Business ethics, governance system and risk management are very important issues for any organization. Lack in sufficient attention on these aspects has shown to result in the collapse of companies, such as Enron and WorldCom. The combination of effective governance and management systems and consideration of ethics during decision making will help to eliminate this threat. This report highlights Mercury’s current governance arrangement and associated risks, and evaluates its decisions in the light of governance arrangements and ethics.
Mercury’s faces potential damages both non-financial and financial because of recent campaigning and publicity by rival newspapers about phone hacking and airbrushed photograph. As a result, the company may be involved in costly legal action, which has already happened against Mirror group, where 20 claimants took legal action against mirror group over phone hacking allegation. Readers have already started to boycott the products of Mercury, which will reduce the company’s revenue and eventually do damage to the shareholders’ wealth.
Table of Contents
1. Executive summary
2. Introduction:
3. Exposure to reputation risk: (A)
4. Manage risk
5. Proposed changes in UK press regulation: (B)
5.1 Similarities:
5.2 Differences:
5.3 Impact on Mercury
6. Mercury’s current corporate governance arrangement: (C)
6.1 Positive issues in current governance
6.2 Inadequacy of company’s current corporate governance arrangement
6.3 Decision is robust or not:
7. Decision to use airbrushed photograph is ethical or not: (D)
7.1 Would it be profitable:
7.2 Is it legal:
7.3 Is it fair:
7.4 Is it right:
7.5 Is it environmentally sound:
7.6 Decision:
Objectives and Core Topics
This report evaluates the corporate governance and risk management framework of Mercury, focusing specifically on the ethical implications and governance risks associated with the company's decision to continue using airbrushed photographs in its publications.
- Corporate governance structure and board effectiveness
- Enterprise Risk Management (ERM) strategies
- Ethical evaluation of business decisions using Tucker's model
- Impact of new UK press regulations on corporate operations
- Stakeholder analysis and reputation management
Excerpt from the Book
Decision to use airbrushed photograph is ethical or not: (D)
Whether decision is ethical or not, can be evaluated through Tucker’s model which is based on the view that profit motive is justified however profit should be made in an ethical way. This model includes to be asked 5 questions before making a business decision where if the answer to all questions is yes than the decision is ethically sound.
The 5 questions about the decisions are
1. Would it be profitable: it is very hard question to answer. In the short term using airbrushed photograph may increase the profit because as a result of using these images, product are looking more desirable and customer are 20% more likely to click on the advert links which take them to the company’s website. For every click Mercury receives a commission and it will eventually improve company’s revenue. However, in the long term if company stops using airbrushed photograph may create more appeal to conscious customers and can create useful relationship with other stakeholders.
It can be also argued that reputation damage may occur if the company continues to use airbrushed photograph. It is impossible to predict how bad this might be as it depends on how much publicity or campaigning the decision gain. Since Be Real has already started campaigning against airbrushed images and as a result of this campaign, complain against airbrushed images has increased from 5 to 1000 compared to last year. Therefore, the effect could huge.
Summary of Chapters
Executive summary: Provides an overview of the significance of business ethics, effective governance, and risk management in preventing corporate collapse.
Introduction:: Outlines the scope of the report, covering governance arrangements, risk assessments, and ethical evaluations.
Exposure to reputation risk: (A): Analyzes the potential financial and non-financial damage Mercury faces due to public campaigns regarding unethical practices.
Manage risk: Details a proposed Enterprise Risk Management (ERM) system designed to identify, monitor, and mitigate potential corporate risks.
Proposed changes in UK press regulation: (B): Discusses the shift to the Independent Press Standard Organization (IPSO) and compares the new regulations with corporate governance standards.
Mercury’s current corporate governance arrangement: (C): Critically examines the board's decision-making process, highlighting both positive governance practices and significant inadequacies.
Decision to use airbrushed photograph is ethical or not: (D): Employs Tucker’s model to assess the morality of the company’s decision based on profitability, legality, fairness, and rights.
Keywords
Corporate Governance, Risk Management, Management Systems, Unethical Behavior, Business Ethics, Reputation Risk, Enterprise Risk Management, Stakeholder Analysis, Press Regulation, Accountability, Shareholder Wealth, Transparency, Ethical Decision Making, Board Independence, Corporate Social Responsibility.
Frequently Asked Questions
What is the primary focus of this report?
The report examines the corporate governance and risk management practices at Mercury, specifically focusing on the ethical and reputational consequences of their marketing choices.
What are the central themes discussed?
The core themes include board structure, regulatory compliance in the press industry, risk mitigation strategies, and the application of ethical frameworks to business decisions.
What is the main research objective?
The objective is to evaluate whether Mercury’s decision to continue using airbrushed photographs aligns with best practices in corporate governance and ethical standards.
Which methodology is applied in this analysis?
The report utilizes standard corporate governance principles, Enterprise Risk Management (ERM) frameworks, and Tucker’s ethical decision-making model.
What does the main body of the document cover?
The main body covers the assessment of reputation risks, the impact of new press regulations, an analysis of the current board’s composition, and a step-by-step ethical audit of the decision to use airbrushed images.
Which keywords characterize this study?
Key terms include Corporate governance, Risk management, Business ethics, Reputation risk, and Accountability.
Why is the chairman's tenure a point of contention?
According to the UK Corporate Governance Code, the chairman is no longer considered independent after nine years of service, which raises concerns about the objectivity of the board's decisions.
How does the author apply Tucker’s model?
The author uses the model to test the "airbrushing" decision against five criteria: profitability, legality, fairness, rightfulness, and environmental impact.
What is the final verdict on the airbrushing decision?
The report concludes that the decision is not ethical, as it prioritizes short-term self-interest over shareholder long-term value, fairness to stakeholders, and human dignity.
- Quote paper
- Kamrul Islam (Author), 2015, Mercury's business ethics, governance system and risk management, Munich, GRIN Verlag, https://www.grin.com/document/456106
