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October 2, 2012

Corporate Regulations Legal Study

Corporate Regulations Legal Study
With the advent of the 21st century corporate sector has witnessed unprecedented boom and growth either in the form of their diversifying business portfolios and maximizing global operations in different countries. It is primarily because of these reasons that a number of unethical practices have been able to successfully proliferate itself in contemporary sector. Furthermore such mushrooming commercial operations have also aggravated the need for a particular code of conduct and ethics which has to be adhered and implemented by the heads of the organizations as well as by the employees of the organization. During the course of this discussion we will be focusing upon the adverse repercussions that may result in the human resource, marketing and accounting departments of an organization due to unethical exercises. Furthermore we will also be shedding light on some of the legal aspects that have been incorporated to prevent such unethical practices from occurring.
Marketing and Ethical Values
            One department in any organization that has been periodically maligned for organizational malfeasance has been marketing. A prime reason for this negativity is there at large exposure with the general public and the subsequent impact that they intend to create on their target audience. Another function that is concomitantly allied with marketing is advertising.
Since both of them share a symbiotic relationship, it is not astounding that both of them share a much similar reputation. Deceptive advertising strategies are considered as the key idea behind the mind control and indoctrination of individuals in which children occupy the foremost position. Even though the practice may sound unethical, but at the same time it is also important to realize some parallel components and dimensions of the entire situation. It is important to understand that stakeholders can be classified as internal and external. Internal stakeholders include board of directors, managers and employees whereas external are mainly consumers, competitors and advertising agencies. Both categories of stakeholders have their specific interests which they need to advocate under all conditions for the smooth running and progress of the organization. (Dubrick, Huand and rajan, 2004)
A major conflict arises when the interests of both these stakeholders collide, for example in many of the advertisements catering to children needs, consumers usually complain about the manifestation of unethical practices. For example in one of the advertisements of McDonalds which has been termed as a key attraction for children, a model dressed as semi-nude was shown cleaning a car in the sexually explicit way possible. Such kinds of manipulative marketing tactics directly affect external stakeholders whereas internal stakeholders are mainly concerned about the productivity and revenue that the strategy can generate.
Even though most of them do intend to conform ethical principles, but most of the decisions are also formulated by eyeing the existent scenario of corporate conditions. Most of these decisions are influenced by internal stakeholders as they are in the most auspicious position to exercise maximum influence on the organization. The watchdog authority Federal Trades Commission or the FTC very clearly outlines that “advertising must be truthful and non-deceptive… advertisers must have evidence to back up their claims… and advertisements cannot be unfair.” (Mazurkiewicz, 2004)

Human Resource and Stakeholders
            In most of the cases relating to environmental impact and economic development a very clear and distinct pattern of internal level corporate tactics and the outcry from external stakeholders can be chalked out.  It has mainly been viewed that the internal stakeholders of an organziation do not pay much heed to environmental repercussions that will be an outcome of their commerical projects, the most important aspect that is foremost in their agenda is the revenue that they can generate from their investment.
Another point that is worth mentioning here is that the concern for environment or ecological habitats only supercedes other commercial priorities when the organziation gets enciricled by an unexpected crisis. However it is also important to mention here that external stakeholders are a major source of opposition to this intetnionally demonstrated indifferece. The outcry that is viewed brewing in the population is mainly fueled from non-governmental organziations sponsored by  competitors in these cases and hence counter advertising stratgies can also be applied to undermine each others authority and reputation in the market, and for the fullfilment of all these purposes external stakeholders  serve as the most integral and instrumnetal tool.
In order to germinate a concern for the deteriorating environmental conditions from exploitative commerical  activities, the concept of CSR or Corporate Social Responsibility has been developed which according to the European Union cultures  ‘the concept that an enterprise is accountable for its impact on all relevant stakeholders. It is the continuing commitment by business to behave fairly and responsibly and contribute to economic development while improving the quality of life of the work force and their families as well as of the local community and society at large’. (Professional Advertising, 2010)
Accounting Practices and Stakeholders
            Accounting is another vital organizational organ without which an organization cannot progress. It is therefore important that all financial dealings and operations practiced by an organization are completely transparent in nature. Accounting can be assumed as that one department where unethical practices will adversely affect internal as well as external stakeholders. The extent to which unethical accounting practices can affect stakeholders varies from the situation that is under consideration.
For example a few years back a leading Indian IT organization Satyam was charged of conducting high level scams in their accounting practices. The news on disclosure rattled the foundations of the entire Indian IT sector including the competitors, but in other cases disclosure of such information can benefit competitors especially in conditions when there is a giant competitor stbale enough to sustain its reputation and standard even in such critical times. Internal stakeholders come under greatest risk because of such practices as all of them are either directly or indirectly involved in orchesterating the fiasco.
Response from external stakeholders is mainly in the form of eroded credibility and a subsequent increase of economic leverage and image improvement for the competitor  Therefore it is mandatory for every organization to formulate its accounting polices and provisions which are in complete conformity to legal practices and provisions along with the right of maintaining confidential information.


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