a) The main stakeholders in the MG Rover business at the time of its collapse include:
workers: As a direct consequence of the firm filing for bankruptcy, 6,500 jobs in the West
Midlands were eliminated, which had a huge negative effect not only on the workers but also on
their families.
Directors and management: The management of the firm and the board of directors were
responsible for making strategic choices that influenced both the success of the company and the
workers of the company. The company's shareholders were people who had invested money in
the business and so had a monetary stake in its success.
Suppliers: The failure of MG Rover would have had an impact on the company's many
suppliers, since it would have resulted in the loss of a large client.
Local community: The bankruptcy of MG Rover had a greater effect on the local community,
notably on companies that depended on the company's workers as consumers. MG Rover was
based in the nearby area.
Despite the fact that BMW had left MG Rover quite some time ago, the company continued to
have holdings in the company, including a credit line and perks totaling about one billion
pounds. The German automobile manufacturer's investments looked to be in jeopardy as a result
of the collapse of the corporation and the absence of a sustainable future. Nanjing Automobiles
and SAIC are two companies that are expected to benefit from the difficulties MG Rover is
experiencing. The intellectual property rights to two different Rover models that are eligible for
sale in China have been purchased by the state-owned SAIC. They benefited from another
Chinese company's acquisition of MG Rover, which was to their advantage. In addition, Nanjing
Automobile wasted no time in beginning to transport the machinery from Longbridge to the
facilities of its low-cost manufacturing operations in China. Nanjing Automobiles avoided the
burden of MG Rover's high labor expenses in the United Kingdom by purchasing the MG Rover
brand as well as its equipment before beginning production in China. This allowed Nanjing
Automobiles to gain from the acquisition of the MG Rover brand. The State-Owned SAIC was
prepared to promote two different Rover models inside the nation, thus this position presented a
big opportunity for both the State-Owned SAIC and Nanjing Automobiles to come out on top.
The degree to which a stakeholder is involved in or exerts influence on an organization will
determine how significant they are compared to the other stakeholders. Employees are likely to
be considered the most significant set of stakeholders in this scenario due to the enormous effect
that this circumstance has on both their ability to make a living and their overall wellbeing.
However, in addition to the shareholders, there are a variety of other parties who have a genuine
interest in the operation of the firm. The degree to which these parties should be prioritized will
vary according to the specifics of the situation.
b) Carroll's pyramid of CSR may be used in order to do an analysis on the case actions of MG
Rover. In Carroll's model of corporate responsibility, a company's obligations may be broken
down into four categories: economic, legal, ethical, and charitable. The requirement of a firm to
be successful and deliver value to its shareholders is an example of what is meant by the term
"economic responsibilities." When we talk about an organization having legal duties, we're
referring to the need of that company adhering to certain rules and regulations. The term "ethical
responsibilities" refers to the duty that a company has to act in a manner that is fair, just, and
equitable, as well as to safeguard the interests of its stakeholders. Philanthropic duties are the
obligations that are placed on a company to make positive contributions to both the community
and society at large.
In this particular situation, MG Rover's primary concern was with meeting its economic
responsibilities; the firm was going through a rough financial patch at the time and was working
hard to maintain a viable business. In addition to this, the company was required by law to
comply with all of the applicable labor laws and regulations. The directors of MG Rover were
condemned for receiving forty million pounds in salary and perks while the firm was in the
process of failing, which led many people to believe that the corporation did not meet its ethical
commitments to its workers.
Carroll defines "corporate social responsibility" as the behavior of a business that aims to be
financially beneficial, ethical, and socially stable (Dudovskiy, 2012). In order for a business to be
considered socially responsible, its productivity and legal compliance must be taken into
consideration when determining the company's guiding principles as well as the degree to which
it makes commitments of money, time, and expertise to the community in which it does business
(Dudovskiy, 2012). In addition, the multiple layers that make up the pyramid are a useful tool for
managers in gaining an awareness of the many different kinds of responsibilities that society has
for firms.
When unfavorable occurrences do place, it might be reassuring to believe that a small number of
reprehensible people are to blame. This gives the impression that the world is a kind and
sympathetic place, and that if there were fewer horrible and closed-minded individuals in it,
everyone would be happy. According to The Economist (2005), this is how the general public in
Britain perceives the demise of MG Rover, a once-outstanding vehicle company that has been on
a downward trend for four years and is now in receivership. In the year 2000, a company named
as Phoenix paid £10 ($15) to BMW to acquire the automobile; nevertheless, they were unable to
revive the titan's fiery remnants. The four individuals who were responsible for Phoenix fared
extremely well for themselves, acquiring a £10 million advance note and a £16.5 million annuity
fund; accordingly, their "avarice" has been the focus of open fury at the organization's downfall.
Gordon Brown, who is serving as chancellor, has promised a "request" into the activities of the
group. 2005 edition of "The Economist" It may be reassuring to believe that dishonest people are
to blame for what has taken place, but doing so is fraught with peril. It gives people the
opportunity to avoid placing blame where it rightfully should be placed, namely on the laws of
financial matters, which direct that small to medium-sized auto organizations are condemned,
and on the administration, whose defeatist arbitration five years ago caused harm to the assets of
the specialists it claimed to be attempting to protect. An investigation of Carroll's Corporate
Social Responsibility for MG Rover indicates that the corporation owes significant sums of
money to a number of other organizations in addition to BMW. In addition to this, it is possible
that the company's workers are due back pay, which will need to be settled.
Furthermore, it may be the obligation of the firm to either supply its workers with an appropriate
leave package or to make sure that they find occupation elsewhere. It is possible that they may be
obliged to settle retirement and other employee monies as a part of their legal duties. In addition,
it's possible that there are back taxes that need to be paid to the government, which also has to be
cleared up. The current situation MG Rover finds itself in is morally problematic. It would be
inaccurate to say that the recent report by the Financial Reporting Council that censured Deloitte
and penalized it £14 million for its position as MG Rover Group's consultant was shocking in
any way (Economia, 2013). It was previously known that the corporation was being accused of
wrongdoing, and residents of the city were spreading speculations that the sum of the company's
financial penalty may fall anywhere between £7.5 million to £20 million (Economia, 2013).
What has astonished the calling, however, is the clear widening of the commitment to examine
the public's excitement for the tribunal's report and the influence it may have on the method in
which sanctioned bookkeepers do business with non-review customers. This development has
stunned the calling (Economia, 2013).
Rapidly, the tribunal also decided that Deloitte, which had examined MG Rover, had committed
a major breach of duty in its interactions with the "Phoenix Four," who had acquired the
struggling carmaker for £10 in 2000 with the purpose of restoring its fortunes. The "Phoenix
Four" had purchased the failing automaker with the intention of reviving the company's fortunes.
After five years, MGR went bankrupt, which resulted in the loss of employment for more than
6,000 people and a debt of £1.3 billion. (Economia, 2013) According to the tribunal, the
bookkeepers emphasized their own personal interests above the interests of society as a whole
and violated their specific objectivity while working as corporate account advisors for MGR.
Because of this investigation of people's participation in general society, the profession is in a
precarious situation.
A third criticism leveled against Deloitte by the tribunal was the assertion that the company
ought to have "considered people's general excitement before accepting or advancing with their
engagement." However, despite several allusions to people in general investment, it does not
clarify on what the phrase "people in general investment" implies or what Deloitte could have or
should have done to take it into consideration. It is probable that the tribunal did not take into
account the public interest since there was no paperwork showing any transactions (12 years
have passed since these events took occurred). (Economia, 2013) In the event that this is
accurate, it would be the first time that external auditors have been connected to the idea of
disappointment in relation to archiving, which would mean that disappointment need to be taken
into consideration. At MG Rover, we do not have any commitments to charity organizations.
c) It is difficult to assess the relative strength of the major players in the MG Rover scandal. Due
to the fact that the corporation was privately owned and run, the government of the United
Kingdom had very little ability to prevent the company from going bankrupt. As the former
owner of the firm, BMW had some say in the direction the business would go in the future, but
in the end, they opted to sell it to a group called the Phoenix Consortium. As the new proprietors
of the corporation, the Phoenix Consortium had the greatest ability to decide what would happen
next with the business. However, because of the company's precarious financial position, the
available choices were restricted. As a possible acquirer of the firm, SAIC had considerable
influence over the decision; but, in the end, they chose to acquire just the intellectual property
rights to the two primary Rover models.
Even though they each have a unique value, the concepts of corporate morality and social
responsibilities are often used in a contradictory manner. The phrases "business" and "morals"
are two of the most common words in the English language, and when combined, they form the
term "business morals." Although businesses are defined as "social elements that (2) are
objective organized, (3) are planned as deliberately organized and composed action frameworks,
and (4) are connected to the outside environment" (Daft, 2001), the term "business" is typically
used to refer to "any association whose target is to give products or administrations to benefit."
This definition highlights one of the most important and necessary authoritative components,
which is that organizations are in fact open frameworks, which means that in order for them to
exist, they need to connect with the earth. This is a standout amongst the most essential and
essential authoritative components. In spite of natural disturbing forces and instability, the
organization has to find and acquire the necessary resources, interpret and keep track of
environmental changes, reduce waste output, and regulate and guide internal activities. The
reality that business associations are open frameworks indicates that despite the fact that
organizations need to earn a profit in order to live, they are required to balance their need for
profits against the requirements and prerequisites of the general public within which they
operate. This is because business associations are open frameworks. Consequently, in spite of the
fact that in business economies business groups are often allowed some degree of discretion.
Despite "apparently being allowed to pick what products and services they deliver, the
businesses they mean to serve, and the methodologies by which they create," sorted social orders
around the world did, in fact, create standards and created principles or guidelines of behavior -
both legal and verifiable - with the specific end goal of guiding companies in their initiatives to
gain benefits in ways that don't hurt society overall in the process.
The word "morals," which is included in the phrase "business morals," originates from the Greek
word "ethos," which may be translated as "character or custom." The study of morals has been
defined in a variety of different ways, including but not limited to the following: the
investigation of profound quality; the investigation into the nature and grounds of ethical quality,
where the term profound quality is taken to mean good judgments, principles, and tenets of
behavior; and/or as the code of good standards and values which reflects the practices of an
individual or gathering regarding what is correct or wrong (Daft, 2001). Taking into account
these conceptualizations, the meaning of business morals that is embraced here conveys the
ethical standards and norms that guide conduct in the realm of business, while a company's
loyalty to augment its certain effect, and minimize its negative effect, on society is referred to as
an organization's "social responsibility." corporate social responsibility The concept of corporate
social duty is multifaceted and may be broken down into four distinct categories: (1) financial,
(2) legitimate, (3) moral, and (4) purposeful magnanimous commitments.
It is the responsibility of a company to meet its financial responsibilities by providing the goods
and services that society requires at a price that is sustainable for the company's growth and
satisfies the obligations that it has made to its investors. Therefore, social responsibility in
relation to the economy encompasses a variety of specific concerns, such as how businesses
interact with their competitors, shareholders, customers, representatives, the community group,
and the physical environment. The rules and regulations that an organization is required to
comply with make up the bulk of its legal duties. It is the bare minimum that is required of
business ties by society as an exchange for enabling them to acquire the inputs they require from
nature, transform inputs into yields, and discard yields - as merchandise and administrations
procured by purchasers with the end goal of fulfilling their individual needs and needs. Society
requires this in exchange for allowing business associations to acquire the inputs they require
from nature, transform inputs into yields, and discard yields. In this manner, the legitimate
measurement of corporate social responsibility alludes to obeying local, national, and worldwide
law directing competition (procompetitive legislation) and securing: specialists' human rights
(value and security legislation); the (customer insurance legislation); and the native habitat
(natural assurance laws).
Moral duties are the behaviors or actions that are anticipated of companies by society but are not
codified in legal statutes. This subset of corporate social duties may be seen as transmitting the
"soul of the law," as opposed to the "letter of the law" in the previous example, which was the
focus of attention. As a conclusion, intentional charitable obligations are those practices and/or
activities desired of business by society and alluding to business obligations to society regarding
personal satisfaction and society's welfare. For example, providing for magnanimous
associations and/or supporting group endeavors are examples of intentional charitable
obligations. In spite of the fact that it would appear, by all accounts, that there would be little
disagreement about the requirement for ties to act successfully at the more extensive society and
the general environment in which they work, ties themselves have received a wide variety of
positions with regard to their corporate social obligation.
According to Barney and Griffin (1992), the various hierarchical positions that exist in free-
showcase economies in comparison to social duty lie along a continuum, moving from a low to
high degree of socially attentive authoritative behaviors. The few organizations that use a social
check approach to their social responsibility often do as little as possible to get an understanding
of the many social and/or environmental challenges. In this scenario, "the organization does
stand separated from society and capabilities best when it returns to essentials, when it is
emancipated of government regulation and stipulations, and when it eliminates of social
constructing for outright building" (Schwartz & Gibb, 1999). One of the stages involved in being
released from social impediment is social commitment, which is achieved when the association
performs all that is required of them.
d) Multiple stakeholders are responsible for preserving employment at Longbridge. Through the
choices that they make about management, the administrators of the organization are accountable
for protecting the health and safety of their workforce. The government of the United Kingdom
has a responsibility to cultivate an environment favorable to commerce, one that stimulates the
growth of existing businesses and the production of new employment opportunities. It was
necessary for SAIC to fulfill its obligation to keep its pledge to buy the firm and maintain
employment. It is very improbable that a single stakeholder can bear entire responsibility for
maintaining employment at Longbridge on their own due to the fact that doing so would need a
collective effort. However, failing to maintain employment may have substantial impacts not just
on affected individuals but also on the community as a whole. As a result, it is imperative that all
stakeholders work together to reduce the number of jobs lost and provide assistance to those who
have been impacted.
On April 15, the administrators of MG Rover, PricewaterhouseCoopers, made the announcement
that the last British-claimed volume vehicle manufacturer will immediately stop operations. MG
Rover had been in business since the 1920s. It will lead to the loss of 25,000 employment at
suppliers and retailers, the most of which will be located in the West Midlands. This will result in
the loss of 5,000 jobs at the Rover factory in Longbridge. The worst-case scenario for workers
will amount to almost £3,000 in compensation. After the stalled vehicles have been removed, the
remaining one thousand workers at the factory will be terminated, and the facility will be closed
down. Retailers all around the country are in the process of terminating their employment of
sales and showroom staff. The experts are no longer receiving their annuities. The most recent
year for which numbers are available is 2003, and as of that year, the benefits reserve at Rover
had a deficit of 67 million pounds. When BMW sold MG Rover to Phoenix Venture Holdings in
2001, the firm received a fully loaded benefits support package in return for the sale of the
company.
The retailers are making an effort to recover debts of up to £10,000 per individual from
customers who acquired Rover autos on a delayed payment plan. This puts a huge number of
individuals who do repetitive tasks at danger of individual bankruptcy. There is a great deal of
unpredictability around the value of the new-vehicle warranties held by the owners of the
300,000 Rover and MG vehicles that have been sold in the previous three years. The failure of
MG Rover has been characterized in the media as signaling the end of the British automotive
industry. In point of fact, after the failure of the government's decades-long struggle to preserve
such a vast business, the only thing that was left was the organization that was sold to Phoenix
Venture Holdings in 2000 for a small amount of £10. This was all that was left after the
endeavor.
As a result of Margaret Thatcher's conservative administration's decision in the 1980s to forsake
earlier attempts to defend a "national champion" via the use of government subsidies, the
national automobile industry ceased to exist in any meaningful sense during that decade. More
than one million autos were manufactured annually in 1973 by a workforce of 210,000 people.
By 2005, MG Rover had a total workforce of just 6,100 experts, and the company produced
around 100,000 vehicles yearly while experiencing annual sales declines. It has been the
equivalent of a "death by a thousand cuts" for autoworkers. Despite this, the challenges that must
be overcome go far beyond the immediate future of MG Rover or even the automotive industry
as a whole.
A free political response to the patriot and star entrepreneur viewpoint of the trade unions, which
has shown to be incapable of defending the employment of experts, was established by MG
Rover. The first issue that has to be answered is how this unfortunate event transpired for MG
Rover. It was not evident from the transaction in the clearing room whether or not MG Rover
was still in operation. Although the unions provided assurances that Longbridge would be
"saved," MG Rover's valuation under Phoenix was never acceptable. There was not a single
answer provided to any of the key issues. Rover had the expectation that it would eventually
become a subsidiary of a bigger multinational corporation.
Dwindle Cooke, a professor of the engine industry at Nottingham Business School, made the
following statement on the administration of Phoenix: In the beginning, they looked for a
companion by traveling the world and engaging in conversation with everybody and everyone
they encountered. When there are three or four different items offered, the expenses of upgrading
need to be amortized across one million units. Apparently, Phoenix was debating 250,000 new
business each year, which is an intriguing development. In order for Meanderer to return the
original expenditure, the company needs an annual base offer of 180,000 automobiles. Instead,
sales fell to 145,000 in 2002, 116,000 in 2003, and 110,000 in 2004, reducing the company's
share of the car industry down to less than four percent. This is a significant decrease from the
13.4 percent stake it had in 1990. Even more concerning is the fact that Rover was effectively
just re-creating earlier models with a new exterior shell. Developing new models is a
prohibitively costly endeavor that often costs about $2 billion. The attempts made by Phoenix to
locate overseas investment partners were, for the most part, fruitless.
The Chief Executive Officer of Phoenix, John Towers, made efforts to form worldwide alliances
with Tata in India and later with Brilliance in China. Both of these companies are located in Asia.
Neither of the planes was able to take off. In 2004, Towers tried to develop an "essential
partnership" with Shanghai Automotive Industry Corporation (SAIC) in order to design and
produce other models. This agreement would have allowed Towers to expand their product line.
SAIC is China's biggest carmaker and works under licensing agreements with both GM and
Volkswagen to produce automobiles. The failure of this very last-ditch attempt was the
precipitating factor that led to the rapid collapse of MG Rover. In any case, the four executives of
Phoenix believed that their investment in MG Rover would ultimately result in a successful
return on their capital. On the day when managers were dispatched to Longbridge, Phoenix
officials allegedly did "what any ruthless entrepreneur would have done given the situation:
incentivize, slash resources, and withdraw money ahead of schedule." This information comes
from the Financial Times.
According to the Financial Times, this practice is known as "copying through another's money."
Towers, Peter Beale, Nick Stephenson, and John Edwards, the four founders of Phoenix, founded
the organization with a combined total of £60,000, and they swiftly rose to become billionaires
as a result of their success. They wasted no time in making their own property purchases, during
which they showered themselves with lavish compensations and established a personal annuity
fund with a balance of 13.5 million pounds, all of which contributed to their current wealth of 40
million pounds. After dividing MG Rover into 28 separate businesses, the executives transfer
Rover's productive property portfolio as well as its motor and vehicle rental organizations to
Techtronic, one of the firms that is directly under their control. This results in a financial gain for
the executives. They left MG Rover as an empty carcass, holding only debts, some of which
were owing to their different entities, making them Rover's major and sometimes only loan
manager. Some of the debts were owed to them. In 2001, BMW sold Rover's auto fund firm,
MGR Capital, straight to the management of the company. These executives then created a joint
venture with the HBOS bank in order to purchase £313 million worth of vehicle advances and
rentals from BMW. According to the Financial Times, MGR Capital would provide the
executives with a bonus of £6.1 million when the last normally scheduled installments on the
credits are paid in the near future or on time next. These payments are expected to take place in
the next year.
At that point, there was nobody who could be considered sensible who thought Phoenix had a
hope of rescuing the organization. Since the occurrence in issue, the guys behind Phoenix and the
Chinese companies to whom they sold the portions of the business that were worth regardless
have been the primary benefactors of the intervention that was carried out by the legislative
body. 2005 edition of "The Economist" It is possible that it would be sensible to forgo the idea
that the legislature can salvage the firm given how much of a mess it has made of MG Rover as a
whole. However, despite over a century's worth of unsuccessful mechanical design, the
assumption that it ought to be able to accomplish anything continues; and with an election
coming up in three weeks, it is impractical to try to persuade people of this position. Since this is
the case, the families of experts stroll on Downing Street, and the government pays £6.5 million
each week to maintain both them and the harmful concept that mediation is more likely to be
helpful than damaging (The Economist, 2005).
In light of the evidence shown above, it is reasonable to draw the conclusion that while MG
Rover has made a large number of mistakes, it is impossible to pin all of the blame on a single
person. Directors did look out for their own best interests, but they also made every effort to
prevent the firm from going under. Unfortunately, the efforts made by the administration to
secure the situation at Longbridge were fruitless. BMW likewise arrived, looked around, and
then went. It is up to SAIC and Nanjing Corporation to bring MG Rover back to the glory that it
once had, or they may just let it die out.
REFERENCES
Barney, J. B., & Griffin, R. W. . (1992). The management of organizations: Strategy, structure,
behavior. Houghton Mifflin College Division.
Dudovskiy, J. (2012). Criticism associated with corporate social responsibility (CSR). Business
Research Methodology.
Dudovskiy, J. (2012). Carroll’s CSR Pyramid and its applications to small and medium sized
businesses, 25 October, [Online],. Retrieved from
http://research-methodology.net/carrolls-csr-pyramid-and-its-applications-to- small-and-
medium-sized-businesses
Economist, T. (2005). Greed and cowardice, 14 April, [Online],. Retrieved from
http://www.economist.com/node/3861248
