FINAL EXAMINATION

Faculty of Business SET A

Course :
MPHR7113
Corporate Governance and Social Responsibility

Date :

Time :

Duration :

Module Lecturer : Dr Baharu Kemat

Total marks : 100 marks (worth 40%)

Instructions to candidates:

1. Write your name and student number on the Final Exam Paper AND Answer Booklet.

2. You must answer ALL questions in Section A.

3. Do not remove any part of the examination paper.

Materials allowed for this examination:

1. NONE

DO NOT REMOVE ANY PART OF THIS EXAMINATION PAPER FROM THE

EXAMINATION ROOM

Student ID : ___________________________________________________

NIRC/Passport No : ___________________________________________________

Program : ___________________________________________________

Lecturer : ___________________________________________________

SECTION A:
Instruction: Answer ALL of the following questions.
Each question consists of 20 marks.

1. We live in a complex and sophisticated world where competitiveness and

sustainability have become critical issues and are a priority among the agendas of
private and public organizations. How the organization today’s address these issues?
Discuss.
(20 marks)

2. Business ethics is a study of the implication of our moral standards for business
activities. Some school of thoughts have said that ethics has no place in business?
Discuss.
(20 marks)

3. (a) Explain Five Stages of Environmental Corporate Commitment.

(10 marks)

(b) Discuss the environmental issues that are faced by organizations.

(10 marks)

4. In your judgment, should the major decisions on pollution and resource depletion,
especially energy policy be made by government experts? Provide moral arguments
in support of your judgment.
(20 marks)

5. (a) Explain who are business stakeholders from the production and managerial views?

(10 marks)

(b) Discuss what opportunities and challenges do stakeholders encounter?

(10 marks)

“End of Questions”
Good Luck!

Question 1:

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Answer: Competition is already global, so today's organizations step out on the market with
global strategies, and it does not apply only on the foreign but also on domestic markets.
Permanent changes are an integral part of the success and competitiveness, because those who
do not apply innovation become not only less competitive, but usually disappear from the
market. Timely response to changes is the basis for successful management and training
organizations for the successful functioning of the market. Managers have been learning for
almost two decades how to behave in accordance with the new rules. Modern organizations
respond rapidly to competitive and market changes. Therefore, modern organizations redefine
the postulates of their operation and management. To achieve the best practice, they
continually determine benchmarks, and in order to achieve efficiency, they aggressively
"purchase" from other sources. In addition, in order to maintain the advantage over
competitors, organizations take account of several core proficiencies. The organization
management has proactively modified and synchronize subsystems of the organization that
makes it strong. In order for an organization to penetrate new markets and to be competitive,
they constantly promote their work, constantly introduce and enable new models for success,
and continually introduce innovations. Positioning once stood as the core of the strategy.
Today, it represents something too static for today's dynamic markets and technologies that are
constantly changing. Also, it is currently considered that competitors can quickly copy any
market position, hence competitive advantage is at best temporary. However, by applying the
appropriate strategies of competitive advantage, organizations get involved in the fight for a
better position and increased market share. To establish and maintain competitiveness,
organizations are forced to continuously improve the knowledge of employees and adopt
modern methods and concepts of management and marketing. Some organizations are capable
of employing their production factors better than others on the account of eliminating
unnecessary work, usage of modern technology and better motivation of employees.
Organisations which use their offers to exceed the needs and desires of the target consumer
groups, have access to innovation, include new technologies and new methods of operation
achieve competitive advantage. It`s necessary to be different to become better. Innovations can
include new product designs or new market access. Some innovations create competitive
advantage in such way that they discover an entirely new market opportunity by taking into
consideration the needs of any market segment which had been neglected by other
organizations. When competitors react slowly, these innovations provide competitive
advantage. When using some innovations to achieve competitive advantage, modern

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organizations sustain themself only through constant improvements, that is, to produce
improved and more functional products. Modern organization which wants to achieve a
competitive advantage and maintain consumer loyalty to a high level is obligated to use a
systematic approach to management. That means it is necessary to coordinate the functioning
of the organization with the needs and desires of consumers of their intended products /
services, all aimed at achieving the set goals.
In order to be able to implement sustainability guidelines, a firm lets its managers to innovate
their perception regarding the efficiency of its products, services, and technologies employed
in its processes. Because of that, organizations have become increasingly more interested in
applying sustainability to its day-to-day and disclosing its actions to their stakeholders through
sustainability reports. Either through market needs or due to specific legislation, sustainability
reports have become an important tool to communicate the sustainable activities implemented
by organizations. Several developed countries utilize a standard system to analyse the
information regarding sustainability, so as to ensure that the decision-makers have a solid
grounding in their strategic planning. Sustainable practices vary depending on the firm’s size,
level of business maturity, strategic planning, and organizational structure, and this variation
presents a challenge when implementing, analysing, and identifying possible improvements
for sustainable practices. Therefore, firms plan and operationalize their activities in the short,
medium, and long-term based on operation, based on innovation and tools to improve and
implant the sustainability on their business. Environmental and social matters are also being
taken into account in the stakeholders’ analysis researchers, investors, customers,
governments, and civil society in addition to economic performance. Among the several ways
to document those practices, sustainability reports have grown in popularity

Question 2

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Answer: Ethics is the study of morality that involves scrutinizing the concepts of right and
wrong.  In the same manner business ethics is depicted as the process of rationally evaluating
our moral standards and applying them to business situations. However, there are a number of
people who deny the idea of applying moral standards to business actions. Various arguments
arise that caring about moral standards or following under the ethical criteria does not build
profits. To pursue profits, a firm should only produce what the society needs and it should do
it in an effective way.  The second disagreement that occurs is that managers are only liable to
serve the company. They should only be loyal to the company and work for its benefits
exclusive of the ethical dilemmas.  Furthermore, it is argued that only law is necessary for the
corporations to run, ethics should not be taken into account.
On the contrary majority of people including myself believe that “Business Ethics” is highly
vital for an organization to pursue profits plus flourish in the industry and in the eyes of
general public. Society is healthy because of the moral standards held by the individuals. And
it is the individuals who altogether construct a company. Imagine of a world where there is no
notion of ethical values, no moral standards and no concept of right and wrong, that world
would be a darkest place where there is no trust. Similarly, business without ethics means no
confidence no faith no humanity, everything would seem to be carried out on legal contracts.
If looked upon research, it clearly shows that it is the ethics that enhance the pursuit of profits.
Common people like us care about principles and beliefs and customers become satisfied
when corporations care about feelings and morality. Companies which carry out corporate
social responsibility (CSR) activities are an example of success due to business
ethics.  Companies like General Electronics and Harley Davidson have made it and they are
listed as World’s Most Ethical Companies along with a list full of other names. This clearly
shows being principled won’t let you down.  And there are companies like Chevron, the oil
and guess company which is accused of violating human rights. Philip Morris, cigarette
manufacturers is considered as the 5th most unethical company for the reason of exploiting
and targeting children.
It is crystal clear that Ethics has an important place in business and is proved by the research.
Companies which take into account the moral standards of society are highly appreciated,
become successful and also achieve higher profit margins than those that do not follow
business ethics.

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Question 3a
Answer:
Viewing compliance as opportunity.
The stick is sometimes more compelling than the carrot, but companies should not view
sustainability in this light. Instead, develop the internal ability to anticipate and help shape
regulations. This requires working with other companies, including rivals, to develop industry
standards.
Making value chains sustainable.
By learning how to address carbon management and life-cycle assessments, and designing
operations to use less energy and water, companies can discover sustainable sources of raw
materials, components and energy. By addressing waste throughout the supply chain, a
company will reduce its costs.
Designing sustainable products and services.
Companies should conduct a full product review to determine which ones are most harmful to
the environment, then work to improve the product or phase it out. Effectively doing so helps
a company be seen by the public as a true “green” company, and not one that is engaged in
greenwashing. Developing compact and eco-friendly packaging is a good first step, but
companies also should consider the notion of biomimicry in product design.
Developing new business models.
By adopting more sustainable practices internally, a company begins to better understand what
today’s eco-minded consumer wants to purchase. Opportunities include developing new
delivery methods or technologies to save costs and creating monetization models that relate
more to services than to products. Companies also are urged to develop business models that
combine digital and physical infrastructures.
Creating next-practice platforms.
By looking beyond its current core competencies with an eye toward sustainability, a company
can begin to redefine itself as a next-generation operation that may even involve expansion
into new and different industries. One of the key drivers in this stage is creating business
platforms that enable customers, suppliers and partners to manage energy in radically
improved ways. Another opportunity is to develop products that require less or no water, as
compared to similar products that are water-intensive.

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Question 3b
Answer: Our planet is plagued by environmental issues that are depleting our natural resources
and putting an enormous strain on our livelihoods. If left unchecked, many of these issues will
impact businesses directly and indirectly. In many instances, they are already doing so. Some
of the primary environmental issues that are affecting businesses today include pollution,
waste disposal, water quality, and water supply issues, and climate change.
Pollution is one of the world’s biggest environmental issues. The business impact due to
pollution stretches far and wide, with just one example pointing to how pollution affects the
health of people which then impacts medical costs and loss of productivity.
Climate change is a global issue with serious implications including environmental, social,
economic, and political. Factors like coastal flooding can have a major impact on businesses,
leading to operational disruption and losses for organizations. Climate change can also create a
higher demand for energy as the temperatures get warmer and there is a higher demand for air
conditioning use. This means higher costs overall to businesses.
Environmental issues that we face today make it clear that solving as many of these complex
issues as we can best serve all sectors. It will also require the cooperation of all sectors.
Environmental issues affect every individual, community, organization, and country.
The environmental factors that are affecting business and will continue to affect production
and the economy. Such issues as major storms, loss of resources, inflation, and scarcity of
food and water – are creating serious detriments. However, solving these complex issues
requires the cooperation of individual sectors. It is apparent that the environmental crisis we
are facing calls on all business leaders to consider the environmental impact that their
companies have and also calls on business leaders to take action to ensure that they meet all
compliance needs and regulations.

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Question 4
Answer: Environmental problems are products of complex, often nonlinear, interactions
between people and the environment, and our understanding of them is usually incomplete and
clouded by profound uncertainties. These problems cannot be managed only in terms of cause
and effect relationships, as they involve multiple actors and vary over time and space, often
with very long time-lags between human action and environmental effects. Human health and
well-being, for example, are closely linked to the integrity of local, regional, and global
ecosystems, the same ecosystems that in a vicious circle are at risk due to pollution and
resource depletion. In part because of their complexity, such problems are often not well
communicated and are frequently misunderstood by the public, the press and politicians.
Because of the interdependencies between humans and the environment, most environmental
challenges require fundamental changes in attitudes and behaviours from governments,
industry and individual citizens. While most people think sustainability is an important
problem, they are often unresponsive, seem slow to act, do not always understand and often
deny environmental imperatives, creating substantial social and psychological barriers.
Governments use policies, legislation, regulations and taxation to influence people’s behaviour
and address environmental challenge. Decision makers aspire to evidence-based policy, and
this creates imperatives to systematise knowledge transfer and application. Evidence‐based
decision‐making has become a byword for good governance. Major decisions on pollution and
resource depletion be made by everyone. over the last three decades the governments has
promoted evidence-based policy to replace ideologically driven policy, but its development
has highlighted the challenges of dealing with environmental uncertainty and the need for
transparency in the process. The effects of environmental uncertainty combined with issues of
trust in government and science have impacted public perception and willingness to take
environmental action.
It is increasingly difficult for the public to understand or verify the evidence behind public
policies, how it was generated, derived, or synthesized. These trends have further exacerbated
public concerns about the role of science and amplified social inertia and apathy towards
environmental policies. Considering that most sustainability policies depend on public
acceptance and support through action, their effectiveness can potentially be diminished when
public perception does not translate into pro-environmental behaviour. Hence, this is everyone
has a moral obligation to prevent pollution and everyone is affected in one way or another by
pollution.

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Question 5a
Answer:
Production View:
Customers
Customers purchase a product or service of the company. Sales, marketing, public relations
and the overall strategy cantered around the customer, and their interest in these strategies
determine whether they buy a product. Customers buying products greatly affect the success
of an organization, and customers can be given access to new products if the company has the
profit to expand their product line. Overall, the customer is vital to the success of a company,
and their satisfaction can directly influence whether internal stakeholders are also satisfied.
Suppliers as Stakeholders
Suppliers provide the raw materials or components that a company uses to create its products.
In some cases, suppliers provide finished products. A business may depend on one particular
supplier that produces a superior or rare good, in which case the supplier has heightened
importance. A small business with a narrow niche may be particularly likely to rely on the
specialized materials of one supplier. This also increases the risk to the company and other
stakeholders. If the business can't purchase supplies from this source, it may need to
dramatically adapt its offerings.
Managerial View:
Employees
Employees are hired by the company as an instrumental asset in completing tasks that result in
products or services provided to clients or consumers. These stakeholders contribute in
exchange for compensation, benefits, training and professional development. Their time and
effort are investments made to the organization, and they depend on the organization's success
to ensure their continued employment. Employee feedback can be considered to determine if
they are satisfied with their environment, role and work-life balance and other factors. Their
satisfaction can directly impact their productivity, which can then affect overall output and
success as well as the satisfaction of other stakeholders.
Owners
Owners have exclusive rights over a property or business. They usually have full ownership in
terms of the products and services that impact the customers who eventually purchase it from
the company, and they set out strategies to meet and exceed sales goals for the product.
They're often directly responsible for the success of the company and the employers who go

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forth generating results orchestrated by the owner. The success is dependent on the owner's
actions.

Question 5b
Answer: Business activities have a variety of impacts on people. These can include providing
meaningful employment and good working conditions; support for charities, or significantly
improving the quality of the goods and services available to customers. Conversely, some
company activities may involve negative impacts on groups, for example by exploiting
workers through providing unsafe or poorly paid working conditions.
For some investors, the value a company attaches to these issues is increasingly seen as being
as important an indicator of its long-term sustainability as its approach to environmental
issues. Such impacts are often described in terms of stakeholder issues. A stakeholder can be
defined as a party who affects, or can be affected by, the company's actions.
Consideration of the treatment of stakeholders can encompass a variety of issues including:
 systems, policies, reporting and engagement
 advertising complaints
 community Involvement
 equal opportunities
 health and safety
 job creation and security
 relationships with customers and suppliers
 supply chains
 trade unions and employee participation
 training and development

Stakeholders opportunities
An increasingly important element of labour conditions is a company's attitude towards equal
opportunities and diversity. Despite the many strides made globally in combating
discrimination during the last century, much remains to be done to achieve true equality in the
workplace. Equal opportunity is increasingly an issue of global concern. However, progress
towards equality is often at different stages of development in different countries.
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