Code of Ethics

Abstract

This research paper describes the code of the ethics of the three publicly held companies. These companies are Wal-Mart, Starbucks and Microsoft. Code of ethics addresses the broad range of practices and procedures of business. It does not cover all the issues of the business, but it formulates the basic guiding principles in order to successfully conduct the business. This paper also describes the significance of the code of ethics and its role in expansion of business globally.

Introduction

The Sarbanes-Oxley Act of 2002 is also called as the Public Company Accounting Reform and sometimes referred as the Investor Protection Act of 2002. In short, it is called as SOX. This legislation has established improved standards related to the boards, management and accounting firms of public company in the U.S. This act is not applicable for privately owned companies. The Act comprises of 11 titles or sections, which vary from the responsibilities of additional Corporate Board to criminal punishments and need the SEC (Securities and Exchange Commission) so as to apply rulings in order to obey the new law. This legislation played a vital role in reestablishing confidence of public in the capital markets. Apart from this, it strengthened corporate accounting controls. This Act also led to the establishment of quasi-public agency and the Board of Public Company Accounting Oversight (PCAOB). It was responsible for regulating, supervision, inspecting and disciplining accounting firms for their role as an auditor of public companies. The Act also addressed issues like the independence of auditor, assessment of internal control, corporate governance and disclosure of finance (Description of Code of Ethics, 2008).

Code of Ethics

A code of ethics forms a part of formal statement showing the value of the organization on the ethical and social issues. In other words, these act as general principles about the beliefs of organization related to the matters like employees, quality and the environment. Below are the codes of ethics of the publicly held companies.

Wal-Mart: – the code of ethics of the Wal-Mart comprises of the integrity and honesty as core values that are non- negotiable. Following are the major points under the code of ethics of the company:

Open-door policy, better relations with Supplier, Accounting and computer standards, disclosure of Information, no policy of discrimination, proper use of the property, assets and the facilities of the company. Apart from this, it also includes provisions for the Health and safety, environment, inappropriate behavior and Harassment (Wal-Mart, code of ethics, 2007).

Wal-Mart de Mexico also comprises of the location of corporate compliance responsible for the communication of the policies related to ethical behavior that governs the company.

Starbucks: – Starbucks conducts its business operations in a volatile and competitive business-environment. The organization is committed to its core values and principles in order to comply with the laws of ethical conduct (Kazmi, 2002). Starbucks Standards of Business Conduct present a brief outline of the ethical and legal standards followed by the organization on a regular basis.

Code of ethics for Starbucks is a part of the bigger strategy of industry monitoring. Starbucks is greatly concerned with the ethics of environmental and social responsibility. As it is depended on the products of agriculture, Starbucks is especially worried about the bad effects of the threat caused by global warming.

In concern to the environment, the company has been given many environmental awards and is a member of about twenty five socially-responsible investment funds (Corporate Ethics and Accountability, 2008).

Starbucks regularly undertakes an investigation of various kinds of possible violation of its principles, standards, the Financial Code of Ethics and reports under the Procedures (Corporate Ethics and Accountability, 2008). This ensures that all the departments functioning under the organization are working in a proper manner and conducting business in a fair and transparent manner (Starbucks-Standards of Business Conduct, 2008).

It takes several steps to ensure that all the work-processes and business practices follow the ethical guidelines of the organization. According to the ethics program, the Chief Compliance Officer is assigned with the responsibility of enforcing the principles and standards framed by the organization. At the same time, the Law and Corporate Affairs department advises the Audit and Compliance Committee of the Board of Directors regarding the matters concerning with this policy.

It also follows a “Policy on Communicating Complaints and Concerns to the Company and the Board,” which regulates the process of submitting complaints and the procedures for addressing those (Starbucks-Standards of Business Conduct, 2008) .The organization makes these procedures available on its website along with a helpline for the Standards of Business Conduct. In order to take prompt & appropriate corrective actions for the procedures, the non-employee Director, Audit and Compliance Committee, the Board committee or the Chief Compliance Officer committees are set up.

Microsoft: – Microsoft’s code of ethics is reflected in the Finance’s mission that includes the encouragement of professional conduct in the carrying out of financial management globally. In corporate governance, important role is played by the Microsoft’s Chief Executive Officer (CEO), Chief Financial Officer (CFO), Corporate Controller and other employees (Ball & McCulloch, 1982). The company makes sure that interests of all the stakeholders are suitably protected, balanced and conserved. This Finance Code of Professional Conduct substantiates principles that are supposed to be adhered. These ethical business principles cover rules related to the responsibility of individuals, peers, Microsoft employees, public and other stakeholders. Greater responsibility of abiding to the rules lies with the CEO, CFO, and employees. Any violations in these codes of Professional Conduct might result in the disciplinary action, which might vary up to the termination of the employment. The code of ethics includes the honesty and integrity, avoiding conflicts of interest in their personal and professional relationships and providing correct, complete, fair and relevant information to the stakeholders and complying with the regulations and the rules of the state, federal, provincial, and local governments. Last but not the least, the other factors in the code of ethics are acting in good faith and proactively promoting ethical behavior (Cherunilam, 2005).

Adequacy of the code

The code of the ethics is adequate in the star bucks and Microsoft but inadequate in case of the Wal-Mart. As the Wal-Mart follows very stringent and strictest policies and buyers are not offered with the coffee from suppliers (Wal-Mart, code of ethics, 2007). They have very indifferent attitude towards the employees and follow the practices of gender bias and discrimination law is not followed by the company. On the other hand, star bucks and Microsoft take proper care of their stake holders. Both of them regularly undertake an investigation of various kinds of possible violation of their principles, standards, the Financial Code of Ethics and reports under the Procedures (Corporate Ethics and Accountability, 2008). This ensures that all the departments functioning under the organization are working in a proper manner and conducting business in a fair and transparent manner.

Business and Cultural challenges

A well-planned, voluntary and cost-effective code of ethics promotes the growth of the companies and prepares them to face the challenges while expanding globally. In star buck, Microsoft and Wal-Mart, the code of ethics are well defined and include honesty and integrity, avoiding conflicts of interest in their personal and professional relationships and providing correct, complete, fair, objective, relevant information to the stakeholders and complying with the regulations and the rules of the state, federal, provincial, and local governments. All these are the prerequisites to establish a business globally. Company following such codes gains easy acceptance in other country (where it wants to start its business) from the people and the local authorities.

Conducting Business Globally

Starbucks’ code of ethics provides a good example in conducting a business globally, as proper care is being taken from the execution to the implementation of the code of ethics. It takes care of the interest of its stake holders along with the concern for the environment. Therefore, it can successfully conduct its business globally (Kazmi, 2002).

Microsoft works for the interest of its stake holders and also for their health and safety. It would be better for the company if it includes certain policies for the environmental protection.

Wal-Mart on other hand has quite strict policies under the code of ethics. This might create problem in expanding its business globally. It should not leave any loop hole in the formulation and implementation of the code of ethics. It should establish committee that looks after the implementation of the policies, so that the employees can feel free to raise their grievances (Gogoi, 2007, June13).

Conclusion

In order to conduct the business globally, the company must have an effective code of ethics. The codes are helpful in avoiding the imposition of barriers and help in establishing business globally. They clarify the roles and duties of all the individuals in the organization and provide direction to the company.

References

Ball, D.A. & McCulloch, W.H. (1982) International Business (1^st Edition). Plano, Tex, Business Publications.

Cherunilam, F. (2005) International Business: Text and Cases. New Delhi: Prentice Hall of India Pvt. Ltd

Corporate Ethics and Accountability. 2008. Retrieved April, 7, 2008, from http://www.starbucks.com/aboutus/corporate_governance.asp

Description of Code of Ethics (2008). Retrieved June 12, 2008, from http://www.12manage.com/description_code_of_ethics.html

Gogoi, P. (2007, June13). Wal-Mart’s Latest Ethics Controversy. New York: McGraw-Hill Companies Inc.

Kazmi, A. (2002). Business Policy and Strategic Management. Delhi: Tata McGraw-Hill Publishing Company Limited.

Starbucks-Standards of Business Conduct. 2008. Retrieved April, 7, 2008, from http://www.starbucks.com/aboutus/US_English_full_kit.pdf.

Wal-Mart, code of ethics. (2007). Retrieved June 12, 2008 from http://phx.corporateir.net/phoenix.zhtml?c=130639&p=irol-govconduct