Social Responsibility and Business Ethics - Assignment Example

FINANCIAL MANAGEMENT - BUSINESS FINANCE ASSIGNMENT Table of Contents Table of Contents 1 Introduction 2 Social Responsibility 2 Business Ethics 3 Profit Motive or Corporate Citizenship 5 Conclusion 6 References 7 Introduction Business ethics and Corporate Social Responsibility (CSR) are similar terms and are concerned with the values, goals, and decisions made by corporate organizations in alignment with its objectives to make profits. The business firms which are socially responsible are required to act ethically. There is a thin line difference between business ethics and CSR. Ethics are concerned with individual actions that are capable of being assessed as wrong or right in accordance with the moral principles. Whereas, CSR is concerned all about the obligations of an organization towards all its stakeholders and are not limited to its shareholders only. Being the owner of a manufacturing company which is involved in the business of producing goods and selling it in the market, the primary goal or objective of the company is to earn profits out of the products sold. However, social responsibility and business ethics are two vital tasks which have to be undergone by the company to create a perfect balance between the profit making motive and being a good corporate citizen. Critical analysis of these two aspects has been discussed in this study. Social Responsibility CSR can be defined as the means operating a business by an organization which meets or even exceeds the legal, ethical, public and commercial expectations which the society has from the organization. According to the requirements of CSR, every company is needed to have some obligations towards its society and environment at large (Kotler, & Lee, 2008, p.3). CSR serves several purposes. It helps to ensure that the business processes are conducted by the organizations in an ethical way in accordance with the interests of the community. It helps in responding in a positive way towards the emerging priorities in the society. It serves for the purpose of developing willingness amongst the organizations to act beyond the regulatory confrontation. It also helps in maintaining a balance between interests of the shareholders of the company and the wider community. CSR helps in the development of the corporate organizations into good corporate citizens in the society. Social responsibility of the corporate organizations can be considered to have four dimensions. One is the economic perspective which is the responsibility of the organizations to earn profits and generate wealth for the owners of the company. Legal is another aspect of CSR which implies that all the business organizations have the responsibility to act in accordance with the existing laws and are to comply with those laws. The ethical aspect of CSR means every organization are required to act not only just for the purpose of generating profits but also doing something which is right and fair. The philanthropic and voluntary aspect of CSR is concerned with the promotion of goodwill and human welfare. Lastly CSR requires the organizations to remain as a good corporate citizen and requires them to contribute to the community development (Natarajan, n.d.). Business Ethics Business ethics can be defined as the study involving various decisions and activities carried on by a business concern where issues related to something being correct or incorrect are addressed. Business ethics are present so as to facilitate us with the answers to why some of the decisions taken up by some business organizations should be evaluated of ethically correct or wrong. Ethics and laws are quite similar to each other. Laws are considered to be the codification or institutionalization of ethics into the regulations and specific rules that exist. Ethics actually starts where law ends. Ethics are involved in issues which the law does not cover. Discussion about the ethical issues related to various business transactions carried on by business organizations might eventually head towards legislation. However in most of the issues related to business ethics, law does not provide any type of guidance for solving the issues (Crane, & Matten, 2007, p.5). Business ethics primarily relates to three things. On one hand it implies avoiding breaking of laws related to the business activities carried on by an organization. On the other hand it implies avoiding performance of such activities by an organization which might end up in a civil law suit against it. Business ethics also refers to avoiding activities which are not good for the brand image and reputation of the company (Fieser, n.d.). In today's world business ethics is of great importance to any organization. Business activities carried on by an organization imparts great amount of influence and power on the society and many people are not happy with such developments. Business ethics can help in providing ways to solve such issues. Any business organization has a significant contribution towards the society and gives rise to many ethical issues associated with it. Malpractices followed by an organization can have detrimental effects on the individuals in a society. Business ethics helps in the understanding of the reasons behind such events and the after affects. Assessment of the benefits and ill effects of ethics being managed in an organization could be measured through business ethics. Profit Motive or Corporate Citizenship CSR activities can be advantageous to the business firm in a number of ways. It would help in the retention of employees in the company and would attract more people to the company. The public image of the company would also be enhanced. It is so because the customers who are ethically conscious are attracted towards the organization following CSR activities. One such example of social responsibility activity is recycling of wastes produced in the company. It would help in the reduction of costs, thereby increasing the profit of the company. The primary motive of our company should be to earn profits. However it is also a fact that we have some responsibility for our society and environment in which our company operates its business. It is simply because the business activities carried on by the company has a direct impact on the society and its environment as a whole. In today's world, companies like ours are faced with major limitations towards its growth potential and ability to earn more profits. Various factors like Government regulations, globalization, environment issues, etc. are causing the business organizations to lose lot of money. In some of the cases, it might seem apparent that CSR and ethical implications serve to be a costly hindrance in the path of the success of an organization. However, CSR is of great importance for the organization and helps in providing better and safer opportunities for both the employee and the employers of the company. Initially, following CSR activities might prove costly, however in the long run it will always be profitable for the company. Ethical issues creep up in an organization mainly because of the availability of various alternatives to perform a certain business activity in a company. The issue is about deciding upon which the most ethical way of performing such activities (Ferrell, O. C., Fraedrich, & Ferrell, L., 2012, p.65). There can be different ways of approaching business ethics by an organization. Some argue that business ethics are derived from the profit motive of the company. As for example, production of safe products by our organization would help in the enhancement of profitability for the company through reduction in costs associated with lawsuits related to product liability. Respecting privacy of employees by our company would help in boosting the morale of the employees and thereby increasing the efficiency of the employee. All these and many other facts prove that good ethics would help in the development of profitable business in our organization. Others argue that business ethics followed by an organization are restricted to only the compliance of law by an organization. The companies are engaged in activities which are in accordance with the existing laws and are not concerned with ethical issues beyond what law requires. However, being the owner of the company it is my responsibility to act as a good corporate citizen. Conclusion CSR and business ethics have gained significant importance in all the business organizations worldwide. Both these issues are required to be considered by our company separately from its profit making motive. No organization can thrive without society and environment. The business activities have significant impact on the society and its environment as a whole. Following CSR and business ethics can prove to be advantageous for our company. Hence, apart from generating profits and wealth for the stakeholders of the company, our company also needs to behave as a good corporate citizen to have a sustainable growth and development in future. References Crane, A., & Matten, D., 2007. Business Ethics: Managing Corporate Citizenship and Sustainability in the Age of Globalization. 2nd Ed. Oxford: Oxford University Press. Ferrell, O. C., Fraedrich, J., & Ferrell, L., 2012. Business Ethics: Ethical Decision Making & Cases. 9th Ed. Connecticut: Cengage Learning. Fieser, J., no date. Business Ethics. [Online]. Available at: . [Accessed on June 20, 2012]. Kotler, P., & Lee, N., 2008. Corporate Social Responsibility: Doing the Most Good For Your Company And Your Cause. New Jersey: John Wiley & Sons. Natarajan, B., no date. Corporate Social Responsibility and Business Ethics. [Pdf]. Available at: . [Accessed on June 20, 2012]. Read More