Social Responsibility Flashcards
Explain with example social responsibility of businesses
Its duty to treat all those it comes into contact with honestly and fairly in a way acceptable to society.
Businesses have an obligation to do good and make a positive contribution to lives of the people and the environment it affects
Ex: boots chose Irish cancer society as its charity partner
Name the stakeholders a business has a social responsibility towards
Investors Employees Suppliers Customers Government Local communities
Explain how a business has a social responsibility towards investors with an example
Put capital into business to set up and expand
Business must give them honest info about financial performance and has responsibility to share success by paying reasonable dividend
They can make informed decisions to invest
Ex: WorldCom falsified its accounts so people would continue to invest- not fair
Explain how a business has a social responsibility towards employees with an example
People who work to carry out tasks as best they can to make business successful
Must pay them a fair wage for their work that reflects their qualifications and efforts
They must have safe work conditions and proper health and safety
Must not discriminate
Ex: Lidl, Aldi, IKEA pay Irish staff a living wage not just legal min wage
Explain how a business has a social responsibility towards suppliers with an example
Firms that the business buy from
Must pay them in full on time
Business should not exploit smaller suppliers. It should pay a fair price for what they supply
Ex: Body shop many ingredients from small scale, disadvantaged suppliers paying fair price for ingredients and gives additional money to be spent in the community for needs
Explain how a business has a social responsibility towards customers with an example
People who buy business product or service
Must provide them with good quality products and services safe and unlikely to cause harm at a reasonable price
Should not mislead them so they make informed decisions
Ex: Neurofen charged almost double that of its standard painkiller even though its other products contained the same ingredients
Explain how a business has a social responsibility towards government with an example
Helps businesses in ways such as grants, improving countries infrastructure and lowering tax
Business must pay tax in full and on time
Must comply with the letter and spirit of country’s laws
Ex: National Irish Bank encouraged Irish people to evade tax in the 90s
Explain how a business has a social responsibility towards local communities with an example
Consists of all people living in area around a business
Businesses must preserve and protect local environment
Duty to help the community in buying from local suppliers and hiring locals
Ex: IKEA opened store in Ballymun and hired as many Ballymun community residents as possible
What are the advantages to a business of being socially responsible
Increased sales
Reduced costs
Easier to attract and retain employees
Easier to attract capital
Explain increased sales as an advantage of being socially responsible with an example
Consumers like socially responsible businesses
Prefer to buy from those who treat all people honestly and fairly
Ex: Body shop enjoys high sales because of its stance on buying materials from poorer communities and its support of human rights
Explain reduced costs as an advantage of being socially responsible with an example
Saves money in long run
Proper behavior means no reason to sue in future- saves money avoiding costly law suits
Ex: Volkswagen lost billions after admitting to installing software in its cars to trick testers into thinking the car had less emissions
Explain Easier to attract and retain employees as an advantage of being socially responsible with an example
Employees like to work where they get a decent wage and good conditions
Easier for firms to recruit and keep workers
Reduced recruitment costs
Ex: google attract the brightest and best employees
Explain Easier to attract capital as an advantage of being socially responsible with an example
Increasing number of investors care where and how capital they provide is used
They do not want money funding illegal, harmful activities
Ex: many green investment funds that attract billions of euro capital for socially responsible business
Explain business ethics
A set of moral principles that guide business people regarding how they should act in business situations
Tells what is the right thing to do and what is the wrong thing in a situation
Explain the ethical business practice
Means conducting business according to a set of moral principles
Ensures business behaves in an honest, fair and legal manner
Means doing the right thing in all situations, regardless of the effect of profit
Ex: body shop even though it costs more it refuses to test products on animals and pays a fair price to its suppliers for goods
How can managers improve business ethics
Managers must lead by example
Managers must encourage employees to report others
Managers must draw up a code of ethics
Ethical audits
Explain the benefits of a code of ethics
Improved reputation and sales- consumers like business with code of ethics. prefer to buy from those treating all honestly
Prevents harm and mistakes to business- Employees understand expectations of business for them. They are aware and those who fail to meet standards are dismissed
Less theft fraud- employees and managers act appropriately
Explain the challenges of a code of ethics
Hard to introduce- with culture already there. will take time for people to respect and support
Lower morale- need to enforce it means sanctions must be imposed if code is violated. sanctions lead to lower staff morale
Increased costs- training to understand and implement code properly
Explain managers must lead by example as a way to improve business ethics
Must be good example and behave ethically themselves
Must disapprove and punish unethical behavior and reward ethical behavior
Shows seriousness of ethics
Ex: Sky Sport fired one of its commentators for sexist remarks about female assistant ref
Explain Managers must encourage employees to report others as a way to improve business ethics
Must know about unethical practices in their business so they can take steps to stamp them out.
Encourages employees to report instances of unethical behaviour
Whistleblowing
Ex: Vodafone operate whistle blowing mechanism called “Speak Up”
Explain managers must draw up a code of ethics as a way to improve business ethics
Those in a business must know exactly what ethical and unethical business practices are
Code is a formal written document that sets out rules for employees and managers to follow them making decisions
Gives correct way to behave and right thing to do in situations
Should be included in staff training
Explain Ethical audits as a way to improve business ethics
Getting business assessed by independent outsider called ethics auditor
They examine every aspect of the business
Sends a report to managers highlighting areas business behaved unethically
Businesses can take steps to eradicate this behavior
Ex: IKEA commissioned auditors to look into allegations it benefited from use of forced labor
What are four environmental issues/responsibilities for a business
Climate change
Waste management
Pollution
Sustainable development
Explain climate change as an environmental issue for businesses
Most serous issue
Business using fossil fuels leads to releasing greenhouse gases mainly CO2 trapping heat in the atmosphere
Business should use fossil fuels as efficiently as possible and switch to renewable sources of energy so they will not damage the environment for future generations
Explain waste management as an environmental issue for businesses
Waste must be disposed of in a way that doesn’t harm the environment
Responsibility of business to minimise waste by reduce reusing and recycling
The government have the polluter pays principle so the more waster businesses produce the more it costs to dispose of it
Explain pollution as an environmental issue for businesses
This is humans introducing substances into nature that have a harmful effect on the environment
Business must not pollute and use machines that minimise harmful emissions into air and water
It should source raw materials local to prevent transport reducing carbon footprint
Explain sustainable development as an environmental issue for businesses
Development that meets the needs of the present without compromising the ability of future generations to meet their own needs
Must protect and preserve the environment
If they take something from nature they should replace it
Ex: Velvet toilet paper replants three tress for every one they use
Explain sustainable development
Development that meets the needs of the present without compromising the ability of future generations to meet their own needs
What are the effects of the environment of businesses
increased sales
increased costs
damage to reputation
Increased regulation
Explain increased sales as an effect of the environment on a business
Growing demand for green products
Increased government regulation in this area means if businesses develop such products they save others money and attract customers
Ex: Beoing aircraft that uses 20 percent less fuel than other planes attracted many orders
Explain increased costs as an effect of the environment on a business
Waste must be disposed of in a way that doesn’t harm the environment
The government have the polluter pays principle so the more waster businesses produce the more it costs to dispose of it
Increased costs lower profits
Explain damage to reputation as an effect of the environment on a business
If business damages environment may suffer from bad publicity
May cause consumer boycotts with customer refusing to buy from them
Ex: Volkwagen suffered a lot following its admission that it fitted cars with software to disguise emission levels
Explain increased regulation as an effect of the environment on a business
Government passed many laws to protect the environment
Lost of rules to follow
Can increase business costs and breaking them bring hefty fines and penalties
What are the characteristics of en environmentally conscious business
Sensitive to environment Open to new ideas Sustainable development Consult others Honest about environmental matters
Explain sensitive to the environment as a characteristic of an environmentally conscious business
They will reduce reuse and recycle waste
Ex: Cadbury reduced packaging on selection boxes by 30percent
Ex: H&M gives a €5 voucher for every bag of old clothes they bring to their local HM store. They are made into products like cleaning cloths or sold as second hand goods
Explain open to new ideas as a characteristic of an environmentally conscious business
Educates itself about the environment by seeking advice on environmental protection
The environmental protection agency offers them this advice
This means it comes up wiith new ideas to reduce harmful impact on the environment
Ex: Cadbury tried a 100percent sustainable cardboard replacement for its roses tin
Explain sustainable development as a characteristic of an environmentally conscious business
they conduct business by meeting the needs of the present without compromising the ability of future generations to meet their own needs
Protect and preserve the environment
Ex: Velvet toilet paper replants three tress for every one they use
Explain consults others as a characteristic of an environmentally conscious business
It communicates with all interested parties befor eit makes any decisions that may affect the environment.
Takes advice on board
May also prepare an environmental impact statement before a project
ex: tesco introduced a system to prevent trolleys leaving the centre
Explain honest about environmental matters as a characteristic of an environmentally conscious business
Does not hide accidents
If there is an industrial accident they tell appropriate authorities immediately to repair the damage as quickly as possible
What are the effects on costs for a business of being socially responsible?
increased wages bill Increased manufacturing costs Increased material costs Lower legal costs Lower energy costs
Explain Increased wage bill as an effect on costs of being a socially responsible business
Business will pay a fair wage
Higher rate of pay and better conditions than the minimum legal requirements
Explain Increased manufacturing costs as an effect on costs of being a socially responsible business
Business will buy recyclable materials and machines that do not pollute environment
Costs money to dispose of and replace old polluting unfriendly machines
Recyclable machines tend to be more expensive
Explain Increased material costs as an effect on costs of being a socially responsible business
Business will pay them fair price for their products to suppliers
Ex: Body Shop pay a fair price for ingredients and an additional sum of money to be spent on whatever community needs
Explain lower legal costs as an effect on costs of being a socially responsible business
Will save money long term avoiding costly law suits
Ex: Volkwagen suffered a lot following its admission that it fitted cars with software to disguise emission levels
Explain lower energy costs as an effect on costs of being a socially responsible business
Save money long term using renewable energy such as solar and wind power which are cheaper than fossil fuels
What are the effects of being a socially responsible business on revenue
Increased sales
Easier to attract capital
New markets
Explain increased sales as an effect of being a socially responsible business on revenue
Consumers like businesses that behave in an ethical socially responsible manner.
They prefer to buy from people who treat all honestly and fairly
Ex: Body Shop enjoy high sales because of its stance on buying materials from poorer communities
Explain easier to attract capital as an effect of being a socially responsible business on revenue
Investors care how and where the capital they provide is used
Do not want money funding illegal harmful activities
Easier to attract capital and business grows so greater the revenue increases
Explain new markets as an effect of being a socially responsible business on revenue
There is a growing demand for green products
Government regulation in area
Business develops such products can save others a lot of money and attract ore customers
Ex: Boeing aircraft
