Company’s Duties and relation with Customers, Employees, and Suppliers
Company’s Duties:
Introduction
Commercial companies play an important role in the
economy and no less important role in society. Companies contribute to the
growth of the economy and the accumulation of wealth. The companies are linked
to and involved in many different and diverse relationships that enable the
companies to perform their role and achieve their objectives, which is the
company's relationship with shareholders, employees, suppliers, and customers.
These relationships are dictated by the nature of the company's activity and
the goals it seeks to achieve according to its strategy.
According to the NAPF statement in 1996, to achieve
the desired results, the company must show give care and focus on each of these
relationships and work according to the nature of the relationship, and that is
the best way to ensure the company achieves its goals and achieve the growth
desired and continue in the labor market. Giving the necessary attention to
each of those, relationships will definitely lead to success in business, but
is this everything and only that the companies should do to achieve their
goals? What else can affect the company’s success?
Companies Act 2006 172 “Duty to promote the success
of the company
(1) A director of a company must act in the way he considers,
in good faith, would be most likely to promote the success of the company for
the benefit of its members as a whole, and in doing so have regard (amongst
other matters) to:
(a) the likely consequences of any decision in the
long term,
(b) the interests of the company’s employees,
(c) the need to foster the company’s business
relationships with suppliers, customers, and others,……….”
In addition to the direct relations between the
company and the relevant parties. Has started in recent years the focus on the
role that companies can and should play to the social. The role to contribute to
the development of society. To pay back
to society and increase the interest in social responsibility by companies in
many areas. Such as community service, development, environment, culture, and
other areas. Meeting societal obligations is a kind of indirect promotion, to
improve the reputation of these companies in the communities in which they
operate. That is a kind of investment in interfering with society both in their
services and products as a means of introducing companies away from direct and
expensive propaganda or commercial advertising.
The relation with the Employees
Employees are the most important assets of a company
that enable it to perform the required tasks. Constant attention to employees
and work to provide a good environment that contributes to the spirit of
constant encouragement to continue progress. Providing training from time to
time contributes to increasing the ability of the company to meet new
challenges, providing appropriate benefits according to the market to maintain
the expertise and skills in the team and attract new talented and skilled
Employees.
The relation with the Customers
Some companies consider this relationship to be the
most important in the business they focus on it in a way that makes them not pay
enough care to the other kind of relationships. Even with the importance that
customers have but to reaching the satisfaction and confidence of customers will
not be done without giving care and attention to other parties such as
employees and suppliers.
The relationship of companies to consumers begins with
marketing research that contributes to data collection and analysis; to provide
information to decision-makers while making decisions. Marketing research
depends on studying a phenomenon or problem and then following up on the
results of the research so that researchers can correct the mistakes of a
specific marketing problem.
The relationship with customers is a sensitive
relationship that is addressed through marketing studies to identify the needs
of customers in the market. The extent to which the products or services
offered by the company are suitable for customers. The level of customer satisfaction
with the performance of the company in terms of the quality of the product or
services and the effectiveness of customer service. That builds trust between
customers and the company.
The relation with the Suppliers
Suppliers represent an important part of the company's
business, so the company can offer better and more competitive prices by
getting better deals from the suppliers. Permanent monitoring and quality
control for the materials provided by suppliers contribute to the improvement
of the quality of the final products or services provided by the company to its
customers.
The relations between the shareholders and the other parties within the corporate governance theory
The importance of the principles of corporate
governance (transparency, accountability, responsibility, equality), in
regulating the nature of the relationships between shareholders and other
parties. Is the result of society's need to safeguard the rights of all the
parties in a fair manner that ensures a sound environment for businesses and
companies that play a constructive and beneficial role in society?
Because of the contractual relationship between owners
and managers, many problems arose; the most important is the conflict of
interest, as managers worked to achieve their interests by maximizing their
return at the expense of owners' interests. To avoid these problems, the rules
of corporate governance are adopted to protect the interests of the third
parties involved with the company.
The importance of corporate governance is represented in
Fighting the
financial and administrative corruption in commercial companies.
Ensuring
impartiality and integrity for all employees in the company.
To achieve
sufficient disclosure and transparency in the financial statements.
Provide effective control over the company’s
accounts.
The protection of shareholders' rights is provided by
requiring the Company's management to maintain regular and clear records for
the accounts and transactions with the suppliers and customers. The right of
shareholders to obtain the financial statements of the Company in full and with
transparency and to be submitted at the right time without delay. The right of
shareholders to elect the members of the Board of Directors and obtain a share
of the annual profits.
Justice in commercial transactions is achieved by
recognizing the rights of all relevant parties who have direct interests in the
company in such a way as to ensure justice and equality between shareholders
whether inside or outside the company. This rule is the responsibility of the
company directors towards the shareholders, employees, and third parties.
Following and respecting the rules and principles of corporate
governance will have a positive impact on improving the performance in the
economic sector, allowing for more growth in the right way. It also contributes
to combating fraud and financial corruption, which is the main cause of
financial crises and the loss of the rights of all parties.
The Organization for Economic Co-operation and
Development (OECD) has confirmed that the Board of Directors is primarily
responsible for monitoring its performance and achieving adequate returns for
shareholders. While the Board is forbidden to be in in a position of conflict
of interest. The Board is required to maintain the balance between the parties through
the exercise of objective and independent judgments. Making those decisions
should come from responsible persons who can bear the responsibility and bear
the consequences (Kopeiking, 2006: 20).
The principles of corporate Social responsibility
Corporate Social Responsibility (CSR), also known as
corporate responsibility towards society, holds corporate businesses
responsible for society and the environment. This is an option that became
necessary as a result of the development of modern civil life and the culture
of the customer, who is looking for products that take into account health
aspects and environmentally friendly products.
Customers and society as a whole are also looking and
prefer companies that serve the community to be their preferred choice to buy
their consumer goods. This has been observed in European countries over the
past few decades.
Commercial companies in general and industry companies
especially particularly exposed to increasing pressure from society and laws to
improve their business ethic by demanding more care and attention to their
processes and ethics. Corporate social responsibility has become increasingly
relevant to the market at present, with increased interest in social aspects.
Corporate social responsibility can help increase business confidence and
address societal challenges while at the same time achieving profitable
results. It seems that everyone has become aware of the need for sustainable
development and that companies have a great responsibility to achieve it.
Companies must ensure that they can manage their social responsibilities and
that these responsibilities make a profit, of course when implemented.
The World Business Council for Sustainable Development
defined social responsibility as "the continued commitment of
businesses to act ethically, to contribute to economic development and to
improve the quality of living conditions of the workforce and their families,
the community and society at large." Therefore, it is of utmost
importance for companies to fulfill their desired role about the need to comply
with their social, ethical, and environmental responsibilities to the fullest
extent!!
The social responsibility of companies ensures, to a
certain extent, the support of all members of the society for the companies’
goals and development mission. Contributing to the success of their goals as
planned, and contributing to meeting the needs of the community and its
necessary living and living requirements by the establishment of charitable and
social projects of a developmental nature.
Conclusion
Financial
crises that have occurred in recent years due to management mistakes and
practices that lack transparency, without respect for shareholders' rights and
rights of others. This has led to the need for regulators to intervene to
establish rules of governance that regulate the commercial relations between
different parties and shareholders in a manner that ensures transparency and
control leading to the non-loss of the rights of any party of the rest of the
parties.
It is
clear to us that in the pursuit of its desired objectives; the company must
undergo different types of relationships that affect in different ways and at
various levels the performance of the company and its business. Therefore, the
Companies Act 2006, and Corporate Governance Code 2014 were concerned with each
of these relations and organizing them to preserve the rights of shareholders,
the rights of the company, and the rights of other parties. The success of the company
depends on the ability of the company to show the necessary attention and care to
each of its employees, suppliers, and customers. Neglecting any of those
parties or even dealing wrongly with any of them may have a negative and
noticeable impact on the company's results, its competitiveness, and good
results.
Bibliography
Kopeikina, Luda, "The Elements of Aclear Decision", Mitsloan – Management
Review, Vol 47, 2006.
OECD, "Principles of Corporate Governance", Organization for Economic
Co-Operation and Development Publications Service, 1999.
Higgins, Robert, "Analysis for Financial Management", 6th edition, McGraw–Hill,
America, 2001.
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