Ethics and the environmental responsibilities of companies tie directly into those of social responsibilities and occupy a very important position in both incorporating into strategic plans and the company’s value system. In this paper, the subject to describe is how the role of ethics and social responsibility is developed into a company’s strategic plan; this will enclose an example of how Enron initiated an overstepping of these ethical boundaries.
The paper will also describe the internal and external environments of how Google, Amazon, and Microsoft using an environmental scan. Included in the scan will be a determination of the competitive advantages each company has and what the strategies of each company are. The paper will finally point to how each company creates value and sustains completive advantage through their business strategy, and to what measurement guidelines each company is using to verify strategic effectiveness.
Keeping an honest code of ethics can ensure that a company achieves their missions, visions, and general objectives in a manner that can provide a solid framework for years to come. Ethics can also assist in ensuring guidelines are being made to bind an organization by a common thread and interests that guide employers and employees to avoid straying from the intended path of the company. Another element of today’s current strategic planning process is corporate social responsibility or CSR.
This is when managers confront different situations of increasing demand from stakeholders. The specific demand has been marked by many claims that link themselves to corporate social responsibility of an organization’s projected profits, in the media and many other faucets, such as up-and-coming international CSR organizations. The motivation of this is clear; if a positive CSR is present, and a financial performance relationship is identified; companies will be motivated and pushed to increase corporate spending on various CSR activities in the name of enhancement.
As for those companies who include social responsibility as one of the desired employee criteria, many are choosing to leave little to the imagination and contribute to the general improvement. A CSR focuses on two areas, including both internal behaviors (which refers to the way a corporation conducts their daily operations and business functions), and their external behaviors that refer to any organizations involvement outside of the direct business interests (Jones, 2004).
The process of internal behavior planning generally starts within the human resources department or HR. HR directly contributes to the recruitment and retention of employees. Although the above listed external behaviors can include certain functions, they do differ from internal CSR both because management and public relations will consider the ending financial. Ethical Boundaries: Enron Corporate scandals such as Enron have scarred the business industry forever.
Enron became a failure because the unethical practices were exposed just as the Justice Department began a criminal investigation after Enron filed for bankruptcy (Corrado, 2008). After the investigation started, it was revealed that top executives had been inflating stock prices via numerous techniques and misleading the statements made by the public. It turns out this was done in an effort to raise the stock prices, so that Enron would earn more money. Five different individuals were exposed to have made a total of $150 million off such schemes (Corrado, 2008).
Basically as Enron grew as a company, their poor ethics slowly destroyed them and it caught up to everyone in the end. This ultimately brought high levels of frustration to customers, and the actions and poor decision-making fell on the shoulders and responsibility of management. This resulted in customers leaving with levels of distrust in Enron, and resulted in more scrutiny than needed from regulatory authorities, government, and the public themselves. Environmental Scan: Google, Amazon, and Microsoft
In the corporate space of the Internet, three major companies are dominant. Most individuals recognize these companies easily, Google, Amazon, and Microsoft. Each of these companies has strengths in their own right, and as the Internet matures, the lines are blurring. Google was once thought to be primarily a search-engine company whose profitability tied to its advertising model, while Amazon was the primary bookseller on the Web, and Microsoft was a software company with an online presence. Today that has changed with the advent of cloud computing.
Cloud computing permits businesses and individuals to access applications from their business computers, home computers, or mobile computers, and telephones. These applications were once primarily the domain of Microsoft with its Windows software and Office suite of applications. However, as open source software with standardized applications has gained a foothold, both Google and Amazon entered this part of the market, capitalizing on their individual strengths to carve out new niches and threatening Microsoft’s market dominance.
Strategies The strategy of Google in the cloud computing arena is to leverage its huge databases and internal research and development strengths to offer powerful tools while continuing to be the primary search engine with profitability tied to its advertising models, including Adsense, and Adwords. Additionally, the company has moved into what was previously Amazon’s domain by adding Google Books, which includes a vast library of scanned books, some free of charge to Web users.
Conversely, Amazon has branched out from its dominance of the book domain to the cloud computing arena while strengthening its profitability by partnering with retailers offering everything from jewelry to stand mixers. Microsoft, on the other hand, continues to strengthen its market dominance in the home computing and business computing worlds with its software while moving into Google’s prior domain with its introduction of Bing. com, which provides users with a more refined search engine than Google, in an attempt to sell advertising to increase its own market share.
These bleed-over moves between and among the companies have led each of them to expand into new and promising markets while continuing to play to their strengths. Measuring Strategic Effectiveness Little evidence exists about the means by which each company measures its success. All three; however, use profitability as a primary measure, in terms of value to their stockholders. To that end, a comparison of the gross profit, number of employees, gross and net profit per employee can be instructive in understanding each company.
However, before putting too much stock in these numbers, one must consider that Microsoft has been around for longer than Google and Amazon, and specialized in the software market for far longer. So as expected, Microsoft is quite a bit more profitable, in looking at its raw gross profits. However, when looking at the gross profit per employee, Google emerges as the high performer. Amazon lags behind, but this is a completely new venture for the company, and it may emerge as a true competitor in cloud computing.
The table below summarizes the gross profitability of each of the companies: CompanyGross Profit (Billions)Net Profit (Billions)Number of EmployeesGross Profit per employee (Thousands)Net profit per employee (Thousands) Amazon40. 82050019539 Google125. 020123596248 Microsoft4817. 6891000527194 Source of information: (Sridhar, 2008) Amazon was the first to enter this market, with its EC2, Elastic Computer Cloud, which is a scalable collection of storage tools to provide users with what they want, when they want it, and how much they want it for (Avram, 2008).
Google’s App Engine, which is more restrictive on space than Amazon, reaches a more defined audience that tie to its search engine. The company’s entry into this market is consistent with its strategy outlined in its “10 Things” strategy, the most applicable of which is, “You don’t need to be at a desk to need an answer,” and “The need for information crosses borders” (Google, 2010). It may be at odds; however, with another the “10 things”, which is “It is best to do one thing really, really well” (Google, 2010).
The thing that Google does really, really well is search engine technology tied to advertising revenue. However, the company’s entry into the book market and the cloud computing arena may lead it to other areas in which it does really, really well. Microsoft’s cloud computing product, Azure, provides for greater variety than either App Engine or EC2. Azure provides for customers to enter by using its . NET services, while still permitting companies to have their own internal clouds that can be accessed either internally or externally.
Analysts believe that Microsoft has the most to lose in the cloud computing space, stating, “If Microsoft moves too slowly, it risks letting innovators, like Google, and Amazon grab market share. The companies do not face Microsoft’s profitability dilemma because they don’t have physical software franchises to protect (Avram, 2008). Building on the issue of competition between and among the three companies, it appears that Microsoft considers Google a larger threat than Amazon, and recently partnered with Amazon in a coalition with Yahoo! fficially to oppose Google Books’ agreement with the Association of American Publishers and Authors Guild permitting Google to make portions of some books free, and some for a fee (White, 2009). Microsoft has nothing in competition at this point in the books arena, but lent its strength to the coalition in opposition to Google. While there was no direct tie to the cloud computing arena, this move was indicative of the manner in which the lines are blurring between corporate strengths and weaknesses and the new products launching via the Internet.
As uncharted territory, each company is concerned with maintaining its own market share. Companies can measure market share and profitability to help gauge their successes, but it can be a bit like comparing apples and oranges. Using profit as a measurement guideline may be effective at this point, but the companies will need to keep an eye on their different market segments to ensure they are not sub-optimizing one of their stronger, core businesses as they enter new areas.
Whatever the future brings, it is clear that an ethical policy needs to be included in any business model and upheld by striving continually to examine the moral beliefs and conduct of a particular company or industry as well as making every effort to live up to those projected standards.
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Making Sense of Corporate Social Responsibility. Grassroots Development. Retrieved February 9, 2010 from http://www. iaf. gov/grants/downloads/csr_eng. pdf. pdf Sridhar. (2008, October 27). Cloud economics: Microsoft, Google, and Amazon. [Blog]. Retrieved February 9, 2010 from http://blogs. zoho. com/uncategorized/cloud-economics-microsoft-google-amazon/ White, B. (2009, August 25). Amazon, Microsoft, & Yahoo! All fight Google over potential book sales. [Blog]. Retrieved February 9, 2010 from http://www. bloggingstocks. com/2009/08/25/amazon-microsoft-and-yahoo-all-fight