ITPEC IP October 2020 Question 76

To prevent management and employees from being involved in misconduct or scandals that threaten the company's existence — the purpose of strengthening compliance.

Compliance means observing laws and regulations, internal rules and social norms. Companies strengthen it with codes of conduct, training, internal reporting (whistleblowing) channels and checks, because one serious violation, such as falsified data, bribery or a data leak, can cost the trust of customers and society and bring fines or loss of licences that end the business.

Answer (a)

Why not others:

• •(b) — keeping management resources that differentiate the company from competitors describes core competence and competitive strategy
• •(c) — restraining the exercise of management power to build sound management is the aim of corporate governance
• •(d) — improving the satisfaction of all stakeholders for continued growth is closer to CSR and stakeholder management

Key rule: Compliance keeps the company within laws, rules and norms; governance oversees management; CSR answers to society and stakeholders.

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