Oumm3203_vadivookarassi Mammaran

OUMM3203

FACULTY OF EDUCATION AND SOCIAL SCIENCES (EASS)

SEMESTER 4 / 2018

OUMM3203

PROFESSIONAL ETHICS

MATRICULATION NO:

910421075418001

IDENTITY CARD NO.

:

910421075418

TELEPHONE NO.

:

0174188339

E-MAIL

:

[email protected]

LEARNING CENTRE

:

Pulau Pinang Learning Centre

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OUMM3203

Table of Content

1.0

Introduction

2.0

Market Stakeholders

3.0

Non-market Stakeholders

4.0

Developing

and

maintaining

relationship

with

stakeholders

5.0

Summary

6.0

References

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OUMM3203 INTRODUCTION Ace Venture Sdn Bhd is a leading food manufacturing company that was founded in 1980 by Mr Cheah Boon Keat and Mr Llyod Chin. The company has been operating in Malaysia for the past 38 years. During the early years, Mr Chin and Mr Cheah were just focussed on manufacturing biscuits, but all that changed in the year 1998 when Mr Cheah and Mr Chin bought over a failing manufacturing company that was making snacks or what we know as junk food. Since then the company has grown bigger and acquired many other smaller food manufacturing companies that were struggling and was placed under one umbrella known as Ace Venture Sdn Bhd. Currently, a majority of the company production is centred on snack food as the profit and demand is higher with biscuits being produced in a smaller scale comparatively. As of 2018, the main company – Ace Venture Sdn Bhd has seven departments such as manufacturing, engineering, material, finance, quality control, lean supply chain and safety and healthy. The current CEO of the company is Mr Jack Chin while the COO is Mr James Cheah, both of whom were chosen by the board of directors. Under them are 3 directors for finance, materials and engineering followed by the manager of the other departments as well as supporting mangers for larger departments who report to the directors. As of 2018 there are 3000 employees in the company including the operators who work in the factory. Ace Venture Sdn Bhd has been a great company to work which is proven by their low turnover rate that has been consistent over the years. The benefits especially the medical, dental, annual leaves, yearly bonus, performance bonus and many other benefits have cemented their status as a prominent company to work in. Figure 1 shows the organization chart for the company.

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OUMM3203

Board of Directors

CEO Jack Chin

COO James Cheah

Director of Finance Erika Lee

Director of Engineering Arun Deepak

Director of Materials Ramli Ibrahim

Manager Lean Supply Chain Adrian Gomez

Manager Manufacturing Jalil Shah

Manager Planning Jessca Chuah

Manager Cost Control Elisha James

Manager Safety and Health Azizah Ismail

Manager Planning Anisha Sasi

Figure 1: Organizational Chart for Ace Venture Sdn Bhd

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OUMM3203 MARKET STAKEHOLDERS

Before we drill down the market stakeholders of Ace Venture Sdn Bhd, let’s take a look at the definition of stakeholders in general first. Stakeholders are known as people who have an interest in the company who affect or were affected by them (Reference for Business). Different stakeholders have different power over a company such as some having coercive power, while others have utilitarian or symbolic power. Market stakeholders are also known as primary stakeholders. They are defined as those that are involved or have economic transaction with the company directly through the goods and services the company provides (Harvey, 2011). These stakeholders invest in the company and in return they get benefits or financial gains from the company (Harvey, 2011). Now that we have defined the meaning, let’s list out the relevant market stakeholders of a food manufacturing company. First and foremost we have the most important market stakeholder of any company which is the customer. As Peter Drucker said the main reason why we have a company is to create customers hence why they are so important to a company (Trout, 2006). Customers are people who buy the goods or services of a company as such they are of high economic value to the company. For Ace Venture Sdn Bhd, a leading food manufacturer who is concentrating more on the production of snack food (junk food) the customers are usually children and teenagers as well as people in their early twenties (Federal Trade Comission, 2012). Over the years, with stiff competition coming from all directions, loyal customers who have grown to love the taste of Ace Venture’s food have contributed to the company’s economy greatly by buying and consuming the product. Furthermore, through the company’s frequent surveys as well promotional programme, customers’ feedback have been crucial in the products improvement as well as for newer innovative products being manufactured in Ace Venture. This indirectly has not only boosted our production variety but has also kept us on our toes to always serve our best quality products to the customer. As such the company is becoming recognized as well for its good quality. In addition customers influence the way we market our products. For example, since our 4

OUMM3203 target age group is quite big different types of advertisement has to be utilised to appeal to these age groups. Besides that, Ace Venture while keeping the cost down has managed to give out free gifts that changes over the time depending on the trends such as Shrek, Frozen related toys. This has definitely given a higher customer satisfaction and in return made the company more profitable as future purchases were made as well. Its to be noted that keeping the customers satisfied is the most important criteria for a company to survive the changing years. The success of a company depends on several reasons and employees who are market stakeholders as well, are key elements in maintaning that. Lets look at how employees affect a company’s business overally. Employees make up the core of a company, and are as important as the customers. According to a number of studies, there have been irrefutable facts that states that happier employees are better at their jobs and as a result, companies reap a better financial performance and satisfied customers (Payne, 2014). Employees are the frontline people who handle the labour part as well as admin parts of the company. While the upper managemnet looks only at the figures churned out by the employees, it it to be noted that these employees are the ones who know the hows and whys of certain informations. For example, the production manager receives a report of numbers of the production that states comparatively lower than normal numbesr with the reason being machine down; as the manager does not work on the machine directly, he is unable to answer his higher ups any further than whats in the report if questioned, while the employees, specifically technicians will break down in details on that question. Their experiences are invaluable and the company depends heavily on them for its day to day operation. Moreover, when the company takes care of its employee, the turnover becomes lower as employees are happy to stay in the company (Payne, 2014). This impacts the company’s finance as well since less money will be used for rehiring and retraining of employees and experienced employees are retained whereby they can pass on the knowledge to new employees as well. Employees are important assets for companies to progress as good, loyal employees make a better working enviroment which inevitably leads to better performance overally.

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OUMM3203 Next, the market stakeholder we should look at are the shareholders. It could be said that these people are the ones who have the most utilitarian power as they are the ones who own the company on technicality bases even though not in legal terms as they own securities that enables them to have a share in the profits earned not the company by itself (Fox & Lorsch, 2012). In addition, shareholders have a big say in how companies are run as well on its policies as they have a right to either influence in the direction they wish to or even replace the CEO if they are underperforming. Shareholders own stocks and these stocks if is sold at such a rate that the value goes down, it will greatly influence others as they might hesitate to buy the company’s stock as they might consider it a liability (Fox & Lorsch, 2012). Ace Venture is a not a small company that relies solely on shareholders in terms of finance as creditors loan out the cash needed for further expansions, but since shareholders have a big say in the direction the company goes, they can use their utilitarian power to withdraw as an investor if the company decides to go in a different direction against their wishes. While comparatively less influential than the first two market stakeholders, their support is quite important as most companies got their start-up money from investors who took a risk on them when creditors were not as willing. Last but not the least important market stakeholders are the suppliers for the raw materials of production as well machine parts, office stationaries, drinking water and so on. The role of supplier is quite an important one as for a product to be made by employees and delivered to customers by the company is not doable if the suppliers do not provide the materials needed. Hence, it is to be taken note that the raw material suppliers have a great influence on the productivity, financial as well as the integrity of the company as delivery of products on time will not be possible without them. Furthermore, the quality of raw material provided also influences the end product of a company. For example, lower quality materials produces lower quality products which in turn causes customer dissatisfaction and eventually results in financial loss for the company as customers might decide to buy similar products from the competitor. It is vital for every company to have stable, reliable and good quality assured suppliers for all products not just the ones influencing productions. Suppliers who provide services such as air conditioning maintenance for the office staff are also equally important as a 6

OUMM3203 comfortable working environment makes it easier for everyone to carry out their duty. Suppliers are also part of the CSR as companies need to ensure that materials sourced by suppliers are ethically obtained and do not comprise ethics for a lower cost material. Most companies these days have decreased the number of suppliers having prefer to maintain a long term mutually beneficial relationship with each other (Kokemuller, 2013)

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OUMM3203 NON-MARKET STAKEHOLDERS

Now that we have a good idea of what makes up market stakeholders, let’s look at nonmarket stakeholders. Non-market stakeholders are also known as secondary stakeholders and consist of those not directly influenced by the economic transaction of the company (Harvey, 2011). These stakeholders are neither affected nor do they directly affect the company. Non-market stakeholders are made up of the government, the local community, the media, business support group, social activists or NGOs. For Ace Venture Sdn Bhd the more relevant stakeholders are the government, local community, the media and social activists or NGOs whose concern are on the company products’ and such. As a non-market stakeholder, some form of power is held by the government as the compliance of the company with the laws, policies and regulations are the ones ensuring the continued functioning of the company. Even though the government is a non-market stakeholder, it has the rights to know whether a company is following the safety and health policies, environmental policies or even about the licensing conditions as well as about the workers welfare on whether their welfare is being taken care of (Van Beek, 2015). However, as government only requires the general static information with yearly, monthly, or even quarterly reports sent to the relevant governmental departments, this should not be a major issue or cause for alarm if all the regulations set by the government are obeyed. For example DOSH requires that all companies to submit an accident report for any accident that occurs on company grounds within a stipulated timeframe (Department of Occupational, Safety and Health, 2004). DOSH also requires that companies keep their maintenance record up to date as well as the company grounds safe for all employees. With these kinds of laws and regulations the government as a stakeholder ensures that the company fulfills not only it’s obligation towards the employees but also the local community and environment sustainability. As for the local community, their concern as stakeholders would be the impact of the company’s environmental policies as well as the safety and health on their community 8

OUMM3203 people when working in the factory. For example, the spouse of one of the residents might be a worker in the company. Her experience and knowledge on the company affects the way the whole family and maybe the whole community looks at the company. A positive review or experience will greatly enhance the way a company is viewed by local communities. Furthermore, the community is affected by how the company manages its waste water and such. If the local communities are not happy with the way it is being managed, for instance if waste water is polluting their local river, the people in the community could choose to complain or even sue the company for endangering their lives. As such the company has to stay on the good side of the local community by maintaining an open relationship with them. Pursuing this further, we have the media as a non-market stakeholder as well. In the age of technology it could be said that the power of media is quite tremendous especially if we look at how social media has influenced the outcomes of a number of things such as when Nestle group of company came under fire after someone took to social media on their so called false advertising. While the authenticity of the allegation was questionable, it sparked a global controversy with many bashing the company in social media and indirectly causing the company to lose sales as people were influenced by the statements. Media can also be positive to a company if it’s utilized correctly such as companies paying for adverts or even paid reviews for newly released items to measure the success rate of their product as well as to get words out for their products. Media play a major role in the financial success of a company though it is an indirect way; hence companies should always be aware, transparent and keep accountability of them, before the media does it for them. Social activists or NGOs have always been a concern for Ace Venture Sdn Bhd as the growing media power and studies that put such a negative view on sugar based products has made this particular stakeholder a hard to please party. On the bright side, due to this the company will strive to improve itself and its product so that the health impact could be reduced. NGO’s have been the key for many companies to be more accountable and civic conscious as they strive to save the planet and humankind through their work. 9

OUMM3203 Through NGOs companies could work on how to give back to the community by maybe organizing health programs together. This affects the company’s standing among the society and will put them in a better light.

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OUMM3203 DEVELOPING AND MAINTAINING RELATIONSHIPS WITH STAKEHOLDERS

The company is accountable to its stakeholders and has a responsibility in managing them efficiently and effectively. The responsibilities that the company has towards its stakeholders are also known as CSR – corporate social responsibility which includes economic, legal, ethical as well as philanthropic responsibilities (Carrol, 1991). Success follows automatically when the company learns to keep its stakeholders happy regardless of whether they are market or non-market shareholders (Gcoyi, 2018). The first step towards that is to actively build strong relationships from the beginning and also involve them in the relevant processes (Gcoyi, 2018). True to the statement, there is no better way for any company to gain the trust and respect of its stakeholders other than building a strong foundation together as a whole. There are several ways to do so, for instance a company could organize a yearly Family Day for all the employees, their families as well as the shareholders. The event could bring together several of the companies stakeholders and build relationships among them. When events like this are organised it keeps the employees motivated and happy to be working in a company that values its workers and as we said happy employees influence productivity which in return makes the shareholders happy as their financial returns are high. In addition, the local community which consists of family members of the employees will get a positive outlook on the company as well.

It is important as well for a company be more empathetic towards its stakeholders (Madsen, 2011). A company should always put themselves in the stakeholders’ shoes as this will enable them to understand their point of view as well as their worries and concerns. A prime example of this the video made by LUSH a leading cosmetic brand that market itself as an all-natural product company. The video addressed the concerns of 11

OUMM3203 the customers (stakeholders) on the authenticity of the claims and how safe was the product. It also empowered the employees and made them feel important as the video featured real employees making the products themselves. Another way for a company to develop and maintain its relationship with its stakeholder is always ensuring that they are acting ethically towards all their stakeholders. This includes fair treatment of all employees, transparency of product contents with customers, making environmental care an essential part of the ways of working in companies, being financial transparent with the shareholders as well as with the media. Ethics is the cornerstone of all companies and should be upholded at all times notwithstanding the situation. This could be seen when Mattel, a leading toy company recalled its products regardless of the consequences as the product was harmful to children. A news conference was held and the issue was notified to the public and compensations were given as well to the customers affected. The company suffered a setback but were ethical in their transparency and accountability.

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OUMM3203 SUMMARY In conclusion, stakeholders play an important role in a company’s success. No matter if it is a market stakeholder who has direct interest and is engaged in economic transaction with the company or if it’s a non-market stakeholder who is affected or affect the company they are both equally important. Market stakeholder such as employees, shareholders, customers and suppliers influence the way the company moves forward economically as well as ethically as all these stakeholders need to be satisfied for benefits to be reaped by the company. It is equally important as well to keep non-market stakeholders such as the government, media, local community as well as NGOs in the loop and happy as their word of mouth and the company’s response towards them is essential in maintaining a good standing in the society. While its not easy to manage the relationships of all the stakeholders, there are several ways the company could develop it such as building strong relationships from the start, being empathetic towards its stakeholders concerns and also by always making ethics as part of their ways of working.

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OUMM3203 REFERENCE Carrol, A. (1991). The Pyramid of Corporate Social Responsibility: Towards the moral management of organizing stakeholders. Business Horizons, 39-48. Department of Occupational, Safety and Health. (2004). Guidelines on Safety and Health (Notification of Accident,Dangerous Occurrence, Occupational Poisoning and Occupational Diseases) Regulations 2004. Abgerufen am 22. July 2018 von Department of Occupational, Safety and Health: http://ejkkp7.dosh.gov.my/eJKKP7/Bantuan/SafetyPamplet Federal Trade Comission. (2012). A Review of Food Marketing to. United States: Federal Trade Comission. Fox, J., & Lorsch, J. (July 2012). What Good are Shareholders: Harvard Business Review. Abgerufen am 22. July 2018 von Harvard Business Review: https://hbr.org/2012/07/what-good-are-shareholders Gcoyi, A. (22. July 2018). 6 Ways to Improve Your Stakeholders Relationship: SLA. Abgerufen am 22. July 2018 von She.Leads.Africa (SLA): https://sheleadsafrica.org/improve-stakeholder-relationships/ Harvey, V. (11. September 2011). Business Strategy Competition: Knoji. Abgerufen am 22. July 2018 von Knoji: https://business-strategy-competition.knoji.com/marketand-nonmarket-stakeholders/ Kokemuller, N. (2013). What Is the Role of the Supplier Relationship in an Organization?: Chron. Abgerufen am 22. July 2018 von Chron Small Business: https://smallbusiness.chron.com/role-supplier-relationship-organization16013.html Madsen, S. (3. April 2011). 6 principles for building trusting and lasting relationships with your stakeholders: Susanne Madsen. Abgerufen am 22. July 2018 von Susanne Madsen - Developing Project Leaders: https://www.susannemadsen.co.uk/blog/6-principles-for-building-trusting-andlasting-relationships-with-your-stakeholders Payne, G. (14. February 2014). The importance of staff to an organization: Wyre Council. Abgerufen am 22. July 2018 von Wyre Council: http://www.wyre.gov.uk/blog/Garry/post/71/the-importance-of-staff-to-anorganisation/comment

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OUMM3203 Reference for Business. (kein Datum). Encyclopedia: Stakeholder Theory: Reference for Business. Abgerufen am 22. July 2018 von Reference for Business: http://www.referenceforbusiness.com/encyclopedia/Sel-Str/StakeholderTheory.html Trout, J. (3. July 2006). Peter Drucker on Marketing: Forbes. Abgerufen am 22. July 2018 von Forbes: https://www.forbes.com/2006/06/30/jack-trout-on-marketingcx_jt_0703drucker.html#18264bd4555c Van Beek, D. (14. February 2015). The most important stakeholders of Business Analytics: Passioned Group. Abgerufen am 22. July 2018 von Passioned Group: https://www.passionned.com/the-most-important-stakeholders-of-businessanalytics/

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