ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 35 - This step arrives at an understanding of social responsibility that specifically matches the organization of interest. Identifying resources and determining urgency - The prioritization of stakeholders and issues, along with the assessment of past performance, provides guidance for allocating resources. ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 36 Gaining stakeholder feedback Stakeholder feedback can be generated through a variety of means. - Satisfaction or reputation surveys Assessment of stakeholder-generated media (blogs, websites, podcasts, and newsletters) 3. Formal research using focus groups, observation, and surveys 1. 2. ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 37 CLASS ACTIVITY Megan Jones Case  1- What is the Ethical Dilemma in this case?  2- As a Business Ethics consultant, what recommendations do you suggest for these issues? ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 38 Business Integrity Principles: Driving Implementation For Sustainability | Riyadh, KSA ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 39 ETHICS 301 PROJECT: ETHICAL AUDIT Second Semester 2020 Dr. Rhada Boujlil Grades: 20% Due: April 6th Ethical auditing is a process which measures the internal and external consistency of an organisation's values base. The key points are that it is value-linked, and that it incorporates a stakeholder approach. Its objectives are two-fold: It is intended for accountability and transparency towards stakeholders and it is intended for internal control, to meet the ethical objectives of the organisation. The value of the ethical audit is that it enables the company to see itself through a variety of lenses: it captures the company's ethical profile. Companies recognise the importance of their financial profile for their investors, of their service profile for their customers, and of their profile as an employer for their current and potential employees. An ethical profile brings together all of the factors which affect a company's reputation, by examining the way in which it does business. By taking a picture of the value system at a given point in time, it can: - clarify the actual values to which the company operates - provide a baseline by which to measure future improvement - learn how to meet any societal expectations which are not currently being met - give stakeholders the opportunity to clarify their expectations of the company's behaviour - identify specific problem areas within the company - learn about the issues which motivate employees - identify general areas of vulnerability, particularly related to lack of openness An ethical culture is supported by top management, has incorporated ethics at all levels of the organization, and contains all of the components of an Ethics Program. Task Details: Working as a group, you need to study one organization/company of your own choice and do a search pertaining to the topics on the ethical audit list. 1. Write an introduction (i) a brief discussion on the background of the company you have selected ; (ii) a list of major players and changes in the organisation; (iii) key recent changes (5years) in the industry your chosen company is located for the last 5 years 2. You need to study and discuss the company’s ethical audit in detail within your group. A sample assessment questionnaire for the project follows: Support by top management - Has management established an ethical “tone at the top” by setting a good example of ethical conduct, providing positive and open communication, and supporting ethical conduct? - Is there a designated ethics officer or ethics contact? - Does the ethics code start with a statement from the CEO/President about his commitment to an ethical culture? - Does top management positively support the ethics hotline? Incorporation of ethics at all levels of the organization - Are supervisors trained as contact points for ethics related questions? - Is ethics a focus during new employee training? - Is ethics a focus during supplier selection? - Is ethics a focus during internal audits? - Is an ethical culture ingrained in the organization’s brochures, materials, and website? Components of an Ethics Program Ethics Code - Does the organization have a written ethics code? - Does the ethics code cover key elements, such as conflicts of interest, financial irregularities, and compliance to laws? - For publicly traded companies, is the ethics code available publicly / on the company’s website Ethics Training - Do employees receive ethics training on a regular basis? - Does ethics training incorporate the company’s ethics code? Ethics Hotline - Does the organization have an ethics hotline? - Is the ethics hotline confidentiality and non-retaliation policy clearly conveyed to employees? - Does the organization provide ethics hotline information to employees and other shareholders via formats such as postings in break rooms and the company website? - For publicly traded companies, is the “receipt, retention, and treatment” of ethics hotline reports regarding “questionable accounting or auditing matters” aligned with the Audit Committee Ethics Awareness - Is the importance of ethics communicated to all employees on a regular basis via formats such as organization newsletter articles and posters? - Do the ethics articles cover topics that are interesting, engaging, and in pace with the times? 3. PLEASE KEEP IN MIND that it is impossible to produce an acceptable report if you have not researched widely. Some have failed the assignment because of lack of sufficient research, so it is important to start work on it early. Report should be maximum 15 pages in length and attach all the supplementary material (such as company info, Code of Ethics, etc.) with your report.
Purchase answer to see full attachment
User generated content is uploaded by users for the purposes of learning and should be used following Studypool's honor code & terms of service.

Explanation & Answer

Hi there. Here is the work completed. Please
review and get back to me in case of any issue.Kindly remember to rate my work well with
a 5 star and invite me to help in your future assignments.I did 14 pages inclusive cover page and references. I am sure you will be happy of the work. Kindly invite me for more tasks.Thank you.

Running head: Ethical Audit: Saudi Aramco co

Ethical Audit: Aramco co
Student
Instructor
Course
Date

2

Ethical Audit: Saudi Aramco co

INTRODUCTION
This section discusses the background of the Saudi Aramco Company, the major players, and the
changes in the organization. It also explains recent fundamental changes in the industry for the
last five years.
Background of the company
Saudi Aramco is located in Dhahran in Saudi Arabia and deals with natural petroleum and gas. It
is considered to be one of the largest companies concerning the revenues collected. Among the
oil production companies, Saudi Aramco is the biggest, and globally, it is termed to the most
profitable. It was started in the year 1933, and it's an international company serving many
markets across the globe. The president and CEO is Amin H. Al-Nasser, and Yasri AlRumayyan is the executive director. As of 2018, the company had total revenue of $355.9
billion, which had been increasing from past years. By June 2018, the company had $111.1
billion net income, which was an increase from $75.9 billion by 2017 (Aramco Accounts, 2018).
By 2019, the operating income was $674.8 billion, and the company has total assets of 1.5
trillion as of the end of the year 2019. Saudi Arabia's government owns the company, and as of
today, it has approximately 76,000 employees (Key facts and figures, 2017). The master gas
system is the biggest hydrocarbon network and is operated by Saudi Armco. It has over one
hundred fields for gas and oil with Saudi Arabia.
In 1938, some of the United States Companies joined Saudi Aramco after they discovered that
there was a lot of oil in Dhahran. The company has an adequate infrastructure that enhances high
levels of production, and the employees are well knowledgeable and experienced with what they

Ethical Audit: Saudi Aramco co

3

do. It produces an estimate of 10.2 million barrels per day. Some of its subsidiaries are located in
the United States, United Kingdom, China, Egypt, India, Japan, Singapore, and the Netherlands.
In 2012, Aramco faced a cyber-attack after the systems were hacked, but fortunately, the
attacked computers were not part of the oil production. Around 30,000 work stations were
affected, and a group called cutting sword of justice claimed to have caused all that mess. This
brought some delays as the company had to concentrate on bringing back its systems to normal.
Besides, Houthi rebels attacked the company with the use of drones, and this affected the supply
and production of oil since around 5% of the world supply was cut.
Major players and changes in the organization
Other players in the industry include British Petroleum, which was founded in 1909, a public
entity majoring in oil and petrochemical production. It is located in London and has around
73,000 employees, with estimated revenue of $282.6 billion in 2019. Exxon Mobil is also a
critical player that focuses on the production of natural gas and crude oil. It is the earliest
founded company in 1870, located in Irving, United States. The employees stand at around
74,900, with a revenue of $264.9 billion by 2019. Marathon is another player in the industry
founded in 2009 and is the youngest among the key competitors in the market and the ones that
have been discussed here. It is situated in Findlay in the United States. The employees are about
60,350 and have revenue of $123.9 billion by 2019. Total also stand among the key players and
is located in Paris, founded in 1924 and has more employees of over 102,168 with total revenue
of $172.3 billion. ADNOC was founded in 1971 and the most significant rival for Aramco’s
despite having a small share in the market and revenue of $62 billion. Shell is more competitive
and was initiated in 1907 as a group of energy companies. It is based in Den Haag and has

Ethical Audit: Saudi Aramco co

4

82,000 employees with a revenue estimate of $352.1 billion (Craft, 2020). Other players include;
chevron, ConocoPhilips, Lukoil, and Valero. These are key players in the oil and natural industry
that Saudi Aramco operates.
Critical recent changes in the industry for the last five years
The industry had an oversupply for several years back, and the prices of oil have now rebounded.
Through capital discipline, realignments of portfolio and efficiency in production have seen the
industry regaining its trend. According to alert given by Aramco, Total, and Eni, there are high
chances of a supply crunch in the industry since 2016, and this might extend for a decade. This is
because the demand for oil is growing day by day; therefore, companies producing oil must
boost their production. More importantly, is that the companies should be able to come up with
mitigating strategies of curbing the risks that might come along with the supply crisis. The
sector, therefore, seems to be more volatile than before, with a lot of internal and external forces
affecting the production.
Volume of oil discoveries was less made in 2017 in comparison to the too early 1950s when the
same had occurred. Condensate, crude, and natural gas liquids worth 3.5 billion barrels were
recorded, having been discovered only in 2017, and this generally low to meet the demand. The
critical challenge to this is that making discoveries to date is a problem because most of the areas
have already been explored (PwC, 2019-2020).
Another significant change in the industry is supply disruption. As the old fields get depleted of
the products, the supply chain is messed up before new fields are discovered. Other than fields
lacking oil, in some nations, geopolitics has affected the production, for instance, in Libya and

5

Ethical Audit: Saudi Aramco co

Venezuela. Change in demographics has also left oil production at a problem because of a lack
of technical skills. To ensure that these changes don't affect the industry ultimately, key players
need to have capital discipline, manage their portfolio with less break-even price, maintain their
assets, change the business modeling, have more talents for technological advancement and
keenly look at how the business is evolving from time to time. Few companies that will manage
to adapt these strategies and realize that the oil and natural gas industry is so volatile now will
thrive in the market. The fact remains that the supply has been neglected as demand rises (PwC,
2019-2020).
The company has been made tremendous changes in the market in terms of profits and has said
to be the most valuable among the listed companies. This has created more investors to buy
shares with the hope of getting good returns. On the first day of...


Anonymous
Really helped me to better understand my coursework. Super recommended.

Studypool
4.7
Trustpilot
4.5
Sitejabber
4.4

Similar Content

Related Tags