Business Social Responsibilities

Social Responsibility

 

 

 

A business has responsibilities to all stakeholders:

• Investors
• Employees
• Customers
• Service Providers
• Suppliers
• Government
• and the general public

The business must act:

• Ethically / morally in dealing with them
• Environmental responsible

in all their business activities.

 

Business Ethics / social responsibility

 

• Honesty in business dealings

Treating all people they come into contact with fairly, doing the right thing in all situations regardless of profit.

•  Business should develop a code of ethics

A guide that sets out behaviour in situations.  It tells the correct way to behave and the correct thing to do.

 

 

• Promotes positive choices and sustainability

A business that promotes ethical behaviour will act in a moral way, they will encourage all their stakeholders to do likewise.  The advantages to the business of acting in an ethically way will greatly help the business long term survival.

Exam papers

2006 SQ8

How can a business be ethical / socially responsible in their dealings with stakeholders?

Investors

They give financial assistance to the business.  A business has a responsibility to provide them with accurate financial information and give them a good return on their investment. 

Bank – pay back loan with interest, Investors get a good dividend, Government – use grants according to conditions

 Advantage: Easier to gain more finance in the future

Employees

They work for the business.  A business has a responsibility to provide them with fair wage for the work they do, safe working conditions and not to discriminate them.

 

Advantage: they will stay loyal and work hard

Customers.

The people who buy the products and services.  A business has a responsibility to provide them with good quality goods at a fair price and a good after sales services.

 

Advantage: they will return again in the future

Service Providers.

A business may require services from another business, such as accounting services, legal services, cleaning services etc.  A business has a responsibility to provide them with fair and prompt payment for the service they receive.

 

Advantage: they will return the ethical behaviour and provide the best service

 

Producers / Suppliers

Provide a business with raw materials. A business has a responsibility to use fair trade suppliers.  To pay them fairly and on time.

 

Advantage: they will make sure supplies are of the best quality and arrive in good time to you.

 

Government

Look after the running of the country.  A business has a responsibility to provide them with payment of all taxes legally required from them and to obey all laws set by them.

 

Advantage: they will provide the business with assistance and advice if needed in the future.  They will use the taxes to improve local infrastructure.

 

The general public

All people living in the area around the business.  A business has a responsibility to provide them services, jobs, sponsorship for local teams.  To protect their environment and support other businesses.

 

Advantage: they will shop local, provide workers and promote the business.

 

 

 Exam papers

2009 Q2 a

 

A business can encourage ethical behaviour by:

• Leading by example
• Preparing a code of ethics
• Carry out an ethical audit
• Listen to stakeholders

Read book p418 & 419

Exam papers
2012 Q2 c

 

The Environment

A business must make sure to minimise any harmful effects it may have on the environment.  It has a social responsibility to do the right thing.

Characteristics of an environmentally conscious business 

• Sensitive

Aware of the environment around them and will minimise waste by reducing, reusing and recycling.
Reduces waste by taking measures such as photocopying on both sides, sending emails rather than memos etc
Reuses items such as paper clips, uses ceramic mugs rather than paper.
Recycles any waste it can, including, glass, paper, cardboard and so on

Cadbury Ireland developed an environmental strategy called ' Cadbury's purple goes green', it reduced packaging on selection boxes by over 30%

• Open

Comes up with new ideas that will reduce any harmful impact on environment.  They are will to learn new ways by attending waste workshops.

Cadbury Ireland have introduced a new 100% sustainable sourced cardboard box to replace its traditional tin.  The box is 45% lighter and saves 200 tonnes of steel.

• Honest

They will not hide accidents.  If the business has an industrial accident (oil leak) they tell authorities immediate so action can be taken.

The West Cork oil spill was an oil spill off the southern coast of Ireland in February 2009.  The Russian Navy have  accepted responsibility for the incident.The oil spill began heading eastwards and broke up. The spill threatens birds, dolphins, porpoises and seals that are native to Ireland's south coast.The Irish Farmers' Association (IFA) Aquaculture division called on the relevant local authorities and the Environmental Protection Agency to ensure that shellfish farmers in counties Cork, Wexford and Waterford were protected.

• Consults

Communicates with all stakeholders before decisions are made they could effect the environment.  They will also prepare Environmental Impact Statement in order to communicate plans and to ensure there is a plan to minimise harmful impact.

After numerous complaints from local residents about shopping trolleys turning up in local areas and rivers, Tesco changed their shopping trolleys with a locking system that prevents them leaving the shopping centre.

• Protective

Environmental business protect and preserve the environment.  They are interested in sustainable development so that future generations can live and prosper. 

Velvet Toilet Tissue makes plant 3 new trees to replace every tree they use.

Exam papers
2010 Q2 a

Environmental Responsibilities of a Business

• Use renewable sources of energy

book p420 ' climate change'

• Use effective waste management

Business must be aware of the environment around them and will minimise waste by reducing, reusing and recycling.
Reduces waste by taking measures such as photocopying on both sides, sending emails rather than memos etc
Reuses items such as paper clips, uses ceramic mugs rather than paper.
Recycles any waste it can, including, glass, paper, cardboard and so on

Cadbury Ireland developed an environmental strategy called ' Cadbury's purple goes green', it reduced packaging on selection boxes by over 30%

• Reduce pollution

book p421 'pollution'

• Engage in sustainable development

Environmental business protect and preserve the environment. They are interested in sustainable development so that future generations can live and prosper.

Velvet Toilet Tissue makes plant 3 new trees to replace every tree they use.

Exam papers
2008 Q2 b

 

Benefits of being Socially Responsible (Ethical and Environmental)

• Increased sales

Consumers will be happy to shop with a business that has fair prices, good quality and good after sales services and in addition to this they are environmentally friendly.  Socially responsible business can enjoy high sales.

• Easier to attract and retain staff

Employees will like working in an environment that pays fairly and provides good working conditions.  The morale in such a business will be high and workers will be happy to be there

• Good Public Relations

If a business engages in fair trade this will reflect well on their image.  Also, if a business is known as being environmentally conscious this will give the public a positive image of the business.

• Easier to gain finance

If a business is honest with their accounts and gives a good return on all investments, then when they seek finance in the future it will be much easier to get.

 

Effects on a business Costs and Revenue of being Socially Responsible (ethical and environmental)

Costs

• Higher wages

Paying fair wage and providing good conditions will impact on a business expenses and reduce their net profit

• Higher price to suppliers

If a business is to engage in fair trade they will pay a higher price for raw maerials and finished goods

• Increased manufacturing costs

In buying reyclable materials and up to date environmentally friendly machinery that does not pollute, this will make the cost of manufacturing more expensive.

• Lower energy costs

A business that meets its ethical and social responsibilities will save money in the long run by using renewable energy such as solar and wind power, which are much cheaper than fossil fuels.

Exam papers
2007 Q2 c

Revenue

Increased sales

Consumers will be happy to shop with a business that has fair prices, good quality and good after sales services and in addition to this they are environmentally friendly. Socially responsible business can enjoy high sales.

Easier to expand

If a business is honest with their accounts and gives a good return on all investments, then when they seek finance in the future to expand it will be much easier to get.  Expansion will result in higher profits

• Open to new markets

The 'green' market is growing and businesses that are environmentall aware will gain consumers from this market.  There are also government grants available to business that make changes to improve their environmental practices.



• Higher production

Employees will like working in an environment that pays fairly and provides good working conditions. The morale in such a business will be high and workers will be happy to be there and will work hard to increase their production, which will result in higher sales

Exam papers
2005 Q2 c