Impact of ISO Regulations on Stakeholders in Saudi Arabia Paper Example

Introduction

The International Organization of Standardization (ISO) is a regulating organ that aims at providing guidelines on how business organizations should conduct social responsibilities that take care of the business environment. The ISO standards address their potential contribution to sustainable development. ISO regulations ensure that business activities contribute to a sustainable environment, by taking good care of the environment and all stakeholders related to the organizations. Established in 1947 in Geneva, the ISO was created with the aim of promoting quality and operation standards in workplaces and organizations. In recent decades there has been a growing concern for the environment and climate change (Perez, 2011). Therefore, more organizations have integrated systems and activities to control toxic gas emissions waste or optimize resources such as water or electricity. In many cases, it is not only a question of acting under socially responsible behavior with the environment, but many organizations have noticed the importance that consumers, investors, and governments are giving to the care of the environment and the negative effect that this could have on them (Lu & Abeysekera, 2017). Derived from these needs arising from the environment, the ISO 14001, of Environmental Management Systems (EMS) was established. ISO 14001 is the standard response for accrediting environmental management systems in companies. The main objective pursued is to allow an organization to develop and integrate a policy and objectives that take into account the legal requirements that affect the company, as well as information related to the most important environmental aspects (Epstein, 2018). It applies to environmental actions over which the company has control and those over which the organization may have some influence. In addition, this standard promotes environmental protection and the prevention of pollution in balance with socioeconomic activities.

Is your time best spent reading someone else’s essay? Get a 100% original essay FROM A CERTIFIED WRITER!

Save 25%

The ISO and AA1000 compliance has a positive impact on the investment decisions of foreign parties in the Saudi Arabia Kingdom. The ISO standards are international standards for the optimization of business processes, were developed by the International Organization for Standardization (ISO). The members of ISO are representatives of the national standardization institutes. These representatives establish ISO standards in consensus. The standardizations established by consensus are written in a document and their acquisition is facilitated through the ISO platform. National organizations also offer translations of these standards. ISO standards are not laws that a company must comply with compulsory, but ISOs can be helpful to improve. In addition, a company can also get one or several ISO certificates. These certifications are a type of quality mark that serves to convince potential customers that they acquire a certain service or product. In this way, a company can strengthen its position in the market (Massa & Scappini, 2015).

Impact of ISO Regulations on Stakeholders

Through the ISO regulations, the customer is protected from exploitation. The regulations ensure that the prices for goods and services are fair. The quality of commodities is also regulated ensuring the customers get the value of their money. The customers benefit from some rights which include the accessibility to quality products and fair prices, protecting them from exploitation (Epstein, 2018). ISO regulates and upholds these rights by appreciating the organizations that met the required standards. As a result, the business organizations end up producing high-quality goods and offering quality services to the customers as they involve all the concerned stakeholders in making their critical decisions. The interests and the welfare of the stakeholders come first to the business organizations in the process of production. The consumers' needs guide the organizations' production. High-quality products are produced as a result, with minimum degradation to the environment.

Through the ISO regulations, business organizations are required to reveal all the necessary information about their products to their customers (Gilbert & Waddock, 2010). This enables the clients to get informed before making their decisions on the products to purchase. In today's world, there is high demand from the customers to be informed on the manufacturing processes of goods they intend to buy. Since business organizations are regulated, they, therefore, need to be accountable for their actions. They are also required to answer any questions that the consumers may have concerning their various products. The businesses in return develop a sustainable reporting culture which encourages transparency and openness in their operations. When business organizations maintain a good relationship with the stakeholders, the customers gain confidence in the company and its operations. The ISO regulations ensure the customers' rights are not violated by ensuring companies don't compromise the quality or quantity of their products. Companies that do not comply with the regulations are exposed. Companies have had a negative reputation with some producing substandard products and overcharging their clients. Through the ISO organizations, the companies' operations are restricted to prioritize clients' requirements. In a global environment where there is an exchange of goods and services, there is need to observe the quality of products which is critical in ensuring there is accountability adherence (Gilbert, et al., 2010). ISO regulations specify the requirement of the production process, ensuring that the goods attain the agreed standards.

ISO Regulations Protection to Stakeholders

ISO 14001 and AA1000 area set of standards whose aim is to enhance the principle of inclusivity, which is an accountability commitment. The standards ensure materiality, responsiveness, and competence within the business organizations. The stakeholders' interests are therefore protected as the regulations advocate the business organizations to be accountable in all strategic decisions they make. ISO 14001 ensures that the businesses take responsibility for any actions they engage with the environment (Abbott & Snidal, 2010). Every business organization is supposed to protect the surroundings. ISO regulations bar businesses from engaging in activities that may produce toxic levels of harmful gases to the atmosphere. Similarly, AA1000 ensures that organizations are held accountable for anything that occurs as a result of them engaging in business, making them engage in sustainable activities (Massa et al., 2014). AA1000 standards, through the stakeholders' engagement, ensure that the businesses apply a communication channel ensuring that the concerned parties are well informed on business activities. Manufacturing firms in a country grow their clientele by ensuring they produce commodities that are of high quality. ISO 14001 and AA1000 ensures this quality, creating a good relationship between the firms and the customers even in beyond their borders

Impact of the Regulations on Investors' Decisions in an Organization

Investors' decision for engagement depends on whether the firm they are interested in complies with the regulations provided in the ISO 14001 and AA1000 standards. Organizations that comply with international standards create a good reputation, giving potential investors' confidence to express interest. Business firms that follow the ISO regulations express their commitment to align its activities with international requirements (Jamali, 2010). Confidence in business is critical as it eliminates fear, ensuring the investors have a healthy business environment. When business firms comply with the international standards, aspiring entrepreneurs will automatically follow suit, meaning they realize the needs of both customers and the environment.

ISO Regulations in the Kingdom of Saudi Arabia

Implemented of the ISO regulation in the kingdom of Saudi Arabia is conducted by the Saudi Standards, Metrology and Quality Organization (SASO). This implementation involves quality management and bodies' certification. SASO ensure that all organizations in Saudi Arabia comply with the ISO regulations to ensure that the interests of the stakeholders are considered while making critical decision-making policies. The national standards provide guidelines that ensure organizations provide quality commodities. Manufacturing industries in Saudi Arabia must ensure that they manage their waste correctly, without hurting the environment. An example of a manufacturing company complying with the National standards is the Yanbu cement company. Through the quality regulations, the company ensures that the waste is not directed to water bodies. The company uses proper packaging with critical information that is useful to all stakeholders. SASO ensures al manufactured goods are of high quality

Conclusion

The kingdom of Saudi Arabia has experienced significant growth in the number of foreign investors in recent years. The investors are being attracted to the Saudi Arabian business environment, and are investing in large scales (Massa et al., 2015). Many business organizations in Saudi Arabia have complied with international standards, attracting both local and foreign financiers. The ISO regulations have ensured the organization produces high-quality products, giving their customers the value for their money. Organizations that comply with the ISO regulations create a good reputation, attracting potential investors. The ISO 14001 and AA1000 regulations implementation within organizations give all stakeholders confidence in transacting business ensuring efficient interrelationship.

References

Abbott, K. W., & Snidal, D. (2010). International regulation without international government: Improving international organization performance through orchestration. Available at SSRN 1487129.

Epstein, M. J. (2018). Making sustainability work: Best practices in managing and measuring corporate social, environmental and economic impacts. Routledge.

Gilbert, D. U., Rasche, A., & Waddock, S. (2011). Accountability in a global economy: The emergence of international accountability standards. Business Ethics Quarterly, 21(1), 23-44.

Go, F. T., Acosta, I. C., & Malagapo, E. P. (2017). Operations Strategy to Achieve Sustainability in the light of Oil Oversupply and Price Deflation. International Journal of Business and Social Science, 8(11).

Jamali, D. (2010). MNCs and international accountability standards through an institutional lens: Evidence of symbolic conformity or decoupling. Journal of Business Ethics, 95(4), 617-640.

Lu, Y., & Abeysekera, I. (2017). What do stakeholders care about? Investigating corporate social and environmental disclosure in China. Journal of Business Ethics, 144(1), 169-184.

Massa, L., Farneti, F., & Scappini, B. (2015). Developing a sustainability report in a small to medium enterprise: process and consequences. Meditari Accountancy Research, 23(1), 62-91.

Moratis, L., & Tatang Widjaja, A. (2014). Determinants of CSR standards adoption: exploring the case of ISO 26000 and the CSR performance ladder in The Netherlands. Social Responsibility Journal, 10(3), 516-536.

Perez, O. (2011). Private environmental governance as ensemble regulation: a critical exploration of sustainability indexes and the new ensemble politics. Theoretical Inquiries in Law, 12(2), 543-579.