Acca P1

Topics: Management, Risk, Board of directors Pages: 19 (7077 words) Published: May 2, 2013
Corporate code of ethics.
A corporate code of ethics (sometimes contrasted with a professional code) has five general purposes. The first is communicating the organisation’s values into a succinct and sometimes memorable form. This might involve defining the strategic purposes of the organisation and how this might affect ethical attitudes and policies. Second, the code serves to identify the key stakeholders and the promotion of stakeholder rights and responsibilities. This may involve deciding on the legitimacy of the claims of certain stakeholders and how the company will behave towards them. Third, a code of ethics is a means of conveying these values to stakeholders. It is important for internal and external stakeholders to understand the ethical positions of a company so they know what to expect in a given situation and to knowhow the company will behave. This is especially important with powerful stakeholders, perhaps including customers ,suppliers and employees. Fourth, a code of ethics serves to influence and control individuals’ behaviour, especially internal stakeholders such asmanagement and employees. The values conveyed by the code are intended to provide for an agreed outcome whenever agiven situation arises and to underpin a way of conducting organisational life in accordance with those values. Fifth, a code of ethics can be an important part of an organisation’s strategic positioning. In the same way that an organisation’s reputation as an employer, supplier, etc. can be a part of strategic positioning, so can its ethical reputation in society. Its code of ethics is a prominent way of articulating and underpinning that. Evaluate Coastal Oil’s performance

In the case of Coastal Oil, the company appears to have failed its own code of ethics in terms of its pledges on full compliance with regulation in all jurisdictions: safey and care of employees, transparency and communication with stakeholders, social contribution and environmental responsibility. Coastal Oil stated its aim to achieve full compliance with regulation in all jurisdictions. The contract with Well Services was clearly contestable in terms of who was liable, partly due to the complexity of the documentation. There is no evidence from the case that the company was criminally negligent but health and safety or environmental controls, relevant to companies operating in Effland waters, may have been breached. In terms of the safety and care of employees, the company also did not perform well against its own standards. The deaths of eight employees on the Effland Coastal Oil Rig resulted from health and safety failures because of a number of internal control failures. If Coastal Oil saw the protection of employees as an ethical issue, it might have adopted, or ensured that its JV partners adopted, the ‘highest standards’ of performance in ensuring their safety. The company gave the appearance of a lack of transparency and communication failure. Because of the internal arguments between Coastal Oil and Well Services, it took seven days to make a public statement about the event. Clearly, there would be many stakeholders eager to hear Coastal Oil’s view on what had happened, including the families of those killed and injured, and the delay caused by the internal arguments was a breach of its own code of ethics on this issue. In terms of social contribution, the oil spill had a number of negative social consequences. The oil spill caused a number of problems to the communities along the Effland coast. Business was damaged during the important tourist season meaning that communities were less supported, in terms of income, over those important months. The valve failure caused an oil leak on the sea floor which took several months to stop. This is an environmental failure and, given that Coastal Oil stated that environmental responsibility was a key heading in its code of ethics, stakeholders will be reasonably entitled to conclude that it...
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