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
