other Considerations Before Trading Ethically

Question 1

what is corporate social responsibility?

Answer 1

When firms take account of their possible obligations to society over and above the legal requirements

• The act in a socially responsible manner… profit isn’t the only motive
• they consider their employees. the environment, customers, charities, and society in general
• they behave in an ethical manner

Question 2

why is CSR important?

Answer 2

• pressure from customers and surprise you don’t want to be associated with the socially responsible and unethical firm
• more investors and employees are looking for socially responsible firms
• maybe subject to media criticism if firms act unethically

Question 3

what are the benefits of CSR?

Answer 3

+ working with local community offers promotion and opportunities

+ May gain a competitive advantage to enhance brand reputation

+ recruiting and retention of staff may benefit from the enhanced image of the company

Question 4

what are the limitations of CSR?

Answer 4

• expensive to implement and operate
• short term strategies have little effect
• could be seen as insincere/just claims

Question 5

what is ethical CSR?

Answer 5

• firm should try to be ethical by minimising any harmful effects of their actions
• they do what they can to prevent their actions from harming their stakeholders – not the same as taking positive action to benefit their stakeholders

Question 6

what is altruistic CSR?

Answer 6

• firms actively aim to be more socially aware and do what they can for society
• try to make society better, regardless of whether or not it increases their profits

Question 7

what is strategic CSR?

Answer 7

• managers should only seek to be more socially responsible if it helps the business to become a successful
• seen as a win win situation… Firms only behave in a socially responsible manner as they believe that it’s profitable
• in the long run: benefits the company and especially the shareholders

Question 8

what is pure profit maximising CSR?

Answer 8

• The role of the managers is solely to maximise profits for the owners of the business➡️being socially responsible = distraction
• decision-making: mmanagersonly consider whether it makes the firm profit rather than the impact employees or the community

Question 9

what are the objectives for each of these stakeholders?

• consumers
• Government
• suppliers
• shareholders
• employees
• Community
• pressure groups

Answer 9

• consumers: value for money, good customer service
• Government: corporate tax, job creation, taxes from employees
• suppliers: sustained demand, good prices
• shareholders: maximise profits➡️maximise the dividends, increase share prices
• employees: fair wages, sick leave, job security
• Community: jobs, development of infrastructure
• pressure groups: environmentally friendly, workers rights