Dalora, Karen Joy B.

BSBA 3-A

GOOD GOVERNANCE AND SOCIAL RESPONSIBILITY

Chapter 6: ETHICAL PROBLEMS IN PRICE AND WAGE DETERMINATION

Chapter Exercises:

1. Define the terms

Price
The amount a consumer pays for goods he has purchased for services
rendered to him. Economists define it as the compensation for material goods
and wage as compensation for services rendered. To the ordinary consumer
means only one thing: the amount of money he receives for doing a job. To an
economist, compensation for material goods and wage as compensation for
services rendered.

Salary
The term salary is the agreed upon amount of money between the
employer and the employee that is extended at regular intervals on the basis
of an individual’s performance. Salary is generally a fixed amount of package
calculated on an annual basis. When divided by a number of months the
amount to be disbursed monthly is ascertained. The same is given to the
employee on the basis of his productivity.
It is the fixed amount of compensation which is paid for the performance of an
employee.
A salary is an annual amount agreed upon between company and
employee and paid to the employee in increments on a schedule for work
performed in a specific role. Salaries can be
paid monthly, bi-monthly, bi-weekly or weekly.

Wage
Wage is termed as a compensation that is given on the basis of the
amount of work done and the hours spent in doing that. Wages are variable
and do vary with day to day functioning of an individual. Wages are given to
labours who are engaged in manufacturing processes and get the
compensation on a daily basis.
Wage is the variable amount of compensation which is paid on the basis of
hours spent in finishing a certain amount of work.
Wage is a term that's usually associated with an hourly workforce. Hourly
individuals typically receive their paycheck in a schedule that reflects getting
paid for the previous week worked.
2. Explain some practices that deny the payment of fair wages.

* Requiring him to work on holiday but paying him only the pay for a regular
day.
Holiday pay refers to payment of the regular daily wage for any unworked
regular holiday. According to DOLE for any unworked regular holiday, 100% of
the employee’s daily wage rate (Basic pay + COLA). For work performed on a
regular holiday, plus 100% or a total of 200% of the employee’s daily wage
rate (Basic pay + COLA). So it is not fair to pay him only the pay for a
regular day when he work on holiday.

* Asking the employee to sign a payroll that shows he is being paid a fair
wage but he is receiving less than what is stated in the payroll sheet.
This situation is very ethical. They do this to say that the employee is not
underpayment when he actually is. Employer or the one that he let it sign
maybe a corrupt.

* Agreeing to advance the employee’s wage in kind but the goods that the
employee receives instead of his advance wage are priced at least 50%
higher than regular prices.

* Asking the employee to work a full day but securing his agreement to be
paid only for half day’s work.

3. Give examples to each of the different price systems.

1. Varying price policy

 Different price in website and physical store
 Different price on branch locations

2. Follow the leader pricing

 Following the pricing of the largest player in an industry
 When the market leader lowers the price of its good, the company will lower
its price to the same level.

3. Odd price policy

 The product is tagged to the lowest possible prices like P100 to P99.99
 Price ending in 1,3,5,7,9 just a round number

4. Loss leader pricing

 An example is selling low cost computers that need expensive ink.
 Selling toilet paper, milk and eggs, they are sold at discounted prices so as
to draw customers to the store.
Dalora, Karen Joy B. BSBA 3-A

Chapter 7: CORPORATE SOCIAL RESPONSIBILITY

Chapter Exercises

1. Define social responsibility. What do you think is the business

primary responsibility to its stakeholders and why?

Social responsibility is an ethical framework and suggests that an

individual, has an obligation to act for the benefit of society at large. Social
responsibility is a moral obligation on a company or an individual to take
decisions or actions that is in favour and useful to society. Social responsibility
can be said to be the obligation on the part of business enterprises to protect
and promote society's welfare. Social responsibility in business is commonly
known as Corporate Social Responsibility or CSR. For any company, this
responsibility indicates that they acknowledge and appreciate the goals of the
society, and therefore, would support them to achieve these goals.
A duty of care is the first responsibility of a business to its stakeholders.
This is the overarching value that leads then onto the other values
organisations can live by, like respect. Respect as a descriptor becomes the
starting point to a deeper set of details that underpin how an organisation
develops.

2. Cite a multinational corporation that is socially responsible and legal.

* Starbucks
With an eye to hiring, Starbucks wanted to diversify its workforce and
provide opportunities for certain cohorts. It has pledged to hire 25,000 US
military veterans and spouses by 2025 as part of its socially responsible
efforts. Ahead of schedule, the company reached this milestone six years
early and now hires 5,000 veterans and military spouses every year.
In a further move to tackle racial and social equity, Starbucks announced a
mentorship program to connect black, indigneous, and people of colour
(BIPOC) to senior leaders and invest in partnerships. The chain also aims to
have BIPOC represented at 30% in corporate roles and 40% in retail and
manufacturing by 2025.

* The Walt Disney Company

Disney committed to reducing their carbon footprint in their 2020 CSR
report with goals for zero net greenhouse gas emissions, zero waste, and a
commitment to conserve water. They are actively ensuring strict international
labor policies to protect the safety and rights of their employees.
They are also active in the community and encourage employees to do the
same. When their parks closed due to the COVID-19 pandemic, Disney
focused their CSR efforts on local communities. They provided $27 million
towards food donation and PPE from closed parks and production sets and
encouraged employees to participate in virtual volunteering.

*Google
Google is trusted not only for its environmentally friendly initiatives but also
due to its outspoken CEO, Sundar Pichai. He stands up against social issues
including President Donald Trump’s anti-Muslim comments. Google also
earned the Reputation Institute’s highest CSR 2018 score much in part due to
their data centers using 50% less energy than others in the world. They also
have committed over $1 billion to renewable energy projects and enable other
businesses to reduce their environmental impact through services such as
Gmail.

3. Case Study:

Required: Case Analysis

Blindness or low vision can affect an employee’s ability to be safe,

productive and independent at work. But the blind worker was given an
opportunity to take the job. So the blind should take the job seriously
especially when she is offered to counsel. For me, the company do its
corporate social responsibility to the blind worker by offering a council. So it is
just fair or right if the manager will fire her.
Dalora, Karen Joy B. BSBA 3-A

Chapter 8: MODELS OF CORPORATE GOVERNANCE

Chapter Exercises

1. Illustrate and explain the key players under the 3 models of corporate
governance.
The Anglo-US model involves a number of different players including:
management, directors, shareholders, government agencies, stock
exchanges, self-regulatory organizations and consulting firms.
From these, the three of the most important in terms of corporate
governance are: management, shareholders and board of directors. There is
a strong division between investors
and the ownership (in terms of legal liability) of the company. This is mostly
down to the development of the corporate governance framework in a free
market economy.
In the past, the stock ownership was strongly in the hands of individual
shareholders, but in today’s market, institutional investors play a more
important role. The increase in ownership by institutions has meant that
corporate governance structures have to respond to the increasing influence
of institutions and the possibility of conflict of interest that arises from this.
Board of directors in the Anglo-US model include both company employees
(executives or managers, for instance) and institutions or people who don’t
have a direct relationship to the company.
In the past there have been problems with concentration of power,
something which corporate governance frameworks are now hoping to
eradicate. This has meant that the composition of the board of directors
doesn’t remain the same for too long and disclosure and transparency
mechanisms have improved. The number of people on the board of directors
is relatively small in the Anglo-US model. There is a wide range of laws and
regulations governing the relationship between the three different players.
National, and in the case of the US, state legislation define the framework for
a company’s rights and responsibilities. The stock exchange is also an
essential part of corporate governance and generally, the disclosure and
transparency framework requirements are extremely strong.

In the German model there are two key players: the banks and the
corporate shareholders. Other corporations are also shareholders under the
German model. As you’ll see below, the composition of the board is very
different and influences the key players in the system. For example, labor
representatives on supervisory boards are mandatory.
What distinguishes the German model the most from the other two is the
composition of the board. This is because the board consists of two separate
entities: the management board and the supervisory board. Both are set by
law.
The management board is set by the supervisory board and helps it to
make the right decisions. The management board only includes the
executives, while the supervisory board has no ‘insiders’ involved. The
numbers in the supervisory board are set by law.

The German model is strongly influenced by the government and its

regulatory requirements. In Germany, specifically, the federal law plays an
important role. While disclosure rules are quite extensive, they aren’t as tough
as under the US-Anglo model.
The Japanese model centers around a network called keiretsu, which is a
financial and industrial network, and the main bank. The bank plays a crucial
role in helping the corporation manage equity issues and other consulting and
regulatory problems.
While the Anglo-US model has three key players, the Japanese model has
four. These are: the main bank, the affiliated company (keiretsu),
management and the government. Unlike the Anglo-US model, these are
serving a non-balance of power relationship.
The composition involves mainly insiders like executive managers. The
main role of the executive management is to keep the financial performance
up to scratch. If this doesn’t happen, the bank or the keiretsu remove the
management team. The board is usually larger in size compared to the Anglo-
US model.
Japanese corporations are less influenced by national laws and
regulations, mostly due to the internationalization of the companies.
Nonetheless, the disclosure requirements are relatively stringent under the
model. Disclosure often takes place after a longer period of time. The
disclosure often occurs once or twice a year, while under the Anglo-US model
disclosure takes place quarterly. There’s also no need to disclose information
about all the shareholders of the company, only the largest.
Dalora, Karen Joy B. BSBA 3-A

Chapter 9: AGENCY PROBLEMS IN CORPORATE GOVERNANCE

Chapter Exercises

1. Give at least four identified agency problems in governance.

Enron Fall
The fall of the energy giant in 2001 showed the world how an agency
problem arises. The company's chairman Kenneth Lay, the CFO, and CEO
Jeffrey Skilling were selling shares based on false accounting reports which
made it seem as though the stock was more valuable. Many stockholders lost
millions as the value of Enron shares plummeted.

Real Estate Bubble and Goldman Sachs

When financial analysts invest against the interests of their clients, it's
another agency problem. Goldman Sachs and other agencies created debt
obligations and sold them short, with the thought that the mortgages would be
foreclosed. In 2008, when the housing bubble occurred the shortsellers made
millions, and many people including homeowners lost money.

Boeing Buyback
From 1998 to 2001, Boeing had about 130,000 shareholders, and most
were employees who bought stock through their retirement plans. Boeing was
buying back the stock which drove prices lower. The executive actions
damaged the employees' retirement account value.

WorldCom and Executive Pay

In 2001, CEO Bernard Ebbers took out $400 million in loans at a rate of
interest of 2.15 percent. The company didn't report this in its annual report.
The news of the accounting scandal came out later that year, and the
company took on debt to pay its executive.

2. Watch the movie Enron Scandal and make a reaction paper. Suggest
measures to solve the company’s problem.

The Enron scandal was a series of events involving dubious accounting

practices that resulted in the bankruptcy of the energy, commodities, and
services company Enron Corporation and the dissolution of the accounting
firm Arthur Andersen (Bondarenko, 2021).
Enron had a very complicated business model that many investors did not
fully understand. Enron’s complicated business model and exuberant growth
forecasting contributed to the company’s eventual downfall. These two
characteristics should be viewed as red flag in potential stock market
investments.
It is very important to have a deep understanding of a company’s business
model before committing any capital as an investor. “Never invest in any
company before you’ve done the homework on the company’s earnings
prospects, financial condition, competitive position, plans for expansion, and
so forth.” Peter Lynch said.
Enron’s extensive use of financial derivatives was one of the main
differentiates between this business and other large companies in the energy
industry. Investors would be well served to heavily scrutinize any investments
in companies that rely on derivatives and other complicated financial
instruments to generate earnings. All said, we should avoid companies that
employ fancy derivatives
Enron’s excessive amount of leverage magnified its poor financial
performance. “I’ve seen more people fail because of liquor and leverage –
leverage being borrowed money. You really don’t need leverage in this world
much. If you’re smart, you’re going to make a lot of money without borrowing."
Warren Buffett said. Enron’s expensive debt combined with its highly volatile
business model combined to create excessive losses for the company’s
investors. When analyzing a company’s balance sheet, prospective investors
should keep these two factors in mind.
Assessing counterparty risk is an important aspect of business and of life.
Enron’s shareholders were not the only ones who were significantly harmed
by the Enron scandal. Many of the company’s counterparties also suffered
extreme financial losses. By and large, this is because they did not properly
assess the counterparty risk that they assumed when entering agreements
with Enron. Arthur Andersen is the foremost example that you do not need to
be an investor to be harmed by a company’s poor financial management.
It is hard to overstate the importance of having high-quality management at
the helms of the businesses that we invest in. Outstanding managers with
great capital allocation skills and a laser-sharp focus on building shareholder
value have tremendous potential to deliver market- crushing total returns over
long periods of time. Conversely, bad managers produce unsurprisingly bad
results. From this scandal we should take note that we should buy high-
quality businesses with management teams that have both character &
competence.
The Enron scandal provides a fascinating case study on corporate
governance and board room management. One of the best reasons to study
history is to avoid making mistakes that have already occurred in the past
(Reynolds, 2021).
Dalora, Karen Joy B. BSBA 3-A

Chapter 10: CORPORATE SOCIAL RESPONSIBILITY ACTIVITIES

Chapter Exercises

1. Pinpoint or mention some examples of social responsibility activities

engaged in by companies.

1. Coca-Cola.
Uses recycled content in packaging, programs to reduce waste, and
increase efficiency.
* Waste Reduction
Based on the 2019 CSR report of Coca-Cola, they hope to make all of their
packing materials recyclable by 2025. As of 2019, around 88% of their
packaging is already recyclable. They have also promised the reduction of
raw materials to reduce their products' ecological footprint.
* Water Replenishment
Drinking water resources are getting more and more limited. One of Coca-
Cola's issues right now is their enormous freshwater usage since they're in
the beverage industry. They've been looking for ways to fix the issue and have
replenished about 160% of the waters they've used.
* Carbon Footprint Reduction
Carbon footprint is the quantity of carbon dioxide released into the
atmosphere by the companies' operations. In 2013, Coca-Cola started to cut
down its greenhouse gas emissions. This company's initiative significantly
impacts the environment, wildlife, economic losses, and human health. If you
need help dealing with the scientific element of your assignment, we're also at
your service.
* Minimized Packaging
One of the biggest criticisms Coca-Cola has faced is its plastic bottle
packaging. They solved this problem by using refillable bottles and water
dispensers.

2. Ford, Honda, Lexus, Toyota.

Produce at least one vehicle that runs on a fuel efficient, lower polluting
hybrid engine.

3. Shell Oil Co.

Uses many minority-and women-owned suppliers. Also, there are
programmes include the “Gas Mo, Bukas Ko” scholarship programme for
Shell forecourt attendants and transport sector dependents; Sanayan sa
Kakayahang Agrikultural (SAKA), which provides agricultural skills training
and scholarships for youth in Palawan, site of the Malampaya Deep Water
Gas-to-Power project operated by Shell and its joint venture partners;
Movement Against Malaria nationwide malaria prevention and control
programme that has helped to reduce malaria mortality by 90% and morbidity
by over 60% all over the country, Panahiang Pangkabuhayan sa Pandacan
(Triple P) and Bridging Employment through Skills Training (BEST) livelihood
programmes; Shell Eco-marathon smarter mobility programme to promote the
message of fuel-efficiency; Shell Green Scholars environmental scholarship
programme to help establish Clean (Pasig) River Zone warriors; Shell
Tabangao Refinery biodiversity programmes to protect coastal ecosystems;
Waste management programmes such as the Shell Effluent Quality
Improvement Project (EQUIP) to manage effluent from Shell operations,
Bawas Basura sa Barangay (Triple B) solid waste management programme
that also provides livelihood opportunities for communities; and safety
programmes such as the Neighbourhood Emergency Services Team (NEST)
disaster preparedness programme, regular Road Safety Camps and
Workshops for Children and the Road Safety Flash Cards project for
elementary schoolchildren implemented in partnership with the Philippine
Global Road Safety Partnership, among many others.

4. Starbucks.
Works with coffee bean growers to encourage environmentally friendly
practices. Starbucks’ social responsibility strategy is based on three pillars:
Community, Ethical Sourcing, and the Environment. Starbucks develops
community stores that partner with local nonprofits. The nonprofits these
stores work with offer services aimed to meet the needs of the communities
they’re located in. Starbucks in turn donates $0.05 to $0.15 per transaction to
the nonprofit partner. The second pillar, Ethical Sourcing, dictates the way that
Starbucks purchases its products. The company is committed to ensuring that
their coffee, tea, cocoa, and manufactured goods are responsibly and
ethically produced and purchased. They say their “success is linked to the
success of the farmers and suppliers who grow and produce [their] products,”
and so they only purchase those products from farms and manufacturers that
adhere to a certain standard of ethical treatment. Starbucks refers to the
planet as their “most important business partner,” and takes a comprehensive
approach to reducing their environmental impact. To do this, they build LEED
certified stores, are committed to recycling and conserving water and energy,
and pursue strategies that address climate change on a global level.
Generally, Starbucks tries to be as environmentally friendly as possible in
every aspect of their operations.

5. ABS-CBN.
Sagip Kapamilya Helps victims of calamities.
6. Jollibee Foods Corporation.
Maaga ang Pasko sa Jollibee – toys, books, etc. are collected from donors
and are given as gifts to less privileged children. Jollibee Foundation bags
2011 Agora Award for Outstanding Achievement in Advocacy Marketing.
Busog Lusog Talino (BLT) School Feeding Program nourishes 25 000 pupils
nationwide. Jollibee inaugurates first completed classroom in Davao.
Jollibee's Build-A-Classroom project breaks ground in Angeles.

2. Is it possible for a company to be profitable and socially responsible

at the same time? Explain.

Of course it is possible, in fact such acts would only enhance a Company's

relationships with existing and potential customers. The smartest companies
strive for both. In fact, being socially responsible is just smart business and
probably enhances profit in the long run. Social responsibility means that
businesses, in addition to maximizing shareholder value, should act in a
manner that benefits society. The promotion of corporate social responsibility
in organizations encourages a positive correlation with the companies'
profitability. A company's involvement in environmental and social activities
enhances its awareness, hence creating demand among citizens to consume
its products. Also, CSR initiatives can even save you money. For example,
after General Mills installed energy monitoring systems to reduce energy
usage, they saved $600,000.