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Political, Ethical, Economic and Legal Issues: UK and Finland. Case Study: Sainsbury’s and Nokia Companies

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Updated: Jul 3rd, 2020

Abstract

Companies are legal entities. They are separated from the owners and management. Being legal entities, companies can own properties, employ people, enter into contracts and sue in courts. This explains why large businesses are organized as corporations. Corporations have several advantages over other forms of businesses.

First, there is a separation of ownership and the business. Second, companies have more credibility in the market place than other forms of businesses. In business operation, ethical, economical, legal, and political considerations are important in determining the sensitivity of the geographical location.

Thus, this treatise attempts to explicitly carry out a comparative analysis of the political, economical, ethical, and legal processes under which Nokia and Sainsbury’s Companies operate. Nokia Company is located in the United States while Sainsbury’s Company is located in the United Kingdom.

The business laws in these countries are similar. Besides, the economies of these countries are open with little restrictions to free trade. It is important to review the aspects of geographical location in business to establish their sustainability and uniqueness in operations.

Introduction

Indisputably one of the top retail food stores, Sainsbury’s Company has been operational since 1869. The company has chains of stores and offers financial services. The group currently runs 350 supermarkets besides 300 shops. The customer base stands at 14 million per week in these stores.

In order to affirm presence in the market, the company sold shareholding for its bank and currently owns half of it. Generally, the company is considered among the top five best performing grocery store in the world. Sainsbury’s has survived the competitive momentum in the UK market.

Nokia Corporation is a global communications corporation incorporated in Finland. The corporation is divided into three segments. Nokia Corporation has market all over the world with the major markets being China, India, Germany, Russia, USA, Brazil, UK, Spain, Italy and Indonesia.

Political Envirinoment

The essential political requirements of the Nokia and Sainsbury’s Companies towards the operational planning and development phases are those that impact directly on the stability of the culture of the countries of operation. The Finland democracy faces no cultural and religious opposition from the majority who are the bulwark of the Nokia phone users. This has been a factor that has encouraged the engagement of Nokia Company in the economic focusing and operation within the expansive Finland market (Turner 2005, p. 78).

The overall development levels exhibited by the Finland government are relatively stable and high, thus, encouraging prospective investors such as the Nokia Company. Reflectively, this can be seen to include the potential of the region for business ventures such as telecommunication services provided by the Nokia Company.

The rate at which the democracy of the United Kingdom is growing is incredibly rapid and this has led to the diversification of the economy and stability in the Sainsbury’s business stores.

Notwithstanding, this diversification of the economy has led to the definition of the interdependence of sectoral components of the political economy that translate to the realization of non restrictive business operation(Turner 2005). Besides, the finance departments operating in the UK play a great role in the market operations of the Sainsbury’s business. Further, this interaction has a direct impact on the economic currency value of the country (Bolton &Mathias 2005).

Consequently, this could be the reason why the UK authorities insist on promoting the available opportunities for the local investors such as the Sainsbury’s business in an outlook of luring them to invest into the economy. In the long run, this has made it easier for the Sainsbury’s Company to penetrate into the UK economy. Therefore, the Sainsbury’s Company’s approach of customer Centricity is healthy in asserting ethical issues such as cognitive, knowledge, personality (Merkin 2000).

Economic Climate

The inflation rates in Finland and UK are at a minimum and the currency management authorities are confident that the rates are not only minute, but also manageable. Thus, it has no substantial macro effect on the market demand pillars of these economies from which Nokia and Sainsbury’s Companies operate respectively.

Thus, Nokia’s revenues have always increased in its invests in the economy of Finland (Bolton &Mathias 2005). Moreover, the currency’s stability and its minimal fluctuations auger well with the Nokia business profit making objective (August 2008). In addition, recent research on economic projection confirms that Finland has a stable exchange rate on the balance of payments echelon. Consequently, Nokia is constantly gaining in Finland (Bolton &Mathias 2005).

To meet the demands of its population, the UK has successfully transformed the economy and economic systems from traditional agricultural dominance into advanced and reliable service industry system consisting of international banking systems and liberalized private sector through its business policies.

These banking systems make credit available for entrepreneurs in the private sector and facilitate public borrowing. Subsequently, the economy has been expanded and a series of opportunities are available for internal and international investors. The interactions between the banking sector and private businesses in the UK have made it a hub for entrepreneurship and emergence of wide market for companies such as Sainsbyry’s.

In order to gain from comparative advantage, doing business in UK saves resources that could have been directed towards training workforce since skilled labor is available and relatively affordable.

In addition, the culture of UK population promotes self discipline and appreciates excellence in service delivery as a means of making the economy better. In the process of achieving this, the self motivating culture facilitates competence and combines the skills with loyalty to give positive results that attract entrepreneurs such as the Sainsbury’s Company.

In the business environment, laws and regulations imposing trade restrictions could be a turn off to potential investors, especially when they are unreasonably high. In a way, no one will ever want to venture into an economy whose host country has rigid rules and regulations. Also, if the legal requirements of putting up a business structure are excessively many and unreliable, it becomes economical to let go. In business, this situation best defines a scenario in which a potential opportunity translates into a challenge.

Reflectively, Finland, from where the Nokia Company operates, has a reputation of setting high legal expectations of business. This might be seen a repellant to investors. Less legal hurdles are often a magnet for business operations. From the legal dimension, the evaluation of Finland’s legal requirements is necessary for the Nokia Company to tailor its products to suit the acceptable legal norms.

Research has it that Finland though very populous, have a high percentage of the literate in its population. The access to the market (exchange negotiations or otherwise) is a factor that has influenced the pattern of trade in this country (Mckendrick 2009).

Moreover, the documentation of business regulations has made it clear that they are binding and any ambiguities are excluded from the equation. The provision of patent and trademark rights in Finland has helped eliminate the chances of fraudulent attempts on a company’s product to ensure that the company is not disadvantaged. Nokia Company has taken up this as an assurance of the protection to their products against illegal dealers.

There exist some legal issues that Sainsbury’s Company should keep in mind during interviewing and hiring. Discrimination and group differences in testing have been discovered over the decades of personality testing practice and test results vary for different racial groups (Koffman & Macdonald 2007).

A concern in cognitive testing is that different racial groups perform differently in certain cognitive and IQ-based tests, suggesting a bias in these testing methods (Turner 2005). For instance, in 1971 the United States Supreme Court decision, Griggs v. Duke Power resulted in the neither organization to show that testing is a business necessity so that such tests are not biased nor are used to eliminate certain candidates. Nevertheless, procedural justice is another issue that has occurred when conducting cognitive assessments (Stone 2008).

Also, poor face validity leads to applicants believing that the tests do not measure job-related skills or abilities. However, these concerns do not distract from the usefulness that tests can provide to foresee personality, approaches, and psychological behavior to best determine an applicant’s fit with the existing personnel. This aspect must be considered since it forms part of the UK business law (Keenan & Riches 2002).

Principal Agent theory is the general act of motivating one person or an institution to act on behalf of another. Principal hires an agent to carry tasks on his behalf. The agent thereby influences the welfare of the principal (Bolton &Mathias 2005). In the United Kingdom, Sainsbury’s Company has benefited from this law.

The relationship provides a useful framework for analyzing situations in which there is an asymmetric information and when there is need to design a contract or monitor the behavior of the parties. An example is when the shareholders of the Sainsbury’sorganization hire managers to run their business (Marsh & Soulsby 2002). The managers may have different goals from those of shareholders.

For instance, managers may want to maximize profits and increase market share of the company. On the other hand, shareholders may want to increase returns. This creates conflict of interest. This conflict of interest is referred to as the principal agent problem. To avoid this, the contractual business laws in the UK dictate the operating parameters and protects companies from exploitation.

The agency agreement within Sainsbury’s Cooperation involves an active and proactive process of business assessment. In trying to solve the problems that may arise from conflict of interest, the principals of the Sainsbury’s Company have to incur some agency costs such as non procedural termination, voluntary resignation, and layoffs as a result of cost cutting policies that are within the business laws of the UK. These costs include monitoring costs, residual loss and bonding costs (Stone 2008).

There are a number of legal solutions for doing business in Finland . For instance, the business contracts specify the duty and responsibilitiesof a business (Bolton &Mathias 2005). Further, performance incentives are scientifically matched to business outcomes.

The legal system closely monitors the agents in their bid to ensure sustainability in the operations of a company such as Nokia. Thus, to protect the legality of its hiring department, the company has been active in underlining the parameters of operations within the acceptable labour laws of Finland (Bolton &Mathias 2005).

Ethical Environment

In the business environment, there are series of ethics that define the moral obligations expected of the business actors. The ethical environments in Finland and UK have laws against conspiracy, securities fraud, false statement, insider trading, and fraud in businesses.

Business ethics are moral obligations that the management of a business should follow in doing business activities. Good business ethics define objectivity and motivation in maintaining trust in transactions. In order to promote the ideals of positive business ethics, Finland and UK have developed a good business culture by fostering a strong alignment on the set path of achieving goals, missions and vision within the business laws that are operating in these countries.

These ethics have been made achievable through adhering to the written rules of engagement, expected behavior, and accepting the repercussions for deviation for both local and international businesses. Therefore, healthy communication ethics of the UK and Finland support the Sainsbury’s and Nokia Companies in making a steady commitment to practicing accepted desirable healthy business culture such as discipline, CSR, and healthy competition through ethical training.

Reflectively, ethical training is provided to businesses such as Nokia and Sainsbury’s to create a sagacity of moral responsibility to their Certified Public Accountants at the earliest time possible before they commit fraud. Further, ethics training enables them to have knowledge on how to handle ethical dilemmas that they may face when practicing business in these countries (Stone 2008).

The smooth running of an organization processes has a strong impact on the amount of revenue generated through the sales of the products and services produced. Contemporary rules of the Finland business ethical contract include: the protection of intellectual property; auditing responsibilities; responsibility for ethical policies; export control compliance; oversight of the divestiture of businesses; and due diligence.

Within the businesses such as Nokia, where contract security has taken on these expanded roles, there has often been a parallel process whereby the more mundane aspects of the work traditionally associated with employment, the so-called ‘guards and gates’ work, have become the responsibility of other functions such as facilities or health and safety of the employees (Hugh 2003).

Upstream influences play an important part in ensuring success or otherwise of the contract security function within an organization as an ethical policy (Helewitz 2010). Less obviously, the influence and patronage of an ethical code of conduct of UK are crucial to the contract security’s ability to align its strategies to that of the business as a whole, which in turn is a measure of the worth of the employee security of tenure function (Hugh 2003).

Thus, the interests and input of the UK government’slocal business department have partnered with companies such as Sainsbury’s to promote healthy business activities.

Validated personnel selection is crucial in forming an effective staff, directly promoting employee productivity, and in most cases, improves business performance and profitability (Emerson 2009). Finding and hiring qualified candidates is often a lengthy time- consuming process and should be implemented using the most current research practices that promote equality and moral business ethics.

Chen-Wishart (2005) notes that “the goal of the selection process is to capitalize on individual differences in order to select those persons who possess the greatest amount of particular characteristics judged important for job success” (pp. 309). The Sainsbury’s Company has used personality and psychological testing to predict job performance, job related behaviours, and reactions as guides to hiring and staffing its departments in line with the UK employment act (Emerson 2009).

The preferred approach to ethical personnel selection for the Nokia Company includes a general written test that establishes a standard for work experience among the candidates, cognitive ability tests, and personality testing to obtain a clearer picture of which the applicants are (Hugh 2003). Moreover, “with the cognitive ability test, candidates cannot fake the answer by simply wanting to do so. They must have the ability to recognize the right answer” (Hugh 2003, p. 685).

Conclusion

In order to promote the ideals of positive business ethics, it is vital to develop a good organizational culture by fostering a strong alignment on the set path of achieving goals, missions, and vision. This is achievable through adhering to the written rules of engagement, expected behaviour, and accepting the repercussions for deviation from the same in the operation country.

These aspects are very clear in the Nokia and Sainsbury’s organizations in line with the laws, politics, ethics, and economic considerations of Finland and UK respectively. Among other reasons for the better position can be attributed to cheap labour, ready market, government commitment, and the spirit of entrepreneurship. Generally, UK and Finland are better off in business organization and flexibility.

References

August, R. (2008). International Business Law: Text Cases and Readings. New York: Routledge

Bolton, P., &Mathias, D. (2005). Contract Theory, Massachusetts: Massachusetts Institute of Technology.

Chen-Wishart, M. (2005). Contract Law. New York: Oxford University Press.

Emerson, R.W. (2009). Business Law. New York: Barron’s Educational series.

Helewitz, J. A. (2010). Basic Contract Law for Paralegals. New York: Aspen Publishers.

Hugh, C. (2003). The Law of Contract. London: Thomson Litho Ltd

Keenan, D, & Riches, S. (2002). Business Law. New York: Pearson/Longman

Koffman, L., &Macdonald, E. (2007). The law of contract. New York: Oxford University Press

Marsh, S., &Soulsby, J. (2002). Business law. London: Stanley Thornes Publishers

Mckendrick, M. (2009).Contract Law. Basingstoke: Palgrave Macmillan

Merkin, R. R. (2000). Privity of contract: the impact of the Contract (Rights of Third parties) Act 1999. LLP, UK.

Stone, R. (2008). The Modern Law of Contract. New York: Routledge

Turner, C. (2005). The Comprehensive Guide to all the facts Contract Law. Hodder: Oxon

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IvyPanda. (2020) 'Political, Ethical, Economic and Legal Issues: UK and Finland. Case Study: Sainsbury’s and Nokia Companies'. 3 July.

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