Professional Documents
Culture Documents
Definitions:
a) Social responsibilities are duties that a business owes to those affected by its activities. b) Business ethics is the influence of values and beliefs upon the conduct and operation of businesses, i.e. about morality and doing what is right and not what is wrong.
Owners
Stakeholders
Future Generations
Employees Government
*Environment
As we should know, businesses do not operate in isolation, they are actually a part of society who has an impact upon the lives of those communities in which they operate. And therefore *** A firm which is ethical with regard to the society as a whole and the community within which it is based might be described as Socially Responsible*** Here are some examples where firms can show their ethical behaviors, these can be To their Customers: Businesses have responsibilities to their customers, e.g. to sell them a well made product which is reasonably priced. To their Suppliers: An ethical firm should act fairly to their suppliers, e.g. paying reasonable prices for products. They should also respect contracts which they have signed with suppliers. To their Employees: An ethical firm should offer equal opportunities to all employees, thus encourage a fair competitions among employees. To our Future Generation: Businesses can affect our future generation in various ways, e.g. messages in advertisement. An ethical firm should be aware when building their brand images, e.g. branding that emphasize on sex, violence, rebellion, etc To Communities: Businesses have social responsibilities to the communities in which they operate, e.g. in Africa, some small countries are highly dependent on single mining companies or oil companies since they provide a large proportion of jobs. And firms should treat them ethically, not taking advantages with it, i.e. Nike Low paid workers. To Environment: *** Will be discussed in part 2*** Part 2 The Costs & Benefits of Business Activity Focus point:
2
Introduction to Negative/ Positive Externalities. Negative Externalities in terms of Environmental Costs and their impacts.
Definitions:
a) Private costs are the cost of an activity to an individual or a business. e.g. wages, materials, etc b) Private benefits are the benefit of an activity to an individual or a business. e.g. sales revenues, profits, dividends to shareholders, etc c) Externalities are the costs/ benefits generated by businesses activities, to the rest of the society which can be negative / positive; Negative Externalities are the costs to the rest of the society Positive Externalities are the benefits to the rest of the society. c) Social Costs are the cost of an activity to society as well as to a business. i.e. private costs + negative externalities generated d) Social Benefits are the benefits of an activity to society as well as to a business. i.e. private benefits + positive externalities generated
The Costs & Benefits of Business Activity Negative & Positive Externalities
It is obvious that when businesses conduct their activities, both private costs (e.g. wages, direct material costs) and private benefits (e.g. revenue, profits) would be generated. However, they might also create other costs, e.g. A factory may dispose some of its waste in a local river. Pollutants may be produced during factory production. These kind of extra costs created, which have a negative impact on others, are what we called, Negative externalities. They are normally created because businesses failed to behave ethically. And of course, Positive externalities could also be created when firms behave ethically, e.g. business activities may create skills which can be used for other jobs in the area.
Part 3 The Benefits & Effects of Ethical Behaviors Focus point: Benefits and Drawbacks of behaving ethically. Methods of Controlling Environmental Costs Methods of encouraging Ethical Behavior