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WVET 222 Test 2
Unit 3-4
| Term | Definition |
|---|---|
| Constant change | Continuous changes to ex. accounting standards or tax legislation Requires lifelong learning Adds to business risk Must be managed actively - change management |
| Drivers of change | Change or die Change to grow Change is good |
| Change or die | External pressures forcing change in an orginisation |
| Change to grow | Org chooses change to improve |
| Change is good | Org sees change as beneficial |
| Failure rate of change | 70% |
| Principles to instill change | Partners; People; Participants; Security; Competency |
| Partners | Employees to be treated as partners in change, not just workers Involve employees for them to buy in Avenues for communication - fears & concerns Explore alternatives together Transparency & trust NB |
| People | People, not just employees. Place value on relationships to gain their confidence People follow leaders they KNOW & trust |
| Participants | Participants not just employees People support change they create They should help plan, implement & manage change Involvement is dependent on their role Requires time & patience |
| Security | Leaders needs to be secure & confident in their role to lead effectively through change They need to tolerate risk, not become defensive, build relationships, be patient, communicate, have self-confidence, high EQ |
| Competency | Not just reactive, but competent Develop skills to manage change within org |
| Human rights | Basic human rights Movement gained momentum after 2nd WW & led to Universal Declaration of Human Rights of UN 1948 Businesses must promote & protect human rights - Corporate social investment Discrimination is a human rights violation |
| Regulation of human rights | Legislation & regulation - Constitution in SA Overregulation can limit rights of other people |
| Inequality | Closely related to human rights since inequality can limit people's freedom |
| Basic human rights include | Life Freedom from torture Freedom from slavey Right to fair trial Freedom of speech - limitations Freedom of religion Freedom of movement - residence Economic & social rights |
| Human Rights Watch | SA faces serious human rights challenges & public confidence in government's ability to address these issues are declining |
| Main human rights issues | Children with disabilities don't have access to education Violence against women Xenophobic violence - Impunity: people aren't held accountable Foreign policy not promoting HR |
| Rise of ___ cause HR to face unprecedented global attacks | Populist & authoritarian governments/ leaders like Trump, Putin, Jinping |
| Threats to democracy | Unfettered majoritarianism Attacks on checks & balances to gain more governmental power |
| Proposed HRW solution | Target the enablers: financiers & weapons dealers, instead of just targeting abusers, target those who enable the abusers |
| HIV | Human immunodeficiency virus STD or through blood contact Causes AIDS |
| AIDS | Acquired immune deficiency syndrome Syndrome: group of symptoms Caused by virus HIV |
| Immune deficiency | Person whose own immune system is prevented from functioning properly More susceptible to infections |
| Pandemic | Disease widespread over country or world |
| HIV affecting economy | Slows down growth in GDP (gross domestic product) - 2-4% lower Slow growth in labour force Reduced savings - diverts public spending Contributes to poverty - reduced per capita growth rate of household |
| Treatment of HIV/AIDS | Not just medical - Antiretroviral treatments (art) but also needs to address socioeconomic conditions to ensure people with HIV are economically productive |
| Poverty-healthcare cycle | Poor health>reduced ability to work>lower income>poverty>limited healthcare>poor health> |
| SA's ART programme | Since 2004 the gov has provided ART to approx 2.6 million people with HIV They need to balance reducing AIDS with creating equitable economic growth $682 pp |
| World health org on ART | Supports expansion of ART coverage & to identify people earlier so that ART can act as preventative ART could lead to macro-economic growth as long as people can re-enter labour market, and this is lacking in SA |
| SA unemployment | Since 2008 global recession Official unemployment: 24% Broader (incl people not looking: 40% Youth (15-24 yrs): 51.5% Links to apartheid apparently |
| Economic growth & eduction | Since economic transformation has a greater demand for educated and skilled workers, those with low education have limited opportunities that leads to poverty & increased inequality |
| Spread of HIV | Overcrowded settlements have risky behaviours like sexual or alcohol abuse & poorer communities have less access to healthcare, and information, ultimately spreading the disease |
| Solution to HIV & economic problems | Gov shouldn't just focus on ART, but on education & vocational training t reach the goal of healthy people with skills needed for the labour market |
| Corruption | Abuse of entrusted power for private gain - dishonest & decptive actions Breaks trust; undermines democracy; affects gov's capacity & competence to govern Ex. fraud, bribery, nepotism, falsifying information for personal gain |
| Elements of trust | 7C's Capacity; Commitment; Capability; Connection; Commonality; Consistency; Character |
| Fraud | Deliberate deception to secure unfair or unlawful gain |
| Embezzlement | Form of financial fraud that involves withholding of funds or assets to seal some or all of the funds Individuals are still legally in control of assets when deed takes place |
| Money laundering | Converting gains from corrupt or criminal activities into seemingly legal assets to hide the origin of the funds |
| Solutions to fraud | Cultural transformation Integrity Ethics promotion Legal system |
| Corruption & economic functions | Prevents economy from functioning efficiently since power & resources are the "incorrectly" allocated or allocated based on dishonesty rather than merit |
| Major economic & social consequences of corruption | High prices & low quality Inefficient allocation of resources Uneven distribution of wealth Low tech innovation Shadow economy Less foreign investments or international trade Lower quality education & healthcare |
| Emerging vs developed economies corruption | Everywhere BUT higher levels in emerging economies With corruption: 33% less income on average; 3x higher infant mortality; 25% lower literacy levels |
| High prices & low quality | Companies bribe officials to get licensed, can become monopoly or oligopoly. Less comp = higher prices & lower quality Bribes prices can become part of business cost making customers pay more |
| Inefficient allocation of resources | Fair tender processes are based on price & quality but through corruption, the best company can lose to a corrupt one. NB in public procurement which is 15-30% of GDP in many countries |
| Uneven distribution of wealth | Corruption makes rich richer creating a larger gap between lower & upper class. This happens through wealth concentration, illegal pressures or unfair competition |
| Low tech advancement | Innovation requires belief that an intellectual property will be protected. In corrupt spaces, an innovator might be afraid that someone will steal their idea. Less confidence in legal system>less motivation to innovate>less technological development |
| Shadow economy | Takes place outside the official or registered economy Business income isn't properly recorded or taxed. They could even pay below minimum wage or provide poor working conditions. |
| Low foreign investments or international trade | Foreign investors wants transparency, fairness, predictable rules and peace of mind with their investment |
| Lower quality education & healthcare | Affects quality of life. Affects recruitment and the allocation of resource isn't fairly distributed to education or healthcare and used elsewhere. If staff is hired through connections rather than competence, education & healthcare fails. |
| Earnings management | Deliberately influencing the process of financial reporting to obtain a form of private gain Manipulation of financial statements by not applying IFRS correctly Income smoothing using provisions; recording in the wrong period; Assumptions in estimates |
| Tax evasion | Illegal activity that taxpayer deliberately takes to relieve themselves from tax liability. Ex. deliberate omission of income on tax return |
| Tax avoidance | Taxpayer arranger affairs so that income reduces of so that no income is subject to taxation. Legal. Ex. tax free investments |
| Single-line reporting vs Triple bottom-line | Single line: Profit Triple bottom line: People - social, profit & planet - environmental performance |
| Friedman's CSR views | Milton Friedman No social responsibility - DO HAVE responsibility to make profit for shareholder (binding argument) Entities aren't moral agents & sending resources elsewhere acts beyond their mandate (agent argument). Should be in interest of corp |
| Stone CSR view | Christopher Stone Rejects idea: only moral obligation to make profit for shareholders & that no moral oblig to communities (binding & agency arguments) Moral oblig to all stakeholders Laws are reactive Compliance with laws must be complemented by CSR |
| Corporate moral agencies (CMA) | Entities are legal persons & have legal rights & responsibilities. Creates confusion if entities are moral agents with additional responsibilities to their legal responsibilities |
| Friedmans CMA view | Only biological persons can be moral agents |
| French's CMA view | 2 criteria for moral responsibility: Agents must be linked to specific event & event must be intended by agent CID - actions are taken on behalf of the entity by people responsible for it & therefore entities are moral agents with moral responsibility |
| CID structure | Corporate internal decision structure Specific mechanism ensuring corporate actions are linked to intentions 2 elements: org flowchart (organogram)-describes roles, levels & repsonsibilities; rules & policies determines which & how decisions are made |
| Shareholder dominant theory | Friedman's argument Management are agents of shareholders & must increase return on investment |
| Stakeholder theory - Freeman | Edward Freeman rejects shareholder dominance using legal, economic, and stakeholder arguments |
| Legal arguments | Courts give recognition to rights of workers & managers are to respect & balance shareholder interests with employees. Similar arguments for clients, suppliers & LOCAL COMMUNITIES, since stakeholders have rights & legal protection in court |
| Economical arguments | Corp should not internalise benefits of externalise cost of their actions. Market forces don't automatically correct injustice in society. Corporations are responsible TO stakeholders for the consequences of their actions |
| Stakeholder argument | Management cannot contravene the rights of others to achieve corporate objective. All stakeholders make investments in the company All stakeholders are to receive equal treatments & no group should take precedence over another |
| Stakeholder theory - Goodpastor | Kenneth Goodpastor Freeman's theory = multi-fiduciary Stakeholders' claims could be conflicting or irreconcilable Public entity -treat all stakeholders as equal Management should fulfil moral duty without sacrificing economic mission of entity |
| Thomas Donaldson | Distinguishes between company as property and as an entity to determine moral obligation Property: Serves owners - Friedman aligned Entity: Network of relationships; rely on 6 capitals; sustainability is linked to treatment of stakeholders; corp citizen |
| Six capitals - Integrated reporting framework | Financial; Manufacturing; Intellectual; Human; Social & relationship; Natural Companies rely on- & affects all 6 capitals |
Created by:
CARA.FAURIE