Importance of Corporate Responsibility
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In the present environment, organisations are required to meet their responsibilities regarding legal, economical and ethical consideration that support them to sustain in the industry. Corporate responsibility is the key approach or practice which mainly involves activities that support the community and their shareholders (Walker-Said and Kelly, 2015). For the present ethical audit report, the selected organisation is Sport Direct Company which is the leading British retailer that deals in offering products related with sport goods. Along with this, report will focuses on understanding the current preposition of corporate governance within the organisation. While, it also critically appraise the system and processes of the organisation so that they can manage the business ethics.
Sport Direct Company is one of the leading UK retailer that deals in offering range of products related with sports, fitness, fashion etc. the cited firm mainly concentrate on the corporate responsibility practices through focusing on areas like people, health and safety, environment, customers and community (Kamal and El-Masry, 2016). Corporate governance is an effective mechanism as well as system of practices through which company is been directed and controlled by their directors. It also includes levelling the interest of different stakeholders so that they can satisfy their requirement. In order to present corporate responsibility, UK government focuses on framing the governance structure with the code and regulation whose key aim is to facilitate the activities related with effective management within the organisation so that they can easily attain the long terms success (Hillenbrand, Money and Ghobadian, 2013). UK government emphasizes on the key principles of code that need to be implied within the organisation so that staff may engage in the performance of ethical activities.
The foremost principle within the corporate governance includes leadership i.e. company must be directed by effective board that have their clear section of their responsibilities that need to be followed (Denis, 2016). So, that company may easily attain the long term success. According with this principle of leadership, the current approach to corporate governance within Sport Direct Company ensures effective board that consists of chairman and different executive directors Whose key responsibility is to ensure delegation of leadership to the management so that they can engage in operating the daily activities which support in leading the group (Claessens and Yurtoglu, 2013).
Another code that is framed by UK corporate governance include effectiveness among the board of company. So that they may engage in balancing their skills and knowledge that support them delegating effective duties and responsibilities (Bushee, Carter and Gerakos, 2013). It has been critically evaluated that to ensure effectiveness within the Sport Direct Company must establish the audit committee that engage in reviewing ethical standard has been followed in the company or not. Along with this, it also enable their effectiveness through engaging in the external audit process.
In addition to this, another principle within the UK governance code include accountability which says that the board must focus on establishing the transparent and formal arrangements through which they can implement the provision related with corporate reporting as well as risk management so that they may easily achieve the strategic objectives (Larcker and Tayan, 2015). In order to meet the principle of accountability within the Sport Direct Company, board emphasizes on implementing the financial reporting process that prepare the financial account so that it may meet the interest of the stakeholders.
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Another section of the UK governance code include engaging in designing proper remuneration system by the executive directors so that they can easily promote the success of company in the long run (Weiss, 2014). Therefore, government has also stated that performance related elements and components must be kept transparent so that other stakeholders may not get de-motivated. Therefore, to meet this code related with the governance, executive directors within the organisation must engage in constructing provocative activities related with management of performance as well as it also engages in setting the remuneration levels so that they can easily satisfy their stakeholders (Quarshie, Salmi and Leuschner, 2016). In order to ensure providing proper remuneration to staff and employees the board within the company is assisted with principle so that it include establishing remuneration committee that conduct meetings with members so that effective decision regarding the remuneration is been made (EVERYTHING IS CHANGING, 2017).
The last principle within the UK governance code includes engaging in proper relationship with all their shareholders so that they can fulfil their interests (Hwang and Chung, 2016). This principle within the corporate governance include that board must have effective communication with their shareholders regarding the understanding of goals and objectives. It has been required that to ensure proper relationship with shareholders, they must conduct the meeting with their shareholders and investors which support in active participation. It has been assessed that the current corporate governance within the Sport Direct Company has recognized the significance of communication among their different shareholders (Paulraj, Chen and Blome, 2015). Therefore, it may be done through providing annual reports to all of their investors and shareholders.
Therefore, the group within Sport Direct Company has been formulated that is mainly committed with the high standard of corporate governance within the premises so that activities may be effectively directed and controlled (Walker-Said and Kelly, 2015). The key responsibility of the group within the organization is that all the members and systems incorporate within the board so that they may easily engage in taking effective decision. It is an ongoing procedure that mainly engages in the activities related with determining, measuring as well as monitoring of the certain risks. Thus, company complies with the different corporate governance codes that are framed by the UK government.
With the help of conducting interview from the existing employees within the Sport Direct Company it outcome in determining the level of ethical practices within the organization. The certain interview question include-
Business ethics refers to ethics principles and morality for doing business. It practical on different aspect within the business that conduct effective action for individual and organisation (Kamal and El-Masry, 2016). These ethics guide the company what is right and what is wrong.
In order to successfully engage in meeting, the corporate responsibility organisation is required to ensure proper management of business ethics that basically considers the view point related with the activities. It has been critically appraised that there are different systems and processes within the organisation that need to ensure ethical activities so that they can easily fulfil the interest of the stakeholder (Hillenbrand, Money and Ghobadian, 2013). The key process within the Sport Direct Company includes procurement of material and sport products that are required to be delivered to different customers. Therefore, this process focuses on ethical practices as the company procure the sport merchandise with the manufacturer within the community that uphold or implement the ethical practices related with delivering the quality sport products to the company. Along with this it also eliminate the defective product from the packaging process (Denis, 2016). In addition to this, it has been critically evaluated that organisation process has the key responsibility in managing their activities in such a manner that it may not impact the environment where company operates their operation. Thus, for managing the ethics while procuring the material company must engage in using effective transportation system that lessly pollute the environment and reduces the rate of carbon emission. This effective practice would protect the environment and also ensure proper management of transportation (Claessens and Yurtoglu, 2013).
On the contrary to this, it has been critically evaluated that organisation process does not engage in effective trading practices as they offer the product to their customers at different prices. Thus, these trading practices within the organisation are considered as an unethical practice that affects the performance of the organisation (Bushee, Carter and Gerakos, 2013).
Along with this, for selling the range of sports product in the market company also engages in the online activities as with the help of this they can easily distribute and supply products to the customers (Larcker and Tayan, 2015). In order to manage the online activities of Sport Direct Company, management need to ensure activities that support the ethics within the business. For instance, ethics in online distributing of sport product ensure focuses on the security and privacy of the customer’s personal information to ensure satisfaction and build trust among them regarding the company’s products. On the other hand, Larcker and Tayan (2015) has stated that company do not engage in implementing different layer while making the online purchasing therefore, it may sometime results in conducting the wrong and unethical practices that impact the perception of customer related with online shopping. In addition to this, it has been stated that increasing growth of online shopping among the individual faces certain ethical issues related with their privacy and security (Ethical Issues in E-Commerce on the Basis of Online Retailing, 2011). It has been also measured that with the increasing online activities and communication, it increases the level of their services along with this it also reduces the overall cost associated with the printing that results in addressing their income in a proper manner. Therefore, for the management of business ethics in this process they must engage in the activities which results in protecting and securing the information of the customers.
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Another effective system within the Sport Direct Company include that the company should have effective supply chain management as they are committed to engage in effective business practices. Therefore, the cited sport retailer organization should impose effective code of conduct practices that insists all of their suppliers to adhere that outcome in ethical practices. From the view point of Claessens and Yurtoglu (2013) implementing code of conduct or rules within the company helps the staff to be treated equally and fairly as well as it also eliminates the illegal activities related with producing and supplying the sports products to the customers (Claessens and Yurtoglu, 2013). Along with this, the cited retailer company also focuses on maintaining relations with their suppliers as they engage in adhering the Sport Direct's standards through which the company ensure that goods and merchandise meet the standard of quality. In addition to this, Hwang and Chung (2016) has also stated that for the management of business ethics in the supply chain management system company conduct the tests on fabric and material for the products (Hwang and Chung, 2016).
Along with this, the organisation system also includes their centralised commercial as well as different supporting function through which they can easily sell their sports products among different customers (Paulraj, Chen and Blome, 2015). Therefore, it supports the company in engaging in effective operational activities related with warehousing of sport products so that it can fulfil the requirement of the different customers. In addition to this, the established committee within the Sport Direct Company also engage in ethical activities through providing opportunities related with inspiring, motivating and empowering the staff within the company so that they can easily assists in accomplishing the goals and objectives. The company also ensure proper commitment among the staff through engaging in constant developing and rewarding them within the premises (Walker-Said and Kelly, 2015). Therefore, all these ethical practices related with employment assist in enhancing the level of commitment towards the organisation which directly helps in achieving desirable growth. With the help of all these activities, company can easily engage in management of their ethical activities that support in executing their activites and duties towards the organisation as well as environment in which they are operating. Along with this, it would also positively impact in meeting their responsibilities related with the social and economical that directly enhances their performance and image in the environment (Paulraj, Chen and Blome, 2015).
From the above report it has been concluded that company need to focus on accomplishing the social responsibilities that assists them to sustain in the community. Along with this, it also helps Sport Direct Company to engage in the ethical practices that enhances their image within the industry. Along with this, the report also measures the current corporate governance structure that organization follows to engage in the ethical practices.
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