OUMM3203

FACULTY OF EDUCATION AND SOCIAL SCIENCES (EASS)

SEMESTER 4 / 2018

OUMM3203

PROFESSIONAL ETHICS

MATRICULATION NO: 910421075418001

IDENTITY CARD NO. : 910421075418
TELEPHONE NO. : 0174188339
E-MAIL : vadivoo21@oum.edu.my
LEARNING CENTRE : Pulau Pinang Learning Centre

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Table of Content

1.0 Introduction

2.0 Market Stakeholders

3.0 Non-market Stakeholders

4.0 Developing and maintaining relationship with

stakeholders

5.0 Summary

6.0 References

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INTRODUCTION

Ace Venture Sdn Bhd is a leading food manufacturing company that was founded in 1980
by Mr Cheah Boon Keat and Mr Llyod Chin. The company has been operating in
Malaysia for the past 38 years. During the early years, Mr Chin and Mr Cheah were just
focussed on manufacturing biscuits, but all that changed in the year 1998 when Mr Cheah
and Mr Chin bought over a failing manufacturing company that was making snacks or
what we know as junk food. Since then the company has grown bigger and acquired
many other smaller food manufacturing companies that were struggling and was placed
under one umbrella known as Ace Venture Sdn Bhd. Currently, a majority of the
company production is centred on snack food as the profit and demand is higher with
biscuits being produced in a smaller scale comparatively. As of 2018, the main company
– Ace Venture Sdn Bhd has seven departments such as manufacturing, engineering,
material, finance, quality control, lean supply chain and safety and healthy. The current
CEO of the company is Mr Jack Chin while the COO is Mr James Cheah, both of whom
were chosen by the board of directors. Under them are 3 directors for finance, materials
and engineering followed by the manager of the other departments as well as supporting
mangers for larger departments who report to the directors. As of 2018 there are 3000
employees in the company including the operators who work in the factory. Ace Venture
Sdn Bhd has been a great company to work which is proven by their low turnover rate
that has been consistent over the years. The benefits especially the medical, dental,
annual leaves, yearly bonus, performance bonus and many other benefits have cemented
their status as a prominent company to work in. Figure 1 shows the organization chart for
the company.

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Board of Directors

CEO
Jack Chin

COO
James Cheah

Director of Director of Director of

Finance Engineering Materials
Erika Lee Arun Deepak Ramli Ibrahim

Manager Manager Manager

Lean Supply Manufacturing Planning
Chain Jalil Shah Jessca Chuah
Adrian Gomez

Manager Manager Manager

Cost Control Safety and Health Planning
Elisha James Azizah Ismail Anisha Sasi

Figure 1: Organizational Chart for Ace Venture Sdn Bhd

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MARKET STAKEHOLDERS

Before we drill down the market stakeholders of Ace Venture Sdn Bhd, let’s take a look at
the definition of stakeholders in general first. Stakeholders are known as people who have
an interest in the company who affect or were affected by them (Reference for Business).
Different stakeholders have different power over a company such as some having
coercive power, while others have utilitarian or symbolic power. Market stakeholders are
also known as primary stakeholders. They are defined as those that are involved or have
economic transaction with the company directly through the goods and services the
company provides (Harvey, 2011). These stakeholders invest in the company and in
return they get benefits or financial gains from the company (Harvey, 2011). Now that we
have defined the meaning, let’s list out the relevant market stakeholders of a food
manufacturing company.

First and foremost we have the most important market stakeholder of any company which
is the customer. As Peter Drucker said the main reason why we have a company is to
create customers hence why they are so important to a company (Trout, 2006). Customers
are people who buy the goods or services of a company as such they are of high
economic value to the company. For Ace Venture Sdn Bhd, a leading food manufacturer
who is concentrating more on the production of snack food (junk food) the customers are
usually children and teenagers as well as people in their early twenties (Federal Trade
Comission, 2012). Over the years, with stiff competition coming from all directions, loyal
customers who have grown to love the taste of Ace Venture’s food have contributed to the
company’s economy greatly by buying and consuming the product. Furthermore, through
the company’s frequent surveys as well promotional programme, customers’ feedback
have been crucial in the products improvement as well as for newer innovative products
being manufactured in Ace Venture. This indirectly has not only boosted our production
variety but has also kept us on our toes to always serve our best quality products to the
customer. As such the company is becoming recognized as well for its good quality. In
addition customers influence the way we market our products. For example, since our

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target age group is quite big different types of advertisement has to be utilised to appeal
to these age groups. Besides that, Ace Venture while keeping the cost down has managed
to give out free gifts that changes over the time depending on the trends such as Shrek,
Frozen related toys. This has definitely given a higher customer satisfaction and in return
made the company more profitable as future purchases were made as well. Its to be noted
that keeping the customers satisfied is the most important criteria for a company to
survive the changing years.

The success of a company depends on several reasons and employees who are market
stakeholders as well, are key elements in maintaning that. Lets look at how employees
affect a company’s business overally. Employees make up the core of a company, and are
as important as the customers. According to a number of studies, there have been
irrefutable facts that states that happier employees are better at their jobs and as a result,
companies reap a better financial performance and satisfied customers (Payne, 2014).
Employees are the frontline people who handle the labour part as well as admin parts of
the company. While the upper managemnet looks only at the figures churned out by the
employees, it it to be noted that these employees are the ones who know the hows and
whys of certain informations. For example, the production manager receives a report of
numbers of the production that states comparatively lower than normal numbesr with the
reason being machine down; as the manager does not work on the machine directly, he is
unable to answer his higher ups any further than whats in the report if questioned, while
the employees, specifically technicians will break down in details on that question. Their
experiences are invaluable and the company depends heavily on them for its day to day
operation. Moreover, when the company takes care of its employee, the turnover becomes
lower as employees are happy to stay in the company (Payne, 2014). This impacts the
company’s finance as well since less money will be used for rehiring and retraining of
employees and experienced employees are retained whereby they can pass on the
knowledge to new employees as well. Employees are important assets for companies to
progress as good, loyal employees make a better working enviroment which inevitably
leads to better performance overally.

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Next, the market stakeholder we should look at are the shareholders. It could be said that
these people are the ones who have the most utilitarian power as they are the ones who
own the company on technicality bases even though not in legal terms as they own
securities that enables them to have a share in the profits earned not the company by itself
(Fox & Lorsch, 2012). In addition, shareholders have a big say in how companies are run
as well on its policies as they have a right to either influence in the direction they wish to
or even replace the CEO if they are underperforming. Shareholders own stocks and these
stocks if is sold at such a rate that the value goes down, it will greatly influence others as
they might hesitate to buy the company’s stock as they might consider it a liability (Fox
& Lorsch, 2012). Ace Venture is a not a small company that relies solely on shareholders
in terms of finance as creditors loan out the cash needed for further expansions, but since
shareholders have a big say in the direction the company goes, they can use their
utilitarian power to withdraw as an investor if the company decides to go in a different
direction against their wishes. While comparatively less influential than the first two
market stakeholders, their support is quite important as most companies got their start-up
money from investors who took a risk on them when creditors were not as willing.

Last but not the least important market stakeholders are the suppliers for the raw
materials of production as well machine parts, office stationaries, drinking water and so
on. The role of supplier is quite an important one as for a product to be made by
employees and delivered to customers by the company is not doable if the suppliers do
not provide the materials needed. Hence, it is to be taken note that the raw material
suppliers have a great influence on the productivity, financial as well as the integrity of
the company as delivery of products on time will not be possible without them.
Furthermore, the quality of raw material provided also influences the end product of a
company. For example, lower quality materials produces lower quality products which in
turn causes customer dissatisfaction and eventually results in financial loss for the
company as customers might decide to buy similar products from the competitor. It is
vital for every company to have stable, reliable and good quality assured suppliers for all
products not just the ones influencing productions. Suppliers who provide services such
as air conditioning maintenance for the office staff are also equally important as a

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comfortable working environment makes it easier for everyone to carry out their duty.
Suppliers are also part of the CSR as companies need to ensure that materials sourced by
suppliers are ethically obtained and do not comprise ethics for a lower cost material.
Most companies these days have decreased the number of suppliers having prefer to
maintain a long term mutually beneficial relationship with each other (Kokemuller, 2013)

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NON-MARKET STAKEHOLDERS

Now that we have a good idea of what makes up market stakeholders, let’s look at non-
market stakeholders. Non-market stakeholders are also known as secondary stakeholders
and consist of those not directly influenced by the economic transaction of the company
(Harvey, 2011). These stakeholders are neither affected nor do they directly affect the
company. Non-market stakeholders are made up of the government, the local community,
the media, business support group, social activists or NGOs. For Ace Venture Sdn Bhd
the more relevant stakeholders are the government, local community, the media and
social activists or NGOs whose concern are on the company products’ and such.

As a non-market stakeholder, some form of power is held by the government as the

compliance of the company with the laws, policies and regulations are the ones ensuring
the continued functioning of the company. Even though the government is a non-market
stakeholder, it has the rights to know whether a company is following the safety and
health policies, environmental policies or even about the licensing conditions as well as
about the workers welfare on whether their welfare is being taken care of (Van Beek,
2015). However, as government only requires the general static information with yearly,
monthly, or even quarterly reports sent to the relevant governmental departments, this
should not be a major issue or cause for alarm if all the regulations set by the government
are obeyed. For example DOSH requires that all companies to submit an accident report
for any accident that occurs on company grounds within a stipulated timeframe
(Department of Occupational, Safety and Health, 2004). DOSH also requires that
companies keep their maintenance record up to date as well as the company grounds safe
for all employees. With these kinds of laws and regulations the government as a
stakeholder ensures that the company fulfills not only it’s obligation towards the
employees but also the local community and environment sustainability.

As for the local community, their concern as stakeholders would be the impact of the
company’s environmental policies as well as the safety and health on their community

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people when working in the factory. For example, the spouse of one of the residents
might be a worker in the company. Her experience and knowledge on the company
affects the way the whole family and maybe the whole community looks at the company.
A positive review or experience will greatly enhance the way a company is viewed by
local communities. Furthermore, the community is affected by how the company
manages its waste water and such. If the local communities are not happy with the way it
is being managed, for instance if waste water is polluting their local river, the people in
the community could choose to complain or even sue the company for endangering their
lives. As such the company has to stay on the good side of the local community by
maintaining an open relationship with them.

Pursuing this further, we have the media as a non-market stakeholder as well. In the age
of technology it could be said that the power of media is quite tremendous especially if
we look at how social media has influenced the outcomes of a number of things such as
when Nestle group of company came under fire after someone took to social media on
their so called false advertising. While the authenticity of the allegation was questionable,
it sparked a global controversy with many bashing the company in social media and
indirectly causing the company to lose sales as people were influenced by the statements.
Media can also be positive to a company if it’s utilized correctly such as companies
paying for adverts or even paid reviews for newly released items to measure the success
rate of their product as well as to get words out for their products. Media play a major
role in the financial success of a company though it is an indirect way; hence companies
should always be aware, transparent and keep accountability of them, before the media
does it for them.

Social activists or NGOs have always been a concern for Ace Venture Sdn Bhd as the
growing media power and studies that put such a negative view on sugar based products
has made this particular stakeholder a hard to please party. On the bright side, due to this
the company will strive to improve itself and its product so that the health impact could
be reduced. NGO’s have been the key for many companies to be more accountable and
civic conscious as they strive to save the planet and humankind through their work.

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Through NGOs companies could work on how to give back to the community by maybe
organizing health programs together. This affects the company’s standing among the
society and will put them in a better light.

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DEVELOPING AND MAINTAINING RELATIONSHIPS WITH

STAKEHOLDERS

The company is accountable to its stakeholders and has a responsibility in managing

them efficiently and effectively. The responsibilities that the company has towards its
stakeholders are also known as CSR – corporate social responsibility which includes
economic, legal, ethical as well as philanthropic responsibilities (Carrol, 1991). Success
follows automatically when the company learns to keep its stakeholders happy regardless
of whether they are market or non-market shareholders (Gcoyi, 2018).

The first step towards that is to actively build strong relationships from the beginning and
also involve them in the relevant processes (Gcoyi, 2018). True to the statement, there is
no better way for any company to gain the trust and respect of its stakeholders other than
building a strong foundation together as a whole. There are several ways to do so, for
instance a company could organize a yearly Family Day for all the employees, their
families as well as the shareholders. The event could bring together several of the
companies stakeholders and build relationships among them. When events like this are
organised it keeps the employees motivated and happy to be working in a company that
values its workers and as we said happy employees influence productivity which in return
makes the shareholders happy as their financial returns are high. In addition, the local
community which consists of family members of the employees will get a positive
outlook on the company as well.

It is important as well for a company be more empathetic towards its stakeholders

(Madsen, 2011). A company should always put themselves in the stakeholders’ shoes as
this will enable them to understand their point of view as well as their worries and
concerns. A prime example of this the video made by LUSH a leading cosmetic brand
that market itself as an all-natural product company. The video addressed the concerns of

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the customers (stakeholders) on the authenticity of the claims and how safe was the
product. It also empowered the employees and made them feel important as the video
featured real employees making the products themselves.

Another way for a company to develop and maintain its relationship with its stakeholder
is always ensuring that they are acting ethically towards all their stakeholders. This
includes fair treatment of all employees, transparency of product contents with
customers, making environmental care an essential part of the ways of working in
companies, being financial transparent with the shareholders as well as with the media.
Ethics is the cornerstone of all companies and should be upholded at all times
notwithstanding the situation. This could be seen when Mattel, a leading toy company
recalled its products regardless of the consequences as the product was harmful to
children. A news conference was held and the issue was notified to the public and
compensations were given as well to the customers affected. The company suffered a
setback but were ethical in their transparency and accountability.

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SUMMARY

In conclusion, stakeholders play an important role in a company’s success. No matter if it

is a market stakeholder who has direct interest and is engaged in economic transaction
with the company or if it’s a non-market stakeholder who is affected or affect the
company they are both equally important. Market stakeholder such as employees,
shareholders, customers and suppliers influence the way the company moves forward
economically as well as ethically as all these stakeholders need to be satisfied for benefits
to be reaped by the company. It is equally important as well to keep non-market
stakeholders such as the government, media, local community as well as NGOs in the
loop and happy as their word of mouth and the company’s response towards them is
essential in maintaining a good standing in the society. While its not easy to manage the
relationships of all the stakeholders, there are several ways the company could develop it
such as building strong relationships from the start, being empathetic towards its
stakeholders concerns and also by always making ethics as part of their ways of working.

3076 words

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REFERENCE

Carrol, A. (1991). The Pyramid of Corporate Social Responsibility: Towards the moral
management of organizing stakeholders. Business Horizons, 39-48.

Department of Occupational, Safety and Health. (2004). Guidelines on Safety and Health
(Notification of Accident,Dangerous Occurrence, Occupational Poisoning and
Occupational Diseases) Regulations 2004. Abgerufen am 22. July 2018 von
Department of Occupational, Safety and Health:
http://ejkkp7.dosh.gov.my/eJKKP7/Bantuan/SafetyPamplet

Federal Trade Comission. (2012). A Review of Food Marketing to. United States: Federal
Trade Comission.

Fox, J., & Lorsch, J. (July 2012). What Good are Shareholders: Harvard Business
Review. Abgerufen am 22. July 2018 von Harvard Business Review:
https://hbr.org/2012/07/what-good-are-shareholders

Gcoyi, A. (22. July 2018). 6 Ways to Improve Your Stakeholders Relationship: SLA.
Abgerufen am 22. July 2018 von She.Leads.Africa (SLA):
https://sheleadsafrica.org/improve-stakeholder-relationships/

Harvey, V. (11. September 2011). Business Strategy Competition: Knoji. Abgerufen am

22. July 2018 von Knoji: https://business-strategy-competition.knoji.com/market-
and-nonmarket-stakeholders/

Kokemuller, N. (2013). What Is the Role of the Supplier Relationship in an

Organization?: Chron. Abgerufen am 22. July 2018 von Chron Small Business:
https://smallbusiness.chron.com/role-supplier-relationship-organization-
16013.html

Madsen, S. (3. April 2011). 6 principles for building trusting and lasting relationships
with your stakeholders: Susanne Madsen. Abgerufen am 22. July 2018 von
Susanne Madsen - Developing Project Leaders:
https://www.susannemadsen.co.uk/blog/6-principles-for-building-trusting-and-
lasting-relationships-with-your-stakeholders

Payne, G. (14. February 2014). The importance of staff to an organization: Wyre Council.
Abgerufen am 22. July 2018 von Wyre Council:
http://www.wyre.gov.uk/blog/Garry/post/71/the-importance-of-staff-to-an-
organisation/comment

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Reference for Business. (kein Datum). Encyclopedia: Stakeholder Theory: Reference for
Business. Abgerufen am 22. July 2018 von Reference for Business:
http://www.referenceforbusiness.com/encyclopedia/Sel-Str/Stakeholder-
Theory.html

Trout, J. (3. July 2006). Peter Drucker on Marketing: Forbes. Abgerufen am 22. July
2018 von Forbes: https://www.forbes.com/2006/06/30/jack-trout-on-marketing-
cx_jt_0703drucker.html#18264bd4555c

Van Beek, D. (14. February 2015). The most important stakeholders of Business
Analytics: Passioned Group. Abgerufen am 22. July 2018 von Passioned Group:
https://www.passionned.com/the-most-important-stakeholders-of-business-
analytics/

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