b. Are there possibly being any contradictions or tensions between the commitments Thames Water has produced to its shareholders and those which it has produced to its customers and local communities in its Corporate Responsibility Policy? How might these be resolved?
20 marks
There are clear contradictions in between the commitments that Thames has produced to its shareholders and to its customers. For instance, over a part of efficiencies, it has failed to meet its targets for reducing the volume of water lost via leaks, as well as an outcry from its shoppers who for inefficiency. Thames does have other choices to manage leakage activity, but this is not possible given the simple fact that their reputation has already been long tarnished by poor buyer assistance and inefficiency.
The case discover states that Thames Water does allot £500,000 a day is spent on reducing leaks but the company have to stay profitable to secure future funding – this last goal mainly intended mainly for its shareholders. However, although it needs to secure ample financial funding and profits for its shareholders, it need to also take into consideration other stakeholders during the equation – namely, its customers, the environment, and society at large. A single ideal means of resolving this trouble on leaks and inefficiencies is to successfully solicit community cooperation and support. To carry this out, Thames Water has to improve its status like a responsible corporate citizen, particularly from the area of environmental friendliness. It has to verify its best practices to produce these conform to a strong “green” thrust.
20 marks
There are clear contradictions in between the commitments that Thames has produced to its shareholders and to its customers. For instance, over a part of efficiencies, it has failed to meet its targets for reducing the volume of water lost via leaks, as well as an outcry from its shoppers who for inefficiency. Thames does have other choices to manage leakage activity, but this is not possible given the simple fact that their reputation has already been long tarnished by poor buyer assistance and inefficiency.
The case discover states that Thames Water does allot £500,000 a day is spent on reducing leaks but the company have to stay profitable to secure future funding – this last goal mainly intended mainly for its shareholders. However, although it needs to secure ample financial funding and profits for its shareholders, it need to also take into consideration other stakeholders during the equation – namely, its customers, the environment, and society at large. A single ideal means of resolving this trouble on leaks and inefficiencies is to successfully solicit community cooperation and support. To carry this out, Thames Water has to improve its status like a responsible corporate citizen, particularly from the area of environmental friendliness. It has to verify its best practices to produce these conform to a strong “green” thrust.
Although it recorded a profit of £666 million last year, Thames Water has been put up for sale by its owner, the German business RWE. Bidding for your company currently stands at £10billion. Perhaps, the company has identified the trouble of sustaining the business, given its poor reputation. Great and stringent workout of corporate governance will cause an improved public and may possibly gradually provide them the public assist that they have to address the large leakage difficulty that confronts them.
To ensure long-term sustainability, Thames Water need to proper its practices on the manifesting good corporate governance. Corporate governance is investigated in literature from varying perspectives. Whilst doing precious insights into several facets in the manager-shareholder conflict, agency theory has failed to put ample attention to interdependencies in between other stakeholders with the organization (Aguilera & Jackson, 2003). Thus, this predominant perspective has prevented a deeper analysis of new peculiar relationships of today’s organizations. Why ought to Thames even bother to alter its practices, and its status in between public consumers? Stakeholder theory asserts how the ability of an organization to yield sustainable wealth more than time (i.e. its long-term value) is dependent on its relationships with significant stakeholders (Post et al., 2002). Under this framework, the organization is depicted as a socio-economic business whose rationale for existence is to make wealth for multiple constituencies. The stakeholders of any organization are typically diverse, but the relationships among the business and each of its shareholders have quite a few underlying, well-known features. Moreover, the stakeholders have well-liked interests (as well as prospective conflicts) among themselves (Mitchell, et al., 1997). According to this view, the significant challenge is for modern day management to acknowledge the mutual interests between the firm and its stakeholders. In other words, its buyers are one of its stakeholders – not only those who share its profit.
Thames Water must thus strive to become a socially responsible corporate citizen, as investors are striving to discover SRIs in their investment decisions. Socially responsible investments (SRI) are a combination of investors’ financial goals and their concerns around the social, environmental, and ethical (SEE) difficulties (UK Social Investment Forum, 2005). SRI is regarded a tedious investment process that takes into consideration the social, environmental, and ethical final results that may be borne out for the selection, retention and implementation of investments, each certain and negative, during the setting of stringent financial analysis (Mansley, 2000).
As socially responsible investors conventionally purchase these socially responsible companies, the performance of socially responsible firms is a essential element in their performance. Majority in the studies have presented an out-performance for SRI portfolios compares with more conventional investment approaches, even if this sort of differences don't usually produce as statistically significant. As soon as particular dimensions of sustainability are investigated, more important and sure benefits are brought forth, suggesting that some facets of corporate social responsibility may well also contribute shareholder value. It's thus worthwhile for Thames to undertake efforts for activity strong corporate governance. Eventually, this may spell out sustained competitive advantage for your Thames enterprise.
To ensure long-term sustainability, Thames Water need to proper its practices on the manifesting good corporate governance. Corporate governance is investigated in literature from varying perspectives. Whilst doing precious insights into several facets in the manager-shareholder conflict, agency theory has failed to put ample attention to interdependencies in between other stakeholders with the organization (Aguilera & Jackson, 2003). Thus, this predominant perspective has prevented a deeper analysis of new peculiar relationships of today’s organizations. Why ought to Thames even bother to alter its practices, and its status in between public consumers? Stakeholder theory asserts how the ability of an organization to yield sustainable wealth more than time (i.e. its long-term value) is dependent on its relationships with significant stakeholders (Post et al., 2002). Under this framework, the organization is depicted as a socio-economic business whose rationale for existence is to make wealth for multiple constituencies. The stakeholders of any organization are typically diverse, but the relationships among the business and each of its shareholders have quite a few underlying, well-known features. Moreover, the stakeholders have well-liked interests (as well as prospective conflicts) among themselves (Mitchell, et al., 1997). According to this view, the significant challenge is for modern day management to acknowledge the mutual interests between the firm and its stakeholders. In other words, its buyers are one of its stakeholders – not only those who share its profit.
Thames Water must thus strive to become a socially responsible corporate citizen, as investors are striving to discover SRIs in their investment decisions. Socially responsible investments (SRI) are a combination of investors’ financial goals and their concerns around the social, environmental, and ethical (SEE) difficulties (UK Social Investment Forum, 2005). SRI is regarded a tedious investment process that takes into consideration the social, environmental, and ethical final results that may be borne out for the selection, retention and implementation of investments, each certain and negative, during the setting of stringent financial analysis (Mansley, 2000).
As socially responsible investors conventionally purchase these socially responsible companies, the performance of socially responsible firms is a essential element in their performance. Majority in the studies have presented an out-performance for SRI portfolios compares with more conventional investment approaches, even if this sort of differences don't usually produce as statistically significant. As soon as particular dimensions of sustainability are investigated, more important and sure benefits are brought forth, suggesting that some facets of corporate social responsibility may well also contribute shareholder value. It's thus worthwhile for Thames to undertake efforts for activity strong corporate governance. Eventually, this may spell out sustained competitive advantage for your Thames enterprise.
