Business Ethics and Market Regulations - Assignment Example

Business ethics and Market Regulations Question The question of securities regulation is one that has been an issue of discussion in many countries. With the world becoming a global economy and the securities market becoming the centre of this global economy, there are definitely more issues to consider while looking at the issues surrounding the regulations of the securities market. There have been arguments for and against the use of these regulations by the government. Those who argue for the regulation indicate that the regulation only would destabilise the market and to favour those who are in good terms with those in power (Klein, Dalko & Wang 59). Opponents of this idea argue that regulation, contrary to what it is supposed to be, is never done in the interests of the shareholders in the market, but for the benefit of a few people who use regulatory officials to make the market favourable to them. On the other hand, there are those who feel that regulation is necessary in order to bring sanity in the market. This probably has to do with the fact hat in the early days of the invention of the securities markets, there was a lot of misconduct by corrupt traders who used dishonest methods to benefit themselves at the expense of the other traders, especially the smaller traders who did not have a good clue of how the market worked. This led to the exploitation of many people and, in New York’s Wall Street, this unregulated, dishonest trading almost led to the collapse of the whole securities market. Because of such issues, most people felt hat the market does not have enough mechanisms to regulate itself and should therefore be regulated by the government. There are those who believe that the market is now mature and cannot be easily regulated like it was in the earlier days. They believe that whether regulated or not, the securities market will still perform well. Question 2 Adidas must know that it operates in sensitive environments with regard to poverty and economic well being. Adidas, like many other manufacturing firms based in developed world, have decided to move its factories to the third world and developing countries where they can afford cheap labour and be able to produce high quality goods and at the same time deliver the market at much lower prices. While this kind of outsourcing has received a lot of criticism due to it perceived lack of patriotism, due to the fact that the directors of such firms are accused of exporting the labour market while there are so many unemployed people in the local economies, it can be applied in a positive way (Crowther & Rayman-Bacchus 107). Some of the issues which a firm like Adidas would have to consider in order to ensure that it is in the right direction would have to include employee policy. Fair pay and fair working hours Due to the fact that Adidas is looking for cheaper labour, it is very easy to be tempted to create sweat shops as has happened by so many firms, including firs from the developed world, where they abuse their workers in the developing world. In developing world, there are no tight employment regulations and employee protection laws. This fact, combined with the fact that poverty makes people in these countries to be willing to do any work under any conditions makes it easy for the employee to be abused and unfairly exploited without being able to complain. A firm like Adidas should take advantage of these conditions, not to abuse the employees but to set precedence as to how these employees must be treated and how to make sure that the employees reap happy fruits of their labour. This can be possible even after paying them relatively well in comparison to the local economy, the firms still saves a lot compared to what it would have to pay in the developed world. Question 3 Adidas, with regard to its actions seems to have a genuine interest in developing its people. However, being a for-profit firm, it would be misleading to think that this is purely philanthropy, otherwise if it was there would be no need to publicize it. What is important is that even if it is a PR strategy, it should have a genuine need to help people out. Many firms in the world involve themselves in activities which seem to help their employees or the communities which they operate in, but only as a way to get the publicity, but never really care to know whether these CSR projects really benefit anyone. One way to know whether a firm such as Adidas is doing it CSR as a way to only market itself, or whether it has a genuine interest in helping the beneficiary of these programs is to look at the overall operations of the firm. A firm that initiates a philanthropic program in the pretence to helping the people but with selfish interests at heart is easy to spot. Such a firm would have these programs running but still have in its core some activities which harm the same community or society it is pretending to help. In the case for Adidas, this is especially so with regard to the fact that the firm has tried as much as possible to make sure that all its operations are not exploitive but are geared towards fairness and the benefit of all the stakeholders. In this regard, it can be argued that the Adidas’ programs are fair and are genuine in their trying to help the employees and other members of the society to achieve a better life and a better environment for each and everyone. Question 4 There are many issues which must be considered with regard to the regulation of the market. For a new country like Freedom Nations, the first thing to care for is the fact that it is starting from a clean slate and that there is no prior experience. Starting a stock market from scratch in this age and time is not the same as it was a half a century ago, or even a century ago. In this case, the main regulation factor will have to consider the way the market will be launched and to make sure that any firm which is admitted to the securities market is well valued and that there are no briefcase companies selling inflated shares in the market. However, of importance in this case would be how to relate with the international market. Being a new nation would mean instabilities in so many areas, including the political and the economic ends. This would scare off many foreign investors, which would be hurtful to the securities market because at this time it needs the international help the most. In this regard, the regulations would have to consider the foreign investors with an aim of protecting them and guaranteeing them that their investment will not be lost, even in the presence of any instability. Creating a regulatory environment that takes care of these concerns by the foreign investors will not only invite foreign investors, but will also help in attracting foreign experts who will help in building the securities market. This would then be very useful when looking at the ways in which the market will be controlled. However, the local investors must also be protected from sharks who would take advantage of them if they were not protected. In all that, it would be best to make sure that the regulation don’t kill the investment spirit, either fro local investors or for foreign investors. Question 5 Hostile takeovers, more often than not, are ignited by people with a selfish interest, which is neither for the target company, the share holders of such companies or even the consumers (Ricardo-Campbell 78). In most cases, a hostile takeover can be used to dismantle an upcoming competitor and the firm initiating the hostile takeover is always looking to kill competition. In this regard, it becomes very clear that the hostile takeover will not be good for the consumers and the market in general. In this regard, small firms, or even big ones, should be protected from hostile takeovers, unless the rights of the firm trying o initiate a hostile takeover have been abused by the target companies. Firms should only be involved in a merger or an acquisition only if they are willing to do so and only if they are able to determine how they will benefit from the acquisition. In this regard, the Kuwaiti Capital Market Authority must come up with a solution to make sure that smaller firms are protected and that they can have a say in cases where a bigger or more stable firm is trying to acquire them by force. However, there are issues to be considered such as how healthy the target firm is. In some cases, it is possible for a firm to be ailing and the directors of the firm, guided by their selfish interests, fail to allow a merger or an acquisition. In such a case, the shareholders would stand to benefit if a merger or an acquisition happens and they would stand to lose the most of the directors of the firm refused an offer to merge or be acquired. The Kuwaiti Capital Market Authority should therefore take care of such issues and make sure that in the event of this kind of a scenario, the share holders would not have to incur losses just because the directors for heir firm were not wiling to be logical. Works Cited Crowther, David ., & Rayman-Bacchus, Lez. Perspectives on Corporate Social Responsibility. Farnham, UK: Ashgate Publishing, Ltd., 2004. Print. Klein, Lawrence., Dalko, Viktoria ., & Wang, Michael. Regulating Competition in Stock Markets: Antitrust Measures to Promote Fairness and Transparency through Investor Protection and Crisis Prevention. Hoboken, NJ: John Wiley & Sons, 2012. Print. Ricardo-Campbell, Rita. Resisting Hostile Takeovers: The Case of Gillette. Westport, CT: Greenwood Publishing Group, 1997. Print. Read More