Business Ethics and Social Responsibility
Introduction to Business Ethics:
Business Ethics is related to the belief of a businessperson to distinguish right and wrong in the decision-making process of a manager which guides the business activities towards social welfare. Business Activities might be guided by individual experience, values, assumptions and personality. Business Manager follows ethical practices for the betterment of the public at large.
Ethics commonly refers to a set of rules or principles that defines right and wrong conduct”
According to Crane, “Business ethics is the study of business situations, activities, and decision where issues of rights and wrong are addressed.”
Ethical Principles of Business:
- Fulfil consumer’s expectations: The most important ethics of business is to satisfy the diversified need/desire/wants of costumer by supplying right product at right price at right time.
- Encourage fare competition: Manager should focus on fair business practice. Business shoulnt create any artificial scarcity or syndicate which creates less option for customer.
- Good Relation with Employees: Employee are the one who contribute their skills, knowledge and experience to make business success so business should address the employee and makes good relation with them.
- Avoid Monopoly: Businesses should not influence market channel and other agent centre to create their own monopoly business.
- Accepts Social Responsibility: Every aspect of the business (Input, Process and Output) comes from society.
- Optimum utilisation of resources:
- Focus on services
- Ensure Accuracy
- Regular tax payment
- Consideration of rules and laws
Social Responsibility of Business:
Social responsibility is the idea that businesses should balance profit-making activities with activities that benefit society; it involves developing businesses with a positive relationship with the society in which they operate.
Social responsibility is the obligation of a business organization towards a society where it establishes, exists and grows and expands business activities. According to Keith Davis & Robert L. Blomtrom, “Social Responsibility refers to the obligation of decision-makers to take actions which protect and improve the welfare of society as a whole along with their own interest.”
According to Peter F Drucker, ”social responsibility to requires the manager to consider whether their action is likely to promote the public goods, to advance the basic beliefs of the society, to contribute to its stability, strength and harmony”
The major responsibilities of the business are:
A. Towards Employees
The employees directly involved in production and distribution activities. The successful functioning of business totally depends on the activities of employees. They are the assets of the business and must motivate and encourage for their better performance. Management should develop good working environment so that employees can feel the sense of membership.
- Provides a better working environment to satisfy the employees
- It provides a salary, bonus, provident funds and job security.
- It also provides financial and non-financial supports.
- Enriches employees’ performance
- Provide training to develop their skills.
- listen and handle their complaints and issues
B. Towards Creditors:
Creditors are the one who provide loan and supplies good/raw material in credit when the company is in need. It’s a business responsibility to pay back and clear the debt of the creditor.
- Make duly payment
- Satisfaction of creditors with the proper relationship
- Helping them to create their own market.
- Entrusting the right of proper selling of goods and services of their goods
- Copyright and other legal rights.
C. Towards Customers/consumers:
Consumers are the key figures in the market for growth and development of business. Consumer’s need and desire are changing and satisfying by fulfilling their need and wants as per their preference help to sustain in market. Continuous improvement of quality of product and delivery in time helps to increase customer and revenue.
- Better quality of goods and services by charging a reasonable price
- Supply of commodities is also to be done according to the needs of the customer
- Helps to achieve needs and want
- Provide the right goods at the right place at the right time.
- Provide proper pre-sale and post-sale information
- Provide proper information about new products
D. Towards Investors:
Investors invest capital fixed and working capital for the establishment of business and for day to day activities. Investors have a direct interest in the business and its business responsibility to fulfill the expectation of investors.
- True information about earning power of business
- The objectives are to provide a reasonable rate of return to shareholders.
- Provide information about the plan of the business.
- Ensure safe investment
- Promote utilization of resources without leakage
- Ensure transparency of business activities
E. Towards Government
Government is the responsible institution for the administrative and developmental work of the country. Its business responsibility to conduct business as per the government rule and regulation.
- Increase in tax i.e. Increase in government revenue
- Fulfill demand of government
- Non-violation of rules and regulation of government.
- Avoid unfair trade
- Provide essential information to the government.
- Solve national problems like natural calamities.
- Avoid malpractice like black marketing, adulteration, smuggling
F. Towards Society
Every business organisation perform their business activities inside the society and normally public expects some social welfare activities from the business organization.
- Protect the environment
- Employment opportunities generation.
- Utilize Resources
- Maintain Social Value
- Participate Social Walfare