c



 



4a)

According to Grey, Own and Adams the following framework would be relevant for evaluating the Co
social responsibility.

c


Under this view point Co see their responsibility as to the shareholder alone, because it is the
shareholders funds that make the Co to exist in the 1st place. From the case study it appears that the
CEO has taken this stand, as he says that the reason to transfer is ͞best for the Co , shareholders and
Dirs͟.




This view recognizes that observing certain level of CSR is good for the long term survival of the Co,
possibly to the benefit that a positive Corp image could help generate further sales for the Co and avoid
possible non criticism by NGO͛s .

From here it can be seen that the motive for observing CSR is derived from the potential economic
benefits. SeaShells don͛t seem to demonstrate this view point.

c





This view point claims that social contract exists between the society and the Org, and Co therefore is
obliged to observe the needs of other stakeholders in society.

This view point s not shared by SeaShells even though they are the major employer on the island and
the transfer would cause major hardship.




This group are concern for the human environment and see that something has gone wrong with the
economic system that leads to resource use, pollution, waste creation etc. If human livelihood is to
improve a drastic change in the economic system is needed.

Hence Seashells decision to transfer the sea food caught in one country to another for packing on the
grounds of saving on labor cost would be against the social ecologist view point. To please this group it
should stay put in its current location.


According to this grp justice means equality, the fact that SeaShell is a major employer that employs
many employees it is not acceptable to them because it represents unfair allocation of resource.


 

This grp found the existing economic, social, political and business system as well as the language of
business and accounting ͞masculine͟ and recon that there should be a refocus on compassion, love co-
operation and other family values.

In the eyes of this group SeaShell͛s decision is deemed as too harsh as it disregards the predicament of
the employees who will be made redundant.




This grp holds the view that human beings don͛t have any greater right to existence to any other form of
life.

If this is the case it can be said that the entire business of SeaShell would have to be closed down as it
earning profits at the expense of the fish to the extend to causing them to be extinct.

b)

Sustainability

According to World Commission on Environment and development, sustainable development is defines

͙without compromising the ability of future generations to meet their own needs. This mean that an
Orgs biz activities shouldn͛t exhaust all the resources to the extent that the future generations would be
deprived of their use.

Today this concept of sustainability has moved beyond the definition seen above to include also
environmental and social considerations.

SeaShell Activity

Using the concept above Seashell performance on sustainability are as follows

Economic

If the concern that SeaShell increased demand for seafood is causing over exploitation of some fish
species and that the population may crash, then the economic performance of SeaShell is unlikely to be
sustainable as this is the only source of income it has.

Social

The existing social performance where the majority of the 150 people are employed by SeaShell in the
packaging dept will not be able to be sustained as SeaShell is one of the Islands major employers. Unless
the retrenched staff are able to find jobs with other employers they would suffer in terms of bringing
home income and cause them not to be able to maintain the previous style of living.

Environmental

The environment is unlikely to be sustained due to the follow;

R The exploitation of some species of fish mentioned above which means that the next generation
will not get to see them at all
R The transfer of the packaging to another country and back for resale would mean more
consumption of fuel which isn͛t a renewable resource.

Method of Reporting

The existing method of reporting which take into account t only internal costs doesn͛t fully report all
sustainability issues.

The change from financial accounting to full cost accounting which incorporate all external costs such as

R riability costs from polluting the environment e. penalties

R Costs of restoration of polluted site out of constructive obligation.
R Damage to the Co reputation

Are they more appropriate as they put the Co focus on total cost that the Co is likely to incur from the
environmental impact which may result in actions taken to mitigate the effects such the intro of environ
mgnt system. Also if this cost can be included on the production cost consumer would be required to
share the responsibility for buying products manufactured in an environmentally unfriendly manner.
Creating better awareness in the public.

Corp Social Responsibility Report

This can be a standalone report published by the Co or alternatively incorporated in the annual report.
It may contain the following;

R ‰OD commitment to sustaining the environment.

R Reported damages on the environment by Co activities.
R cresentation of Co environmental policy and any environmental management system that
would have been implemented.
R Targets that have been set for the coming year to improve the environment performance.
c

 
 
!

!"

The following are the options available following the meeting with the MD of X ltd;

, accept the agreement proposed by Y

This agreement was reached verily likely due to the close relationship between the sale Dir and Mr. Y.
the nature of the payment would result in our Co as an unsecured payable would be paid in before the
secured payables which is unethical as we don͛t enjoy the same right/protection under the law.

‰ased on the discussions it appears that the Co faces a serious going concern risk, as to survive it needs
the support of all or almost all its suppliers to give it additional line of credit. I am doubtful that other
suppliers are willing to extend such a cutesy as I have just received a telephone call from another
supplier who has expressed similar concerns. Govn this situation the Co would go into liquidation and
the amount paid us by Y, he would most probably recover the payment from his Co.

There may be legal implications by the secured payables try to recover this amount form our Co and
thus tarnish the Co image as we would be viewed as being dishonest having used personal relationship
at the expense of other.

# Don͛t accept payment by Mr. Y and sue the Co.

Unlikely that any payment will be received as the Co has only got sufficient funds to pay its work force
resulting in the writing off of the bad debt.

! Write off the Amount as a bad debt without and legal action.

This will save on legal cost, but it may send the wrong message to other existing customer as they would
hold off payment expecting the debt to be written off with no legal implication.

This will increase bad debts in the future.

$ Decline Mr. Y͛s offer but continue to supply materials

This option should only be taken if other suppliers are willing to extend X ltd credit with the hope of
getting paid upon completion of the project.

% I am a bit skeptical about Mr. Y͛s intentions, as he is unwilling to loan this money to X ltd even though
he as the money to pay us. This may indicate that he himself is not confidant of the Co͛s ability to
continue trading and thus doesn͛t want to have further commitment X ltd.
Recommendation.

Given careful thought to the above options I am of the opinion that the offer by Mr. Y should be
rejected. Instead the Co should initiate legal action under normal circumstances to recover the debt no
different from any other outstanding customer to be seen to be taking action for long outstanding debt.
In accordance with the Co policy.

I believe the current predicament X ltd can be avoided if more stringent credit control efforts have bee
made to monitor the debt outstanding before it accumulates to such a substantial amount. I shall review
the credit control policy and get back to you.

Should you have any queries please don͛t hesitate to contact me.



& 


1a)

The following practice indicate that the control environment in the Co is weak.

1, the role of the risk committee is to study the viability of a project before recommending them to the
‰OD for recommendation. ‰ased on the info given this committee wasn͛t given enough time to study
the project.

2, even though the Co has the necessary sub committees to play the monitoring role so that no one dir
is dominant. The insufficient # of NED in the committees make this role difficult hence control may not
be improved.

3, the Co appears to be profit orientated as seen from the downsizing of the shop staff to increase profit
this would mean less segregation of duties hence higher instances of fraud.

4, The store managers are not given a fully picture as to what kind of decision are to be referred to the
HR director. There could be times that they have to make decisions on their own.

5, appointment to senior positions appears to be based of relationship instead of merit. As seen from
the appointment of the Son of the CEO as HR Dir, who lacks the necessary experience to assume the
role.

6, even with the existence of the appointment committee of Mr. Carson Jr. bypassed this committee,
which shows that the CEO has no respect for this committee and the remaining Dirs are fearful of him.
This indicates domination to power which isn͛t control for control.

b)

crinciple based approach offers flexibility to the Dir and requires them to use Judgment as to whether
certain principles are applicable in their Co. This approach is suitable for those Dirs. Who have a high
level of integrity and wouldn͛t abuse such flexibility, by providing explanation why compliance isn͛t
possible.

The info given in the question casts doubt over the integrity of the Dirs a rule based approach is thus
more relevant as it would dictate the rules they need to follow, i.e. # of NED required to achieve
compliance, as failure to comply could mean a harsh penalty as seen in the SOX Act.

c)

Strategic Risk.
1, The Co doesn͛t appear to have the ability to make strategic decision as seen from the disastrous effect
of moving up market.

2, ‰y downsizing the # of shop staff it is unlikely that they will continue t provide the same level of
service which is synonymous with the Co. in the competitive industry in which cacific Goods operate this
would cause customers to move to competitors.

3, the appointment of staff based on relationship it would mean the Co would have difficulty in retaining
good stuff who don͛t see themselves as being able to assume senior positions due to that fact they are
not related to management. This would pose a problem in succession planning.

4, the falling sale if not addressed promptly would cause significant cash flow problems to the extent of
threatening its survival.

Operational Risk

1, There could be stock out situations if decisions are pending approval by the HR Dir who may not be
available as the store manager would not be sharing the same office as the HR Dir.

2, Decision making may be delayed due to seeking clarification on whether HR approval is required.

3, Unhappy staff due to longer working hours with minimal pay increases is likely to cause inefficiency to
the operations.

d)

answer should include the

1, role of the chairman

2, role of the CEO

3, cossible conflict resulting from combined role

4, Currently cG is experiencing a crisis as both senior positions have been left vacant. Strong leadership
is essential to win back the confidence of the financiers and suppliers so that they continue to support
the Co by having two different persons there is a concern that they may not see eye to eye and thus
causing delay in the implementation of the rescue plan that Mr. Stait has planned as an expert at
refocusing corporate strategy.

If he assumes the role of CEO i.e. another person may not agree with his decision and thus his plan may
not be executed. If he if the Chairman he is not so supposed to involved in the running of the business
there by causing the problem ͙ However it is advisable that once the Co business as return to normal he
must assume only one position.