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What are Business Ethics?
Ethics are the moral principles that shape the way that a business behaves.
Corporate Social Responsibility
CSR is the wider responsibilities of a firm to other stakeholders and society
Social enterprises achieve their financial goals while minimising any negative impact on society/the environment
What does Corporate Social Responsibility do?
Working in partnership with local communities
Socially responsible investment (SRI)
Building relationships with staff & customers
Environmental protection and sustainability
Business and CSR
Some firms use CSR as a marketing or PR tool to enhance their image rather than substance e.g. ‘greenwashing’
CSR Examples:
Nestle
The Body Shop
MARKS & SPENCERS
Shell
Ethical Issues Facing Business:
Environmental
Animal Rights
Treatment of Workers
Treatment of Suppliers
Treatment of Customers
Animal Rights
Animal welfare is a key element of many firm’s ethical policies. The likes of free-range chicken and the mistreatment of livestock
Treatment of Workers
There is no excuse for exploitation even if this occurs lower down the supply chain in a less developed country where a business source their goods from
Treatment of Suppliers
Supermarkets often exploit and pressure UK dairy farmers but the growth of the Fair Trade movement has helped to limit the problem globally
Treatment of Customers
A recent example of customer exploitation was the PPI selling scandal by the banks, where customers who took out loans/financial products where pressurised into also buying additional (unnecessary) insurance.
Analysis of CSR:
Disadvantage:
Reduced profitability
Unhappy shareholders
Is CSR a genuinely held belief
Does a firm act consistently in all countries that they operate in?
Advantage:
Improved Brand Image
Marketing Advantages
Reduced labour turnover & absenteeism
Improved staff motivation
Attract top candidates for jobs
Final Evaluation
Ethics can provide firms with a USP but only if the sentiment is genuine
Will social responsible behavior be maintained if the business is facing a battle for survival?
It is not cheap to be ethical but in the long-term it is likely to generate stronger levels of growth given how socially aware and informed the modern consumer is.