Ethics and Social Resposibility

Ethics - moral principles which quide decision making and strategy.

Morals - concerned with what is right and wrong from a social point of view, decided by individual people, not an abstract business.

Corporate Social Resposibilities - socially resposible firms whichact morally towards their stakeholders, such as their employees and their community.

Social Auditing - a way to ensure that socially resposible objectives are being implimented. It is an independant assessment of how a firm's actions affect society.

Unethical Business Behaviour

Toxic waste from factorys and plants using chemicals has been dumped into oceans and rivers affecting nature and safety. This is disposal of waste in an environmentally unfriendly manner.

Factorys with huge chimneys have an option to install equipment to strip the fumes of the noxious gases but this option is not always taken. This is causes pollution by using environmentally unfriendly production processes.

Children in third world countries are often hired as very cheap labour and are forced to work in terrible conditions. This could be exploitation of suppliers or workforce.

Advantages

Improved Corporate Image - avoid bad media and attract positive PR. People will feel more socially responsible for using the company.

Increased Customer Loyalty - Customers will favour a socially resposible firm which may result in repeat business.

Cost Cutting - by being more concerned with social matters a business could save money. For example, reducing packaging to help the environment or avoiding litigation costs.

Improved Staff Motivation - Employees are likely to be proud to work for a business which cares about society. This will increase staff productivity and may reduce turnover. Also, socially responsible businesses are more likely to ensure good working conditions for workers.

Improved Staff Moral - ethics in a business may attract a motivated staff.

Disadvantages

Compliance Costs - it is sometimes more expensive to behave ethically in business. Time and money spent on farm environments for example to produce organic food and good conditions for animals.

Lower Profits - if it is not possible to cover the compliance costs by raising the prices of goods or services then the cost will be deducted from the profit.

Stakeholder Conflict - not everyone will prioritise ethics in a business. Profit and short-term goals may be more important to some people.



Popular businesses are often involved in helping to improve society in some way. Helping the community for example allows the business to become familiar with its community and gain familiarity with its residents. Positive PR is also a benefit of acting socially resposible. Being socially irresponsible results in bad press and thus customers do not wish to support such a company, thus acting oppositely can only be a good thing, from this point of view.



A social audit is used to ensure that all their socially responsible objectives are being carried out. There would be negative media press on the company if the business stated that it was being socially responsible only to find out that some branches or employees were not upholding the firms socially resposible policies.