3.4.4 Business Ethics (2/2) Flashcards
Corporate social responsibility (CSR)
The belief that a business should act responsibly and protect the interests and satisfy of all its stakeholders.
CSR dictates what
That a business should operate in a way that actually benefits society and the environment for the long term sustainability and prosperity of the business
How does CSR satisfy customers
satisfy their customer by offering reliable products, fair priced, which exceed legal safety requirements.
How does CSR satisfy shareholder
satisfy shareholders by increasing shareprice through payment of stable and regular dividends
How does CSR satisfy employees
By offering job security, safe working conditions and fair wages.
How does CSR satisfy suppliers
Through fair prices, making regular on time payments
How does CSR satisfy communities
By offering jobs, helping local charities and helping local schools
Advantages of CSR (7)
1) Happy customers- They’ll become more loyal to a CSR business
2) Happy staff- more motivated + productive workers who are proud of the business they work for
3) Attractive for investors - more investors + funding will be available
4) Good PR - Good publicity
5) Happy communities - Trusted relationships built with the locals.
6) Happy suppliers - More likely to choose your business because of your ethical stance
7) Cost reductions - don’t have to rehire staff, energy savings in reducing waste.
Disadvantages of CSR
1) May lose sight of profit making goal.-Can be so focused on acting responsibly and ethically you may lose out on profits.Shareholders will be disappointed.
2) Can be costly in installing CSR strategies
3) Greater scrutiny - If you implement a CSR strategy and then make a mistake or avoid behaving ethically then you are likely to face a greater backlash as you’re going against your own strategy ( can damage rep)
4) Competitive disadvantage
- CSR is costly and might increase cost of production which can lead to charging higher prices.People may turn to substitutes as they may offer cheaper prices.
5) Contrasting business interests
- CSR requires to take into consideration the interests of the stakeholders. This can cause conflict when trying to make an important business decsion.
trade off
when the selection of one choice results in the loss of another
What are the trade offs when behaving ethically
1) can raise costs
- you’re paying higher wages when not necessary
- Staff have to be aware of the ethical code+ trained to implement it
2) Can reduce revenues
e. g lose out on lucrative contracts by not bribing
- refusing to develop gm crops which results in competitors doing it getting into the market first and becoming leaders.
