Corporate Governance Dilemma Essay Example | Topics and Well Written Essays - 1000 words

corporal Governance Dilemma - Essay ExampleThe shareholding trope involved the maximization of shareholders value while the stakeholding paradigm involved satisfaction of stakeholders interests. This created the conceptual dichotomy over individual liberty and justice for everyone when making classic business decisions (Sullivan and Conlon, 1997). A prime example of this decision making model is the successful multinational furniture manufacturer Ikea (IKEA, 2012) . While starting as a small family business in Sweden, it gradually became the knowledge domains largest home furnishing retailer with a reputation of low prices and novel design. The companys indispensable costs were attributed to the fact most of the products were manufactu reddened in factories from Asian and eastern European countries. However, in primordial 1998 a scandal ensued stating that Ikea was tolerating appalling working conditions in its suppliers factories in Eastern Europe and quickly write an agreem ent that would stop exploitation of the workers. Later that year, a TV documentary was shown depicting images of child comminute and unhealthy working conditions in factories in India producing IKEA textiles and garments causing uproar in Sweden. Despite the subsequent debates and campaigns from the state-controlled Party (SP), the company failed to acknowledge the problem and refused inspection by third parties. Ikea also didnt bear the Rugmark foundation label, which validated the eradication of child labour and was already adopted by many companies at that time. Customer complaints in the following year ensued and yellow cards were signed but in retort the company still claimed that it would take measures for child labour but didnt satisfy the SPs demands for good control. This in turn caused the intensification of the campaigns spreading to other European countries like Austria and Belgium, ultimately leading to the signing of 53.300 red cards on the 3rd of June 1999 which banned the purchase of any Indian rugs or textiles from Ikea. The result was the complaisance of Ikea on the 7th of July 1999 with the terms of the SP, which involved stronger measures against child labour and hiring a third party cockeyed to evaluate the process. Ikea also adopted a code of conduct in September 2000, called The Ikea Way of buy Home Furnishing Products (IWAY), clearly stating against forced labour and hazardous work conditions (IKEA, 2012). On one hand, Ikeas practices displayed a non-professional approach to the companys problems which was the cause of the subsequent campaigns and product sales ban. The denial of the problems existence significantly damaged companys consumer market by raising questions and awareness of the manufacturing processes of the products. Additionally, the loser of taking initiatives and allowing third party evaluation, raised criticisms for other practices such as tax evasion, further alter its reputation. The image of a child-friendl y reputation was critically damaged which might affected the sales and market refinement of the company. On the other hand, despite the delayed response from Ikea, various initiatives were taken to restore the companys image. In addition to introducing the IWAY code of conduct against forced la