LB5231 Corporate Responsibility and Governance Essay Sample

Sample LB5231 Corporate Responsibility and Governance Essay

DESCRIPTION

This essay is designed so that you can explore ethics in relation to how the culture of a corporate environment impacts directly on governance and responsibility. Ethical theories help us to understand our view of the world and help us understand how business decisions made in the context of ethical/moral dilemmas have an impact on a number of different stakeholders. It is an important part of this essay for you to show that you understand how widespread the effect of a decision can be.

Required:

You are required to write a 1500-word essay in response to the requirements below, taking into consideration the specific points listed:

You are required to research a recent (in the past 2 years) corporate collapse/corporate failure/corporate scandal of your choice. The case you choose must then be critically analysed by drawing on the corporate governance theories you have learnt. You need to demonstrate how the theory/theories you have chosen are best suited to explaining the selected corporate collapse/failure or scandal. Include proper citations in the text and references at the end of your essay.

Solution

Sustainability within a business performance is delivered appropriately based on the implicated corporate governance and ethical approaches. At the same time, labour exploitation refers to practices that affect the brand image and question social responsibilities. That is why this essay aims to analyse the failure and exploitation probe of Dior and Armani.

The corporate ethical culture is the shared beliefs regarding the ethics of the members of an organisation. However, corporate ethical culture is crucial as an important concept for the individuals of an organisation relying on management, business, and accounting (Tricker, 2019). This ethical culture in an organisation for The Assignment helpline enhances employee satisfaction, affective commitment, and the willingness to recommend the organisation to others (Lu et al. 2021). An ethical culture promotes transparency and allows employees to engage in unethical behaviour without fear of retaliation. This type of openness culture is essential for effective governance. Enforcing clear ethical guidelines is useful for reinforcing accountability and ensuring all employees understand their responsibilities. This positively impacts the governance practices, which results in policies that are probably in the best interest of all the stakeholders. In contrast, if ethical and cultural values are not prioritised, they would lead to a decrease in brand value and brand image (Babri et al. 2021). This directly influenced the ability of the company to manage social responsibility, which was seen in Dior, and neglected the friar treatment which needed to be provided to their suppliers.

Two luxury brands have faced the most recent corporate collapse, including Dior and Armani, for abusing labour in Italy, spotlighting the abuse in the high-end fashion industry. Apart from Armani, Dior has also faced criticism for giving the supplies at a low price of €53 and €93, respectively, including the handbags, which are being presented or resold at a quite high price. This particular massive markup not only brought up the issues in the cost of production as well as the selling but also highlighted the ethical issues regarding their supply chain practices (BOF, 2024). After going through thorough investigations, it has been revealed that there was widespread abuse in the supply chain, and people were not given enough wages for tier work. A Dior bag, for instance, which was just €53 for purchase, was sold for €2600, which highlighted an extravagant expense of around 4800%. Additionally, the handbags or Armani were sold with extravagant expenses of about 1800%. These figures stated a harp disbalance in the distribution of the value where the suppliers and even the workers got a small fraction of the original retail price. Even this exploitation of labour is not something new in this kind of industry because a similar issue occurred involving Prada in the year 2019, which stated that the workers in China were not paid enough wages and were paid only $2 per hour for crafting luxury items. They were sold for thousands of dollars (Alex, 2024). This vividly elaborates on this pattern of unethical labour practices in this luxury sector. The labour practices have certainly affected the brand value and the reputation of Dior and Armani since there were high demands from the consumers in terms of transparency and meeting the ethical standards of the production process. Since consumers these days are so prone to get attracted to social justice concerns, even the threats and the backlash received by the brand might result in a decrease in sales. A similar case happened to Burberry in 2018, which resulted in decreased sales due to their unsustainable practices. The key strength of these luxury brands is their capability to bring out huge profit levels. Their pricing strategy, which has been crafted on branding, has enabled them to achieve significant financial success (Prakash, 2024). Apart from this, the Made in Italy label felt justified for many consumers about its huge retail prices. Additionally, the major challenge that the brands are facing is because of their unethical practices. The labour exploitation issue and the increase in the price of the product have gained a lot of criticism, resulting in a decline in brand value as well as the loss of consumer trust.

Stewardship theory refers to proper alignment between management and shareholders within a firm, which develops based on a lack of conflicted interests (Gwala & Mashau, 2023). Over time, this theoretical perception has evolved, including aspects of psychology and sociology. Two key components of the theory indicate the role of stewards and shareholders, where senior executives or top management act as stewards to empower trust. According to Stewardship theoretical perception, managers of a firm tend to make most of the decisions for the benefit of the firm and its profitable stances (Schillemans & Bjurstrøm, 2020). That is why it is quite common for executives and managers of businesses to prioritise self-serving and certain sets of collectivist options. Therefore, this identification clarifies that stewards get motivated only after assessing the corporate benefits and therefore, consider the right decisions based only on the interests of the firm. The ethical dilemmas start taking place due to this mindset, as it leads overall management to oversee the role, responsibility and well-being of key shareholders. The major allegation that has fallen upon the business approaches of Dior and Armani is regarding the tendency to overlook the supply chain. This allegation has been accurately proven based on a report that stated Dior's 53 euros payment to handbag suppliers and Armani's 93 euros payment (Alex, 2024). Afterwards, these companies were reported to sell handbags at the prices of 2,600 euros and 1,800 euros, respectively. This report has caused criticism as the benefits that the suppliers and manufacturers deserve to receive are not being offered rather, the suppliers are being exploited drastically. Even more, it has been identified that the costs exclude the expenses regarding materials such as design, marketing and distribution of raw materials such as leather. Furthermore, it is important to understand the stakeholders of Dior and Armani in order to understand the intensity of the situation. As for that, the situation and the report have confirmed that the stakeholders should be considered manufacturers and suppliers, especially the small manufacturers. In general cases, these manufacturers are seen to generate 50% and 55% of global output regarding the production of leather products and luxury clothing (Alex, 2024). Furthermore, it has also been identified that this exploitation has resulted in judicial steps to get involved and initiate court administration. As a result, the legal reports have showcased that exploitation has caused damage to migrant workers. The sole focus on profitability has blinded Dior and Armani from offering proper treatment to Chinese-owned firms and facilitating the positions of migrant workers.

Stakeholder theory adequately defines any individual or organisation that has even the slightest interest in a specific business's activities and decisions as a stakeholder (Garg, 2021). That is why, in many cases, even the competitors of an organisation get recognition as stakeholders due to the concern and market awareness of the organisation. More importantly, stakeholders indicate the component that has to contribute something to the business, whether motivation for growth and improvement (competitors) or managing business fluency (suppliers, employed, manufacturers and others). Ethical aspects for business, especially for the stakeholders, refer to the necessity regarding responsibility (Marantika et al. 2020). Often, responsibility within business ethics is highlighted based on an integrated level of finance. As for the other scenarios, the involvement of stakeholders contributes components for improvement, even the attainment of required sustainability. In this essay, as the case of Dior and Armani has been considered, the ethical dilemma has highlighted both the cases, finance and responsibility of manufacturers. At the same time, ethical aspects for stakeholders have been identified as strategic empowerment to encourage the behaviours of the stakeholders (Bridoux & Vishwanathan, 2020). A dilemma happens in this aspect, as firms fail to understand the necessities and expectations of stakeholders and address those accordingly. As for Dior and Armani, failure to prioritise the safety of the manufacturers has been identified as the most effective ethical dilemma. Furthermore, it also has been seen that legal interventions in Dior and Armani are being used for intruding on organisational crime, overlooking necessities and others (Alex, 2024). This has been a resource for these companies to foster the achievement of required profitability rather than resolving potential issues. On the other hand, as the safety aspect has been mentioned earlier, in these luxury brands, management has taken an unethical step to remove the safety devices for better productivity. Even more, electric consumption rates in these companies have proven that employees have been working even after 9 pm on the weekends as well.

Due to this aspect, it has been understood that stakeholder theory has effectively highlighted the gaps and failures of Dior and Armani. The abundance of safety and health of the employees and manufacturers has been showcased, and the wellness of one of the key internal stakeholders has been overseen. At the same time, safety exploitation has confirmed failure regarding one of the key external stakeholders, suppliers.

The corporate collapse of luxury brands, including Dior and Armani, spotlighted the importance of ethical corporate culture and governance in the sustainability of the business. The labour exploration practices, including paying lesser wages and selling at a huge price, exposed the lack of ethical cultures. Moreover, the theory of stewardship and stakeholder category has been implemented to bring out the insights of this study, which implied the importance of aligning management's decisions with the welfare of the stakeholders while making sure of accountability.

Reference List

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Sample LB5231 Corporate Responsibility and Governance Essay

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