Business strategy UNILEVER COMPANY

Ethics and Social Responsibility

Week2

Ethics and Social Responsibility

Ethics is the moral principles that govern a person’s or group’s behavior. It is the moral guidelines that guide our behavior to ensure that it is socially acceptable. Social responsibility is an ethical framework that states that an individual, entity such as an organization has an obligation to act for the benefit of the society at large. The business has an obligation to ensure that their corporate activities provide the highest benefit for the environment and the society at large.

Businesses have constantly been placed in the limelight for observing the business ethics. Business ethics refers to the moral principles that guide how a business behaves. They include the use of right channels for trade, corporate governance, and other business operations. Businesses are not expected to engage in corruption or bribery to acquire trading partners or secure deals from the government to secure their business. They are not supposed to use fraudulent means and should refrain from discrimination (Brenkert & Beauchamp, 2010).

Business ethics ensure that the company’s strategic plans will be socially acceptable. The ethics ensure that they do not overstep the boundaries. Using the business ethics in formulating strategic plans ensures that the policies are deemed right and do not infringe anyone’s rights. The use of business ethics also serves to gain public support. The public is very keen on the use of business ethics, and a business that adheres to such rules receives the public confidence. This leads to a better image and more customers, and skilled workforce is attracted to such an institution. The business ethics also provide a guideline for the top managers. The managers face ethical dilemmas when creating the strategic plans for the business. The business ethics help the managers decide what is morally acceptable and therefore helps them to make proper strategic decisions. The use of business ethics also boosts the trust of the employees in their leaders. The employees believe that the decisions made by the top management are right and the most ethical, and they, therefore, end up accepting the strategic plans much easier.

The businesses should also use social responsibility in making their strategic plans. The use of the social responsibility in their strategic plans allows the company to balance their economic value with their social value. Businesses instinctively tend to concentrate on how to get economic gains for themselves and may tend to sideline their social responsibilities. When the businesses use the social responsibilities during strategic planning, they will be able to balance both these responsibilities and create comprehensive plans (Gössling, 2011). The social responsibility also allows the business to manage their stakeholder relationships. The business will be able to maintain good relations with the stakeholders by creating strategic plans that will provide the most benefit for the business, the society, and the environment. They will gain the public confidence and improve the image of the business.

Overstepping Ethical Boundaries

The Enron Company which was started in 1985 collapsed in 2001 after engaging in unethical practices. The Enron Scandal was one of the five largest fraud scandals in the U.S. The company was cited for having conducted numerous accounting frauds such as misrepresentation of figures on their balance sheets and misrepresent earnings to provide a favorable business performance. The company was also engaged in many numerous unethical business practices and had underhanded deals. All these activities took place under the direct and indirect knowledge of the company top management officials. These fraud activities eventually led to the bankruptcy and the eventual collapse of the company (Sterling, 2002).

This situation could be avoided by using business ethics in their operations. There should have been checks and procedures that required ethical evaluation for some of the various accounting processes such as the creation of trade deals and the type of business activities the company engaged in. There should also have been the provision of an external accountant reviewing the accounts of the business to ensure no misrepresentation was done. This would have avoided the entire scandal altogether. The second preventative measure would have been a proper screening of the top management before and during their term in office. Many of these underhanded dealings were done in the knowledge of the top management, showing that they did not have any ethical principles. An ethical evaluation of the leaders would have revealed this flaw and better leaders would have replaced them. This would have prevented the scandal.

References

Brenkert, G. & Beauchamp, T. (2010). The Oxford handbook of business ethics. Oxford New York: Oxford University Press.

Gössling, T. (2011). Corporate social responsibility and business performance: theories and evidence about organizational responsibility. Cheltenham: Edward Elgar.

Sterling, T. (2002). The Enron scandal. New York: Nova Science Publishers.