Issues faced in BHP billiton and infosys

Issues faced in BHP billiton and infosysBHP Billiton and Infosys, though both victorious in their own right, rent emerged from different industrial sectors, and hugely severalize geo semipolitical env atomic number 26ments.BHP Billiton is the worlds largest mining organisation, and was formed in 2001 by the merging of the Australian Broken Hill Proprietary Company, and Billiton of the UK. The companys primary interests are in Iron ore, Manganese, Petroleum, Aluminium, ignorant Metals, Metallurgical Coal, Thermal Coal, Stainless(prenominal) Steel resources, and Diamonds/Speciality materials.BHP Billitons scale and diversity appear to have cushioned it from the worst ravages of the contemporary economic downturn, although, as get protrude be discussed, this has not necessarily helped all of its employees and stakeholders. Un have-to doe with by much(prenominal) vagaries, Chief Executive Officer Marius Kloppers has repennyly judged that Commercial market mechanism leave alone e nsure that developing nations raw material demand is met, that suppliers obtain sufficient investment to meet demand and that new deposits of raw materials are discovered. (Smith BHP chief 2009) However, as other reports concede, BHP expects the majority of this demand to come from developed, rather than developing economies. Despite the low metals inventories in developed economies, there is little evidence yet of sustainable demand for metals emerging post the northern hemisphere summer. (MacNamara 2009) 2009 has seen mining profits depressed by the fall in commodities prices however, BHP has confounded this trend by paying a final dividend which matched its interim payment, i.e. 41 cents. As MacNamara back breakers come in, BHP has been one of the more successful players in the sector, bigger and better able to handle difficult market conditions than rivals much(prenominal) as Anglo American and Xstrata, which have suspended their dividends until further notice. (2009) Uniquel y amongst British mining concerns, BHP has the advantage of a petroleum division, which is now its third around useful line of merchandise. (MacNamara glass 2009) During 2009, BHP also abandoned plans to create a joint marketing company with Rio Tinto, which was to sell up to 15 per cent of westboundern Australian iron ore production. (Smith BHP Rio 2009)Infosys is other company which has made comparatively good progress during the economic downturn, and claims to have emerged from it already. Infosys is Indias second largest software swear outs exporter, reporting a 17 per cent rise in first-quarter profits during 2009. Its UK lymph nodes include the UKs Waitrose supermarket chain and many leading international banks. Its business has now developed to the point where it is a viable rival to long established IT providers, such as IBM, Hewlett-Packard, and Accenture (Fontonella-Khan 2009). Along with other Indian-based outsourcers, such as Wipro, Genpact, and Tata Consultancy Services, Infosys has a macro-economic significance far beyond its own industrial sector, having helped tycoon the Indian economy to 9 per cent growth prior to the 2008-9 financial crisis. (Lamont 2009) London instruct of Economics analysts attribute this partly to the shape of English as an official language in India, making the industrys services highly scaleable in western markets, and constituting a competitive advantage over new entrants such as chinaware. As Ilan Oshri of the LSE Outsourcing Unit ob comes, India is not a powerhouse because it is cheap but because it is smart. Thats not the same with ChinaWe dont see Chinese vendors emerging to be powerhousesChina is much cheaper than India. But the game is not about cost, its about accessing talent.(Lamont 2009).Section 1 Similarities and Differences.Mitchell et al. identify three possible themes within stakeholder saliency power, legitimacy, and urgency. (1997 p.853) twain of the companies in question have extended sta keholder chains, but they are rather different in character. It is this contrast which has determined the behaviour of each altered in one case, unaltered in the other. Of the two, the company which has moved most swiftly to change and signal that change is Infosys, a series of events which whitethorn be construe according Mitchell et al.s saliency model. Infosys power is intrinsically linked to its legitimacy, and this in turn rests squarely on its relationship with important stakeholders. In the first instance, the companys fortunes are mutually beneficial with the Indian government in its role as an economic facilitator and arbiter of structured growth significant investor cooperation is contingent upon this relationship. If the emerging Indian economy wavers, the last mentioned leave alone worry about the skills base, infrastructure, and political stability which is necessary to grow Infosys shareholder value. Moreover, in a globalised economy, influence of investors upon customer attitudes cannot be underestimated. Infosys is an exemplar business to business operator, so its corporate office profile impacts directly on that of its corporate customers. For example, Waitrose of the UK, which markets itself as a profit-sharing, employee friendly, ethical retailer, could not maintain its own CSR status whilst in cooperation with a pariah multinational. Infosys, therefore, must avoid such status at all costs.Things are different for BHP Billiton, whose corporate responsibility effort, as bequeath be discussed, rests on engagement rather than action. The most striking recent fact pertaining to BHP Billitons social responsibility profile is its dismissal of six thousand employees and contractors in 2009 alone. (Smith axe 2009). However, for complex reasons, its stakeholder profile can accommodate such crises comparatively comfortably.Section 2 Responsible business approach, has it increased/decreased, and why?As it is the worlds trader extractive compan y, it is not surprising that the areas of contention surrounding BHP Billitons operations span the environment, ecosystem, clime change, human resources, community disruption, land rights, political lobbying, and financial malpractice, to name but a few. It is far beyond the scope of this discussion to engage meaningfully with the empirical circumstances of all of these issues and concerns. It may be argued however, that its strategy is one of maximum engagement, and nominal change, a dynamic whose provenance lays in the nature of its stakeholder networks.The important point here is that BHP Billitons is not a unique position. As Brewster reports, an ever higher counterbalance of blue-chip organisations are joining the ranks of those who publish systematic CSR reports. (2007). However, the only thing which this signals in absolute positivist terms is the go forthingness to open a dialogue with concerned stakeholder groups. At the same time, it can usefully reassure less conce rned stakeholders i.e., conventional or unethical investors that the corporate responsibility issue is being fielded in an acceptable way. This is not to say that such reports merely convey a facile dialogue of inaction however, as will be discussed, they do line and confine responsibility within certain manageable parameters.It may be argued that Infosys has adopted the same kind of logic in its corporate social responsibility effort its 2008-9 report states that We understand the implications our business has on the economy, environment and society. We also recognise that there is much to learn and engage with our stakeholders to improve our performance in all areas. (Infosys 2009) It goes on to remind the reader that its board members participate in advisory councils, governments and not-for profit organisations to formulatepolicies on topics such as corporate governance, healthcare, education, climate change, and other key sustainability areas. (Infosys 2009 p.9) The over-a rching message is clearly that Infosys is representing itself as a learning organisation, in the defined sense of that term. As Lane et al. point out, each organisation, whether formally constituted or otherwise possesses its own learning culture, subsumed within compatible norms and values, operational priorities, or dominant logics. (2001 p.1143).Of the two organisations however, Infosys has exhibited by far the greatest detail of change in its behaviour. Along with Tata Consulting Services and Wipro, are at the centre of a controversy concerning the importing of non-EU IT workers into the UK Infosys has itself brought in 3,030 of these employees. The transfer route is, as a consequence, being tightened by the UK Home Office, with the result that temporary workers will no longer have any rights of settlement in addition, employees will have to have been with a company for a minimum of one year, before transferring to the UK branch (Boxell 2009). However, as both companies as the government are aware, such transfers are neartimes the only means by which specific human resources shortages may be addressed as Phil Woolas, the immigration minister, concedes, .Intra-company transfers are an important part of making the UK an sweet place in which to do business, and therefore keep industry and the economy moving. (Boxell 2009). The point here is that Infosys extended stakeholder chain implies pressures which must be balanced out through this, and other, important structural issues. It cannot afford to be less competitive than its rivals in terms of corporate responsibility, or it will simply lose business. Conversely, BHP Billiton will not. Its stakeholder chain is wider, more diffuse, and far less responsibility-dependent in short, the world knows what kind of organization it is, and it grows no poorer.Section 3 Contrasting Viewpoints.There are versatile theoretical frameworks which might be employed to assess the relative corporate responsibility efforts of BHP Billiton and Infosys, despite their intrinsic differences. These range from the extreme Kantian ethical position, which argues that a corporation can have no duty other than to shareholder, or the virtue or Confucian ethical position, which argues that innately good practice will eventually ensure rewards. Two modified positions which might allow a more measured assessment are Tinged Shareholder theory, as posited by Moore and others, and utile ethics. As Moore has argued if tinged shareholder theory were to become a normative model , there would be a greater concentration on the ideal pillowcase virtues required of a good manager, and a good organisation. Consequently, a focus on the area of virtue ethics might prove central to the visualising of a corporate responsibility ideal (Moore 1999 p.126). Meanwhile utile ethics arguably provides a useful perspective because of its outcome-focused, bottom-line orientated assessment of events. As Fisher and Lovell point out, utilita rianism, combined with cost-benefit analysis, tends to focus on a good rather than the general good, and is therefore very valuable to organisations who wish to manage corporate responsibility, rather than be managed by it.Infosys has indicated a heightened awareness of its stakeholder responsibilities and potential vulnerability by hastily re-constructing its corporate governance image in the aftermath of recent problems. Principal amongst these has been the financial scandal at Satyam Computer Services, its main rival in the software outsourcing sector. As the Financial Times reports, B. Ramalinga Raju, the former chairman of Satyam who is now in patrol custody, undermined confidence in the sector when he confessed to manipulating the companys accounts last week, including by inventing a cash pile worth more than $1bn(Leahy reassures 13.1.2009). Acutely sensitized to the negative fall-out from this, Infosys chief operating officer S. Gopalakrishnan has reportedly judged that th e entire IT outsourcing sector needs heightened transparency, adding that he himself had been receiving increasing requests for fiduciary details from clients and investors. As he put it, The reason we need to take about confidence measures at this point is that some queries have come in from customers If you look at our disclosures, we have listed every single bank account and the heart of money we have in the bank so if investors are interested they can check and call the banks. (Leahy reassures 2009). The important point here is that Infosys is attempting to avoid a utilitarian, outcome-orientated model of stakeholder analysis, by adopting a position informed by virtue ethics. It has not been accused of any wrong-doing yet and is attempting to avoid that contingency by exhibiting guilelessly good behaviour. It has sound business reasons for doing so as western companies reconstruct themselves following the recent economic downturn, they are downsizing by outsourcing, and Inf osys is well displace to capture such business, if it is untainted by corporate responsibility problems. As Chief Executive Officer, S. Gopalakrishnan explains, You want to be cautious because its not completely out of the woods but we clearly see some growth (Leahy 2009) Like that of many similar Indian companies, the stability and expansion of Infosys is contingent upon the expansion of outsourcing from client companies in the developed world. Infosys itself added a further 35 companies to its client portfolio in the second quarter of 2009. These combined factors have resulted in the addition of 1,548 new employees in the same period, bringing the total on its books to 105,500.As well as reassuring its direct stakeholders, Infosys has also proved itself attentive to the needs of the wider social and political constituency. One example of this lays in the denouement of the Tata Nano car plant dispute, in which protesters alleged that the rights of farmers had been usurped in order to facilitate the development in West Bengal. score by Indias principal opposition party the Trinamool Congress, the movement physically besieged the Singur site, drawing down foreign media attention and threatening to dampen foreign investment. chief executive officer S Gopalakrishnan was initially impressed with the efforts of the state government in attracting such investments however, he now concedes that .Singur has created fear in the minds of India Inc and like all other companies we are watching the developments very closely We will rethink and re-examine our proposed investment if need be.. The bottom line is that Infosys may not proceed with its own West Bengal development plans if the situation is not resolved (Leahy nervous 2009).BHP Billitons needs in terms of communication and responsibility are quite different, and it has arguably opted for a utilitarian, relativist commentary of good. This approach allows it relative freedom to pursue its vast portfolio of extrac tive activities in way which might be more difficult if it took a more obstructive stance. In its detailed deposition on BHP Billiton, the Ecumenical Council for Corporate Responsibility reported that it felt, in general, with a few exceptions outlined below, the company has developed a relatively advanced set of policies, which give consideration to many of the issues that our partners have raised in the Bench Marks document. (ECCR 2004 p.7) Moreover, an important part of its dialogue with ethical regulators such as the ECCR lays not in the discussion of specific or practical acts of corporate responsibility, but the demonstration of stakeholder awareness in the abstract. As it explains, The company provides regular reports to all stakeholders that are independently verified on a plan detailing how the company and the suppliers have shared responsibility for compliance and adopts a transparent policy and reports publicly to all stakeholders on its compliance programme, the findings , and what changes have been made at the factory level. (ECCR 2004 p.63). This is central to BHPs entire CSR strategy monitoring bodies are left-hand(a) facing a multi-headed hydra of good, bad, or indifferent practice across the companys vast array of activities and geographical reach. As one area of neglect arises, another is dealt with, a process through which the dialogue of engagement and improvement is maintained. The other constant is shareholder value as the regulators succeed in limiting less equitable practices in one area, less ethical investors may take comfort from the fact that more profitable centres elsewhere retain their potential for dividends. As Moore points out, it is a common feature of theories of the firm that they regard the firm as a nexus of contracts. Thetheories differ as to the extent of these relationships, with shareholder theory constrictive this to legal and implied contracts, while stakeholder theory takes a broader definition to include social/m oral as well as legal and implied contracts. (Moore 1999 p.122) The point here is that the utilitarian approach adopted by BHP Billiton has, for the time being, balanced these two forces.ConclusionA common theme in the fortunes of these two different companies lays in their successful emergence from a difficult economic period. BHP has recently asserted that there are signs of stabilization in the developed economies, with positive signs of improvement in industrial production. (MacNamara 2009) Moreover, BHP will soon be free to refresh its takeover bid for Rio Tinto, under the terms of the UK takeover code. (Smith BHP and Rio 2009) BHP also told shareholders that market conditions had improved since it held its annual concussion in London. The velocity of the recoveryhas indeed been surprising CEO Kloppers said, whilst cautioning that BHP was expected to emerge from the downturn less strongly than in previous cycles. (Smith 2009). This may be interpreted as a restraining hand upon corporate responsibility things are OK, but dont interfere. Meanwhile, Infosys has also benefited from its more public, virtue-driven responsibility stance. Research by the London School of Economics indicates that western executives in western companies opted for outsourcing on quality of service more than price. It also pointed out that Egypt, Hungary and Romania were most likely to join the shared service centre sector as key players in the near future (Lamont 2009). Infosys has of course already laid the foundations for such diversification, stating that As we grow further, we have to practice sure our workforce reflects the regions from where we derive revenue to whatever extent possible (Leahy 2006).In conclusion, it seems reasonable to argue that corporate responsibility and stakeholder concerns are at their most harmonious -for better or worse when the hegemony of liberal economics prevails. As Collier points out, In the modern world of globalisation there are some fabulo us ladders most societies are using them. But there are also some chutes (2007 p.5) If classical economics is afforded hegemony, then any expectation which does not implicitly recognise that snakes can swiftly become ladders -and vice versa - is inherently flawed. The collection of papers on globalisation edited by Timmons Roberts and Bellone incorporates commentary by some rather older commentators, who observed that, the bourgeosie cannot exist without constantly revolutionising the instruments of production, and thereby the relations of production, and with them the whole relations of society. (Timmons Roberts and Bellone, 2007 p.27) As unfashionable as they may be, Marx and Engels may have distilled an essential truth here, regardless of the fact that they did so through observation of an earlier period of structural economic change. The unavoidable function of companies, including Infosys and BHP Billiton, is to serve shareholder value. When they cease to do so, they will also cede their position to other who will.