Ethical and socially responsible management of the internal environment

Question 1

4 Ethical issues

Answer 1

Fairness and honesty
Respect for people
Conflict of interest
Financial management

Question 2

Fairness and honest

Answer 2

Managers must obviously obey all laws and regulations. As well, society expects managers to tell the truth and avoid using misleading or deceptive information. Employees expect to be dealt with honestly and fairly. For example, if an organ- isation promises a promotion to an employee, then the organisation should honour this commitment to the employee (except in exceptional circumstances).

Question 3

Respect for people

Answer 3

If managers treat their staff with respect, then you would also expect employees to act ethically.

Question 4

Conflict of interest

Answer 4

Con ict of interest occurs when a person takes advantage of a situation or piece of information for his or her own gain rather than for the employer’s interest. Such con icts can often occur when gifts or payments are offered. There is a ne line between what is regarded as a gift and what may become a bribe. Corruption undermines the integrity of the business and, if unchecked, in ltrates the workplace culture.
Once a pattern of corruption takes hold and is seen to be acceptable behaviour, it quickly becomes entrenched within the organisation. Changing the attitudes and practices of individuals within such an organisation is extremely dif cult. What begins as a small incident, to which most people turn a blind eye, may soon develop into corruption on a grand scale. When such corrupt practices are eventually exposed, the organisation’s image will be severely damaged.

Question 5

Ethical Management

Answer 5

Ethical management refers to the process of abiding by moral standards and doing the ‘right’ thing in the interests of all stakeholders.

Question 6

Financial Management

Answer 6

In preparing budgets, a business estimates its expenditures and revenues. The common practice of overestimating expenditures and understating revenue to allow for unexpected and uncertain events is an ethical issue for an organisation.
All nancial records should be regularly audited. Internal and external audits assist in guarding against unnecessary waste, inef cient use of resources, misuse of funds, fraud and theft.

Question 7

Audit

Answer 7

An audit is an independent check of the accuracy of nancial records and accounting procedures.

Question 8

One strategy to encourage ethical behaviour

Answer 8

One strategy that can be implemented to encourage ethical behaviour is to devise a corporate code of conduct. This is a set of ethical standards for managers and employees.
Many organisations now document and distribute their codes of conduct or core values, to provide internal stakeholders with ethical guidelines for workplace behaviour and practices. Training may be given to employees to ensure they understand the values of the organisation. Most organisations also establish formal proceedings for reporting unethical behaviour in the workplace.

Question 9

Social responsibility

Answer 9

Social responsibility is the obligations a business has over and above its legal responsibilities to the wellbeing of employees and customers, shareholders and the community as well as the environment. Social responsibility is good business — customers eventually find out which businesses are acting responsibly and which are not. Customers can react and stop purchasing an organisation’s product if they learn that the business is exploiting employees, accepting bribes or polluting the environment.

Question 10

A social report

Answer 10

Today, most large-scale organisations assess their progress towards fulfilling their social responsibility obligations by conducting a social report. A social report may also be referred to as a corporate social responsibility report, a social audit or a sustainability report. The report details what an organisation has done, and continues to do, to address the social and environmental issues that are relevant to the organisation.

Question 11

Explain how a commitment to social responsibility may benefit a large scale organisation.

Answer 11

Being socially responsible can attract customers. Many customers chose to only shop at organisation that are socially responsible. By being socially responsible, the business attracts customers which can increase sales and thus increase profit. It can also increase morale for staff as many staff feel happy to work at a socially responsible business rather than a business that neglects social responsibility as they know that they are working in a way that is above and beyond legal and moral obligations.

Question 12

Explain how a commitment to social responsibility by Eustace Holdings may in turn provide benefits to the Australian economy.

The CEO has announced that the organisation will invest ten per cent of the annual profit from its mine to regenerate the environment around the mine site.

Answer 12

The commitment to regenerating the environment can provide benefits to the Australian economy. This is because the business is deciding to use its own money to improve the environment instead of the government using taxpayer money, this means that the government can instead use the money to support the economy such as build infrastructure and improve trade relationships to make exporting easier.

Question 13

discuss with reference to stakeholders the advantages and disadvantages of being socially responsible. Decide on the best approach for organisational success,

Answer 13

Businesses are influenced by a number of stakeholders which refer to any individual or group with a vested interest in an organisation’s success and include: shareholders, investors, suppliers, customers, employees, government and the community.

Being socially responsible benefits multiple stakeholders including employees and customers.

Being socially responsible will involve honest marketing and the production of a good quality safe to use product. This is going beyond legal and moral requirements to ensure that stakeholders especially customers are treated well. This benefits the stakeholder of employees and can increase the number of sales as customers are more happy to buy products as they know that they are of high quality and the business is using honest marketing.

Being socially responsible also has a positive impact on employees. A socially responsible organisation will offer trading and development opportunities to their employees as this is going beyond legal and moral requirements to give back to stakeholders, in this case employees. Employees who are trained will have increased morale as they know they are valued leading to increased productivity as the employees are more motivated to work productively.

Disadvantages of socially responsible involve increased costs which can make shareholders happy.. Shareholders want to gain a maximum return on their investment which involves decreasing costs. Being socially responsible such as producing a better quality product or offering training to employees will be costly for the business which can upset shareholders.

Another disadvantage is the time taken to be socially responsible. Producing a better quality product or offering training will be a time consuming process. Many business’s would rather spend this time on other things such as research and development.

I think that organisations should be socially responsible. Being socially responsible can attract more customers and thus increase sales and it can improve morale and thus increase worker productivity, This makes it worth the extra costs as the benefits from increased sales and more motivated workers should exceed the costs of being socially responsible.

Question 14

Discuss how an airline may use the management role of planning to be socially responsible.

Answer 14

Planning is often referred to as the primary management role. IT involves determining where the organisation wants to be in the future, setting objectives and implementing strategies to achieve those objectives.

The first step of the planning process is to define the objective. Budge airlines could set an objective that involves an increase in social responsibility. This ensure that every following step the business uses will involve social responsibility.

The second step is to analyse the environments. They could use a SWOT analysis to examine the strengths and weaknesses from the internal environment as well as the opportunities and threats from the external environment such as another airline that is neglecting social responsibility would make it easier to take customers that value social responsibility that could help them, or make it harder to become more socially responsible.

The thirds step is to come up with alternative strategies. The business would need to come up with multiple strategies to achieve the objective of increased social responsibility. The strategies should be in line with the business’s vision statement which should have been changed to reflect the new focus on social responsibility. An example of a strategy could be implemented such as free meals on the plane as this is going above and beyond legal and moral requirements to give back to stakeholders especially customers.

The fourth step is to implement the strategy. The business may have to train staff to learn new processes to produce a better quality service and be safe at work. At an airline this could involve landing, departing and boarding practices that ensure the safety of the flight crew.

The last step is to evaluate the strategy. After a period of time the business should use performance indicators to evaluate whether the strategy has been successful. If it has not then the planning process may have to be repeated and a better strategy chosen. The business could consider creating a social report to better evaluate what social responsibly things they do.

Question 15

Identify two factors in the macro environment and explain how they may influence an LSO with an example.

Answer 15

One factor in the macro environment that can influence an LSO is technology. As the world is becoming more technologically advanced, business’s are having to adopt technology to remain competitive. At Australia post, the rise of digital communications and the decreased usage of letters has led to them changing focus onto technology to remain competitive.

Another factor are social trends. Social trends on what is right and wrong is constantly changing. Business’s need to ensure that their products are produced in line with the social trends. At Australia post they only offered involuntary redundancies as they know that social trends indicate downsizing is not received well and can lead to a decrease in sales.

Question 16

Explain how an organisation can ensure it has an operations management system that focuses on quality.

Explain how an LSO can be socially responsible.

Identify two stakeholders and explain how they could have conflicting opinions about an LSO’s activities.

Answer 16

An organisation can ensure that it has an operations management system that focuses on quality by implementing a quality control procedure. Quality control refers to the retrospective checking of products at different stages in the production process. It ensures that there are no defected products making it to consumers. This ensures that all goods and services that a customer receives are of a high degree of quality and should meet the customers expectations. This socially responsible as it is going above and beyond legal and moral requirements to give back to customers by offering a very high quality product.

Social responsibility refers to going above and beyond legal and moral requirements to give back to stakeholders and care for the community and the environment. There are a number of ways to be socially responsible. One way is to donate to charities, this is going above and beyond legal and moral requirements to give back to the community. Another way it to offer services during termination. These could include paying for them to attend workshops where they can learn skills that make them a promising candidate for other business’s if they are being made redundant or paying for them to attend financial management and lifestyle counselling services if they are retiring from the workforce.

One stakeholder of LSO’S are the community. The community expects that an organisation will conduct its activities in a socially responsible and ethical way without harming the environment or the community. However this conflicts with the demands of the key stakeholder of shareholders. Shareholders are any person that owns a share in a company. A share is a unit of ownership in a company, buying and selling shares raises finance for public companies. Shareholders want to maximise profits so that they receive a larger return on their investment. They want to achieve this by decreasing costs and this conflicts with the communities interest as being ethically and socially responsible is usually quite expensive.

Question 17

Discuss the impact of social responsibility on the operations management function and the human resource management function.

Answer 17

Social responsibility is the obligations a business has over and above its legal responsibilities to the wellbeing of employees and customers, shareholders and the community as well as the environment.

One way in which business’s can be socially responsible in terms of operations is by managing the operations system in a socially responsible manner. The operations system refers to the transformation of inputs into outputs using processes.

One way in which a business can be socially responsible in terms of inputs is through procurement. That is, only purchasing supplies from ethically and socially responsible suppliers that do not exploit labour or damage the environment. This is often more expensive but it can gain the trust of consumers as they know that the product was sourced using socially responsible materials.

In terms of processes, a business can keep production in Australia. This is often more expensive than outsourcing overseas but it will help support the local economy and provide jobs for Australians. This is going above and beyond legal and moral requirements to give back to the community.

In terms of outputs, a business should offer a very high quality output that exceeds consumer’s expectations. This will require more time, money and effort but it will result in satisfied customers who will be encouraged to continue buying from that organisation.

One way in which a business can manage its human resources in a socially responsible manner is by offering services during termination. If an employee is being made redundant this could include paying for them to attend workshops where they learn skills that will make them a good candidate for other business’s to result. If an employee is resigning, this could include paying for them to attend lifestyle and financial counselling. This is quite expensive but it maintains a positive culture that values employees even when they are leaving or being made redundant which can help to maintain the morale of other employees.

Another way in which a business can be socially responsible in terms of human resources is by offering paid training for employees. Training is the teaching of staff so that they become more effective and efficient at their job. If a business pays for an employee to attend training the employee will feel valued, learn new skills and be more motivated to work productively. It will be expensive but it will lead to a variety of benefits and is socially responsible as it is going above and beyond legal and moral expectations to give back to employees.