Maintain Ethical And Professional Standards

This secondary research task will consider the corporate governance that JSE listed companies uphold. This research task will determine the extent to which these companies maintain ethical and professional standards. Two companies will be chosen and their corporate governance will be collected and closely looked at, there will be a discussion of the information collected for each of the two companies. A conclusion will be made as to which company is better governed based on the information which has been collected for the research.

Introduction

Corporate governance is a company’s operating principles in terms of their ethics, corporate social responsibility, professionalism and the control which stakeholders have over the company to ensure the above principles are followed. Two companies which have been chosen will be looked at closely in terms of their corporate governance. The aim of the research is to determine which of the two companies is better governed, and which of the two companies maintain ethical and professional standards.

Methodology

I have mainly used the internet as it is difficult to get brochures with the relevant information about the corporation. I have looked at various sites about the corporation. I have tried to email the corporation for specific information which I was unable to retrieve on the internet. I have chosen the two companies as I enjoy eating at many of the restaurants which are franchises of the corporation and for the choice of the other corporation; it is because my family shops with them.

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Choice of companies

Both Shoprite Holdings Ltd and Spur Corporation are public companies which are listed on the JSE. These public companies have a Corporate Social Index which determines the amount of involvement they have in the community. Each of these two companies follows a similar business structure (Anonymous, Annual Report 2006, 2006) (Anonymous, Investor care, unknown), but each one has an individual contribution to the community, socio-economic issues and the environment. Each company follows a different code of ethics, but each company aims to not only to make profit but to also give back to the community and to provide for their consumers. I have chosen these two companies as they have great involvement in the community as well as provide excellent service for their customers. Shoprite Holdings Ltd provides for people who are well to do as well as those who are less advantaged. Shoprite gives back to the community in vast amounts and this is the reason why they are supported by the community. My family shops at Shoprite as well as eats at Spur which is another reason why I chose these two companies, to look at in closer detail.

“Food is our passion.

Welcoming you, our pleasure”

Introduction into Spur Corporation micro environment

“Our vision is to be the best family sit-down restaurant in the market in which we trade” (Anonymous, Annual Report 2006, 2006). “Our mission is to be dedicated at all times to our customers and staff- to provide a ‘taste for life’ for our customers and to be a great place to work for our staff” (Anonymous, Annual Report 2006, 2006).

Allen Ambor

Executive chairman

Spur Corporation follows the line and staff organisation structure which has a board of directors who over look the entire organisation. Below the directors are the managers in each of the different fields for example advertising and finances. Below the managers are the staff which interact directly with the customers (Anonymous, Annual Report 2006, 2006). Spur corporation is well aware of the service which they need to provide their customers with.

Ronel van Dijk

Financial director

Pierre van Tonder

Managing director

Mark Fellery

Deputy managing director

Muzi Kuzwayo

Independent non-executive director

Dean Hyde

non-executive director

Keith Getz

non-executive director

Keith Madders

non-executive director MBE

(deputy chairman)

Phillip Joffe

Executive director

Kevin Robertson

Executive director

Financial manager

Public relations manager

Floor manager

Human resource manager

Marketing manager

General manager

Staff

Staff

Staff

Staff

Staff

Staff

Corporate social responsibility and sustainability

Corporate social responsibility is the responsibility of the organization to give back to their community. The aim of the king II report is to improve corporate governance throughout the whole structure of the business. All public companies which are listed on the JSE are obligated to give back to their community.

The king III report is similar in context with regards to king II, but with the exception that businesses need to follow the “triple bottom line reporting “which is “People Planet and Profit”. This then means that businesses should not only focus on gaining a profit but also giving back to their community.

Spur Corporation mainly focuses on providing for the underprivileged children (Anonymous, Annual Report 2006, 2006). By raising these funds and being a part of these projects Spur aims to gain awareness as good citizens for the group of staff who are involved (Anonymous, Annual Report 2006, 2006). The projects are mainly aimed at sporting activities which they believe develop people especially the young South Africans (Anonymous, Annual Report 2006, 2006).

Spur Corporation is involved in the following community projects:

•Spur Soccer Masidlale(‘let’s play’)- this project focuses on developing children from ages of 8 – 12. There are children who come from many different communities and children who have experienced different things in life (Anonymous, Annual Report 2006, 2006). This project aims to teach these children life skills as well as help them gain self- confidence and teaches them many life skills which will help them in their future (Anonymous, Annual Report 2006, 2006). This project will mainly focus on children who are underprivileged (Anonymous, Annual Report 2006, 2006)

•Spur Corporation is involved in charity golf tour. In this project there are many other organisations and competitors which donate money towards the charity programme and therefore compete in the golf tour (Anonymous, Spur chairty golf day, 2006). The money which is raised in thousands is given to a charity. Spur aims to increase the donations every year (Anonymous, Spur chairty golf day, 2006).

Spur Corporation believes there should be a balance between making a profit and also looking and the long term needs of South Africa, the environment and their employees. There are specific people who are allocated the role to ensuring there is a way in which Spur Corporation can reduce the impact they have on the environment. This team looks at the sustainability of their strategy.

Spur Corporation is involved in projects which are short term. The Spur Corporation is not involved in many corporate social responsibility projects. The projects which they are involved in are ones from which South African children can learn life skills and gain personal growth. Therefore Spur Corporation needs to look at projects which are long term and ones which can help communities or children for long periods of time and not have a ” hit and run” approach. Once Spur Corporation gets involved in such projects to help communities or certain children, they begin to rely on the funds. Long term projects are most beneficial.

Socio-Economic issues and strategies used

Spur Corporation is involved in HIV/AIDS management project. The group:

•Is supportive towards the issue and are non-discriminatory

•provides educational workshops about the issue

•provides free access to condoms and educational videos

This project is aimed at educating the employees of Spur Corporation so they are aware of the virus and have the knowledge to prevent contracting the disease

Spur Corporation is not involved in addressing many socio-economic issues. There are many socio-economic issues which South Africa is facing such as poverty. Spur Corporation could focus on addressing projects which are sustainable and which can improve an issue which South Africa is facing. Poverty is one of the biggest issues in the world not only South Africa therefore Spur Corporation could get sponsors as well as raise their own funds to give toward a fund specifically for poverty stricken communities within South Africa or around the world.

Natural disasters have affected the world and many people’s lives. Spur Corporation could also help with donations or fund raising to uplift these communities.

There are many other socio-economic issues which Spur Corporation could address. Donations can be put into their budget as they are an organisation which is making high turnovers (Anonymous, Annual Report 2006, 2006).

Code of ethics

Spur Corporation has a code of ethics which expects all employees to have the highest moral and ethical standards internally and externally (with the stakeholders and shareholders). (Anonymous, Spur Corporation Annual Report 2006, 2006). The code of ethics contains principles such as “integrity; honesty and good transparency, impartiality; transparency and openness; and accountablility and responsibility” which all staff should adhere to (Anonymous, Spur Corporation Annual Report 2006, 2006). The Spur Corporation has a high standard to which they keep up to and therefore this is what helps the business grow. Their code of ethics guides staff on how to behave with their customers and shareholders. The code of ethics will also help shareholders to deal with any unehical behaviour (Anonymous, Spur Corporation Annual Report 2006, 2006)

Introduction into Shoprite Holdings limited micro environment

“Our mission of the Shoprite Group of Companies is to be the consumers’ preferred shopping destination, by retailing food and non-food products at the lowest prices from conveniently located outlets in an environment that is conducive to shopping.” (Anonymous, Customer care, 2008).

Shoprite follows the line and staff organisation structure. The line and staff organisation structure is the board of directors over looking the entire organisation. Below the directors are the managers of each specific aspect of the business such as the human resource manager. Below the managers are the staff which work directly with the customers.

Corporate social responsibility and sustainability

Corporate social responsibility is the responsibility of the organisation to give back to their community.

The aim of the king II report is to improve corporate governance throughout the whole structure of the business. All public companies which are listed on the JSE are obligated to give back to their community.

The king III report is similar in context with regards to king II, but with the exception that businesses need to follow the “triple bottom line reporting”which is “People Planet and Profit”. This then means that businesses should not only focus on gaining a profit but also giving back to their community.

Shoprite Holdings is involved in many different community projects. Many of the projects are ones which are sustainable as they take place every year and raise funds for a specific time period. Other projects are ones which Shoprite Holdings is directly involved in such as donating food to the underprivileged communities.

Shoprite aims to help improve and make the world a better place for the present and future in terms of sustaining the environment, society and the economy.

Some of the projects which they are involved in are:

•Shoprite community network- Shoprite aims to uplift underprivileged communities. This project is broadcast every month on many different radio stations and each area chooses a community which they believe needs Shoprite’s aid the most (Anonymous, Community projects: Community, 2008). The community which is chosen for the month as most deserving receives R10 000 from Shoprite (Anonymous, Community projects: Community, 2008).

•Mobile soup kitchens- Shoprite aims to help communities which are poverty stricken and those which have been affected by natural disasters in South Africa (Anonymous, Community projects: Community, 2008). Shoprite sends out trucks every month to those communities they are aware of which need the food (Anonymous, Community projects: Community, 2008). Shoprite feeds many communities widely spread across South Africa (Anonymous, Community projects: Community, 2008).

• Book collection- Many schools and libraries in South Africa do not have sufficient funds to provide their pupils with books (Anonymous, Community projects: Book collection, 2008). Therefore Shoprite aims to fill the libraries and schools with as many books of all genres. Shoprite allows for the public to drop books off at collection points at any Shoprite, Checkers or Checkers hyper stores throughout the country (Anonymous, Community projects: Book collection, 2008).

•Strokes of genius- Is an art project which allows for many artists and crafters to be recognised (Anonymous, Community projects: Strokes of Genius, 2008). This project aims to inspire and give children who are less advantaged the opportunity to show the equivalence of their talent to that of children who are privileged (Anonymous, Community projects: Strokes of Genius, 2008). Shoprite is helped by The Department of arts and culture, Department of economic development and Department of basic information (Anonymous, Community projects: Strokes of Genius, 2008).

•Golden trolley and disaster management- This project aims to also help the underprivileged and those who have been affected by natural disasters (Anonymous, Community projects : Golden trolley, 2008). Shoprite and Checkers have collection points at which public can donate things which will be donated to the communities (Anonymous, Community projects : Golden trolley, 2008). Shoprite also donates blankets and food to people who have been affected by natural disasters (Anonymous, Community projects : Disaster management, 2008). Shoprite has emergency plans which will help those in need. Shoprite is always ready to help those who are in need (Anonymous, Community projects : Disaster management, 2008).

•Cuppa for Cansa- Shoprite Checkers are the main sponsors of this project and they are involved as the aim to gain awareness about CANSA and raise funds to fight cancer (Anonymous, Community projects : Cuppa for Cansa, 2008). Cuppa for Cansa also aims to encourage people to lead a healthy lifestyle as well as eat healthily (Anonymous, Community projects : Cuppa for Cansa, 2008).

•Casual day- is another project which Shoprite is a main sponsor of.

Socio-Economic issues and strategies used

•Poverty – Shoprite Corporation is in involved in helping communities which suffer from poverty (Anonymous, Community projects: Community, 2008). There are many communities in South Africa which have been faced with natural disasters and many people of those communities are unemployed (Anonymous, Community projects: Community, 2008). Therefore Shoprite reaches out to those communities and gives back in the form of food and blankets, to help uplift the communities. As poverty is a worldwide issue it is considered a socio-economic issue.

•Education- Shoprite runs project with deal with aspects of education as many South Africans are not provided with an education at all or some are but not one which is good enough for them to be the future leaders of South Africa (Anonymous, Community projects: Book collection, 2008).

•Shoprite Holdings addresses the issue of HIV/Aids in South Africa (Anonymous, Organisational integrity, 2008). As HIV/Aids has been on the increase. Shoprite has a campaign which aims to educate staff on the illness as well as teach those with the illness how to manage it. The staff are educated fully and are provided with a counsel. The campaign helps employees by giving them a better understanding of the illness as well as all precautions which can be taken.

Code of ethics

A code of ethics for Shoprite Holdings is not available to the public. This is a negative aspect of the business as the public need to have access to their code of ethics as they are a public company which is listed on the JSE. The code of ethics gives public and other companies a better idea in which they are able to judge the business according to their morals and ethics of how the employees are meant behave with each other and with the customers.

Analysis of information, comparison and opinion

Both businesses follow the line and staff organisational structure. This is a structure which is a good choice as there is only one level of authority in the business; this avoids conflict and confusion between employees and authority. There are various levels in the structure which allows for managers at each level which guide the business as well as the employees in the right direction. Both businesses are greatly involved in corporate social responsibility, one more than the other.

Spur Corporation is involved a fair amount in CSR, but Shoprite Holdings Ltd has great involvement in helping the community to become a better place. Shoprite mainly looks at helping the youth and elderly too, but more the youth in rural areas that do not have much as they are the future of our country. Shoprite Holdings and Spur Corporation both aim to be involved in projects which are more long term than once off as the community needs their input at all times.

South Africa faces many socio-economic issues which can be resolved by the input of the people of the country. Spur Corporation is only involved in helping with HIV/AIDS whereas Shoprite Holdings is involved in much more such as HIV/AIDS, education, poverty and natural disasters which are faced in many of the communities. Shoprite seems to be more aware of the issues which are faced by the country, and they are determined to take action and help the community to be improved and not worsened.

Spur Corporation has a code of ethics which aims to maintain a high business standard which they are aware will help their business to grow. The code of ethics is in place to ensure employees maintain this high standard in their work ethic as well as in dealing with customers. Shoprite Holdings does not have a code of ethics which is available to the public but as they are a public company which is listed on the JSE they will have a code of ethics which the company follows. This is negative factor for Shoprite as the code of ethics of the company gives the public a better idea of the business itself as well as the standards of the business and its employees.

Shoprite Holdings Ltd only lacks a code of ethics available to the public, but otherwise the business maintains high standards and aims to be the best. It is clear that Shoprite is aware of the community and cares to improve the community is every aspect. Spur Corporation is also a public company but does not fully address the issues at hand such as CSR.

Discussion and conclusion

I believe Shoprite Holdings Ltd does uphold corporate governance as well as maintain ethical and professional standards thoroughly. Spur Corporation does not maintain these standards fully. Corporate governance is one of the main aspects of the business and Shoprite Holdings maintains high standards in terms of their ethics, corporate social responsibility and professionalism. Shoprite Holdings is fully involved in corporate social responsibility and addressing socio-economic issues. Shoprite Holdings believes greatly in helping the community as it is clear in the research done that they are thoroughly involved in all aspects of the community such as education, poverty, HIV/AIDS and natural disasters.

Shoprite Holdings has the correct approach in which they address issues in the community as they are aware they should be more involved in long term projects rather than only helping once and thereafter forgetting about the community. Shoprite Holdings is a better governed business and all the above proves this.

Spur Corporation is a business which is a luxury for many people and many people who are underprivileged do not gain from this. This is a reason why Spur should be more involved in CSR and addressing socio-economic issues. But Spur Corporation is hardly involved.

Shoprite Holdings should be commended as they are a company who provide for rich and poor but are still involved fully in the community. This is another reason why Shoprite Holdings is a better governed company.