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Social Responsibilities

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In recent years firms have been held more accountable for the impact of their activities on society. This has arisen due to pressure from consumers, investors, media ... – PowerPoint PPT presentation

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Title: Social Responsibilities


1
Social Responsibilities
  • In recent years firms have been held more
    accountable for the impact of their activities on
    society. This has arisen due to pressure from
    consumers, investors, media and employees (i.e.
    the firms stakeholders).
  • In the past what the firm made was the priority.
    Now people wish to know how, where and what does
    the firm do for society as a whole.
  • As a result managers must consider many issues
  • Their impact on the local community
  • Their treatment of employees
  • Where supplies come from and how they are
    produced
  • Their impact on the environment.
  • i.e. they are now asked to take into account
    their stakeholders concerns not just their
    shareholders.
  • Q What factors determine whether a firm decides
    to accept its social responsibilities?
  • Possible Answers
  • Wealth of country
  • Importance people place on this aspect of
    production
  • Is it a USP for the firm?
  • Size of firm
  • Effects of bad publicity
  • Pressure groups
  • View of managers
  • Issues concerning society See p117-8 External
    Influences (Gillespie).

2
Social Audits
  • Definition An independent assessment of the
    impact of a firms activities on society.
  • A social audit is not a legal requirement (yet!)
    but it is seen as valuable for firms as it allows
    them to take action before its too late.
  • WHY DO IT?
  • Genuine concern by owners
  • Good PR used by righteous- body shop, and
    sinners- BP, ICI
  • Protect firm against legal action
  • Attract employees, investors, customers and
    suppliers.
  • But it shouldnt just be done as a cosmetic
    exercise (this will create more problems than it
    solves by highlighting an issue without resolving
    it). Therefore action and resources are needed.

3
Ethics
  • This concerns decisions about what is right or
    wrong. For example
  • Should a firm pay suppliers on time or delay to
    earn interest for owners?
  • Should a firm relocate to low wage economies
    overseas or create jobs domestically?
  • Should firms pay what they can get away with or
    what it can actually afford?
  • Ethical issues are never clear cut, for example
    As a tobacco supplier, you know your product can
    kill, but if you close down, thousands will lose
    their jobs and investors lose their investments.
    You pay taxes, your product is legal. Is it wrong
    to try and sell your product?
  • Q Is it right to produce and sell genetically
    modified crops?
  • NO NEED FOR ETHICS?
  • Some say managers dont need to consider the
    concept of business ethics because in maximising
    profits firms will adopt ethical policies anyway
    as, otherwise, it will lose customers and sales.
  • BUT if consumers are happy to benefit from the
    lower prices resulting from non-ethical
    behaviour, this results in the market mechanism
    above failing.

4
Ethics or P.R.?
  • Cynics argue firms only change their behaviour
    as a P.R. exercise to win over customers,
    investors and employees.
  • Some feel managers genuinely want their firms to
    set an example and be better members of society.
  • The decision to change may be influenced by the
    positive impact it will have on the firm but this
    doesnt mean it is purely motivated by a cynical
    desire to avoid bad media attention.
  • The sincerity of management can be judged over
    the long run willingness to devote resources.
  • CULTURE vs. ETHICS
  • Culture varies from firm to firm and even
    department to department. The type of culture
    within a firm can lead to unethical behaviour.
    For example
  • Do we tell customers the whole truth or what
    they need to know?
  • If the boss keeps saying the end justifies the
    means, the employees will soon believe it
  • If the boss insists on increased sales no matter
    what, then employees will react
  • Increased expenses claims / sickys- everyone
    else does it!
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