Business Case for Corporate Social Responsibility - Research Paper Example

? Tobacco Companies and Product Safety Table of Contents Table of Contents 2 Introduction 3 Duties of the Companies 4 Theories related to Business Ethics 5 Conclusion and Findings 7 Reference List 8 Introduction In last few decades, it has been found that investigation associated with business ethics or marketing ethics have increased remarkably. It has been found that the managerial ethics within the marketing procedure of an organization forms one of the most significant issues. As marketing is forms one vast picture, it is obvious that there will be existence of various loopholes which might result in unethical activities being adapted by the companies. Thus it is very important to set a strict code of business or marketing ethics for every company in order to avoid the existence of unethical behavior within the business operations. This is also applicable in the selling of the products or services involving the behavior of the salesman (Carroll and Buchholtz, 2009). Deregulation within various industries has raised the scope of committing unethical activities which in turn have resulted in intense competition between all the companies within the industry. It is the competitive pressure mixed with the uncertainty in the existence which has resulted in compromising with the business ethics by the organizations (Barnett, 2007). There are a large number of evidences claiming that many organizations have violated the ethical rules and regulations within last few years. As the buyers cannot identify or evaluate the purchasing variables or purchasing criteria, it results in giving possible chances for the markets to conduct various unethical activities at an increasing rate (Carroll and Shabana, 2010). Because of the unethical activities the organizations seek to achieve short term profits but in a broader aspect it negatively impacts the image, goodwill or reputation of the organization. The organizations that were suspected of performing various unethical activities had also to suffer from the legal terms. The businesses generally perform these sorts of unethical activities for achieving their short term goals or objectives, but there are evidences which claim that it declines their reputation in each and every sphere. The unethical activities might be conducted by the marketers in different manner. They might be providing misleading information to the customers in order to persuade them in their purchasing decisions (Curwen and Whalley, 2005). Another example of performance of unethical activities includes charging higher prices for lower quality of products or services. Thus it can be said that one organization conducts its business performance by unethical means in order to achieve short term profits and they face the consequences hampering their reputation in the latter part (Friedman, 2004). The case study deals with the unethical activities conducted by the tobacco producing companies in United States. It represents how the companies neglected the standards set by the department of justice i.e. DOJ in United States. According to the district judge, if DOJ could prove that the big tobacco producing companies are performing deceptive activities for their short term profit seeking purpose, then they would be penalized strictly and have to pay a heavy amount of money. This paper would be highlighting the moral or ethical issues related to the selling of products or services in the market. The responsibilities or duties of an organization towards its organization are very significant. Theories or literatures would be reviewed for strengthening the entire arguments made in this paper. The paper would be finding the key issues that might be taken into consideration while solving the case study. It would be starting with an introduction about the duties and responsibilities of an organization towards its consumers. Duties of the Companies There is a big procedure involved in the offering of products or services to the consumers. An organization has to handle a large number of duties for dealing with different stakeholders in the market. Stakeholders are those individuals, groups or organizations which either affect or are affected by the attainment of the objectives of the organizations. There are two main principles for understanding the responsibilities of an organization towards its stakeholders. The first principle states that an organization possesses the obligation of not violating other’s rights. It is the primary duty of an organization to understand the rights of the stakeholders. The rights of the stakeholders are very important aspect of the corporate social responsibility. The principle of corporate rights describes the steps that should be undertaken by the organizations for avoiding as well as impacting negative impacts of the businesses on the human rights. These principles should be followed in each and every step in order to attain the objectives of an organization. The second principle states that the organizations are responsible for the impact that their actions possess on others. It is also called as the principle of corporate effect. This principle states that any group or individual that is benefitted or affected by the actions of a corporation must be respected by it. The organization should understand the significance of such individuals or groups and perform their actions accordingly. There are three types of stakeholder’s theories that help in understanding the duties of the companies from this perspective. 1. The first one includes the ‘normative stakeholder’s theory’. This theory states the reason because of which an organization should consider the stakeholder’s interest. According to this theory, the interest of the stakeholders possesses an intrinsic value because of which they hold huge importance. These interests are considered in the decision making of an organization before any kind of strategic considerations. It is due to this reason that they become the moral foundation of the corporate strategy itself. The relationship of the managers with that of the stakeholders is totally on the basis of moral commitments that are normative in nature. This provides guidance associated with how a business enterprise should perform its actions and treat the stakeholders. 2. The second theory includes descriptive stakeholders’ theory. This theory helps in determining whether an organization is actually taking into consideration the interests of the stakeholders or not. It mainly determines that how an organization should allocate its resources among all the stakeholders. Generally the organizations have to face various threats at every stage in the organizational cycle. Thus various stakeholders become very critical for the survival of the organization. It is due to this reason an organization must think of various strategies for dealing with these shareholders. The descriptive stakeholder’s theory helps to determine ways for dealing with them. 3. The third theory includes Instrumental Stakeholder’s theory. This theory considers the fact that it is advantageous for the organization to consider the stakeholders interest. In order to maximize the value of the stakeholders, it is very important that the managers give attention towards the relationship with the stakeholders. The organizations view their stakeholders to be a part of the environment that should be managed for assuring profits, revenues and providing returns to all the shareholders. Theories related to Business Ethics Ethics, which is also termed as the moral philosophy, is one branch of philosophy dealing with systematization, defending and recommendation of the concepts of right or wrong. It basically addresses to the disputes arising in the moral diversity. Morality is the systematic procedure for determining the correct or wrong conduct. In other words, it provides guidance towards right or good conduct. Now it becomes important to understand the significance of moral theory. Theory is the set of structured statements explaining one set of concepts or facts. A moral theory focuses on explaining why one particular action is correct or wrong. Thus moral theories give the appropriate framework of thinking, discussing and evaluating in reasoned manner the specific moral issues. As already stated above, the concept of globalization has increased the need of maintenance of business ethics for the sustainability of the business in a long term perspective. In this context, it has been stated that a business has three goals which are achieving high profit margins and becoming responsible both environmentally and socially. In order to do so each and every business must perform certain needs and responsibilities from their part for protecting the consumer’s needs and preferences. They can perform this task by means of participating in corporate social responsible activities or philanthropic activities. There are various arguments made in this context. Various researchers have stated that the only purpose of the organizations to perform their business operations is earning good amount of profit whereas contradicting this statement, the others have stated that the companies responsibly perform their ethical role in order to remain in compliance with the business ethics. An organization operating within the market has a number of responsibilities apart from carrying out business transactions. These duties or responsibilities are required to be fulfilled in an efficient manner. One of the most vital responsibilities of the organization is providing accurate to the customers about the products quality and other related factors. Another responsibility of the organizations remains providing quality products to the customers so that the price charged is well justified (Waddock, 2002). The company must also abide by the standards that have been set by the government while carrying out their business activities. At the same time they must be responsible to the society which requires attainment of corporate social responsibilities in an ethical manner.The importance of business ethics have been found from the very beginning of the trade. Ethical decision making has been defined in the theories or researches as the procedure comprising of various stages, each being affected by the situational, environmental and individualistic behavior. It is basically a four component model where an organization at first recognizes the moral issue, takes the moral judgment, places these issues ahead of the other concerns and act accordingly. However, non compliance has been conducted by various organizations in this context from a long period of time. Business ethics can be described as such a form of ethics which analyses the moral principles within the business environment. The implementation of business ethics is important in every aspect of the business environment. As already stated above, it deals with the moral judgments of an individual related to what is correct or what is not. Similarly, business ethics involves factors which are correct or incorrect for the businesses. The decision making within an organization is generally done by a group of individuals. The decision needs to be ethically correct in order to ensure that they have performed their responsibilities at every course of actions (Pivato, Misani and Tencati, 2008). The business ethics involves criticism associated with the business behavior. It is not possible for a company to continue its business operations without any customer. Thus it becomes very import ant for all the organizations to retain their customers in order to achieve success in the market (Valor, 2008). The existence and success of the businesses is fully dependent on the level of satisfaction of the consumers. It is due to this reason that it becomes highly significant for the businesses to satisfy the demands or preferences of the customers in an appropriate manner. There are various responsibilities that the organizations should perform in order to satisfy the customers: Providing accurate information to the customers: The customers require information about the products or services they are willing to purchase before buying them. It is duty of the organizations to provide these customers with the actual facts and figures in order to help them in making their purchasing decision. The companies must not provide any misleading information to them for influencing them in buying the products or services from them. Thus it becomes essential for these companies to display all the needed information about their products or services accurately so that they are not misleading at all (O. Ferrell, Fraedrich and L. Ferrell, 2011). Pricing should be done in a justified manner: The customers should not be deceived by imposing higher prices for comparatively low quality products. This would create a bad impression on these customers as well. The pricing should be fair enough so that it does not deceive the customers and helps in turning the normal customers to very loyal customers. Providing customer services: The customers should be provided services by the companies even after selling of the products. There are many evidences which claim that the organizations become completely free from all their liabilities once they sell their products to the customers. It is because of this reason that the customers begin facing various problems. The complaints of the customers are required to be served in a proper manner by the organizations so that they get satisfied by the after-sales services. It will also help in retaining these customers from the long term perspective. Thus carefully sorting out the grievances of the customers is very important (Frederick, 2006; Gyves, 2008). Providing training sessions to the customers: There are some products which are required to be utilized with proper care and this needs a training session. It becomes the responsibility of these organizations to conduct training sessions that would be advantageous for these customers (Muller and Whiteman, 2009). In all these aforementioned factors, the importance of carrying out ethical practices is clearly evident. One of the most significant benefits that are enjoyed by these organizations is increased reputation in the society and high satisfaction of the customers. It has been found presently that the customers are highly aware of their responsibilities towards the society and the environment which makes it more important for the businesses to remain in compliance with the corporate social responsibilities. In the next part of the study, the significance of corporate social responsibility would be discussed along with pointing out that what should be the duties of big organizations for protecting the needs or demands of the consumers. Conclusion and Findings Business ethics is the branch dealing with moral principles that guides the businesses in behaving in an ethical manner in the market. As already mentioned earlier, it is all about describing what is right or wrong while making any decision making in the organization. The study has reflected the ways in which companies neglect the standards or codes of ethics for seeking good profit figures. It is very important to communicate the positive aspect of being ethically correct and socially responsible to these organizations. One of the positive impacts is that it increases the reputation of the companies to a great extent. Moreover, increased customer satisfaction helps in retaining them for a long period of time by increasing their loyalty. On the other hand, carrying out unethical actions might result in declining reputation and failure of the companies performing such activities. Thus it is very important that the organizations remain in compliance with the ethical code of conduct in order to carry out the business operations in a transparent manner. Reference List Carroll, A. B. and Buchholtz, A. K., 2009. Business and society: Ethics and stakeholder management. Connecticut: Cengage Learning. Carroll, A. B. and Shabana, K. M., 2010. The business case for corporate social responsibility: A review of concepts, research and practice. International Journal of Management Reviews. pp. 85-105. Curwen, P. and Whalley, J., 2005. The Strategic implications of european union expansion for mobile telecommunications companies. European Business Review. 17 (6). Ferrell, O. C., Fraedrich, J. and Ferrell, L., 2011. Business Ethics: Ethical Decision Making and Cases. Connecticut: Cengage Learning. Frederick, W. C., 2006. Corporation, be good! the story of corporate social responsibility. Indianapolis: Dogear Publishing. Friedman, M., 2004. The Social Responsibility of Business Is to Increase Its Profits. [pdf] Available at: [Accessed 13 December 2013]. Gyves, S., 2008. Corporate social responsibility: An avenue for sustainable benefit for society and the firm? Society and Business Review, 3 (3). Muller, A. and Whiteman, G., 2009. Exploring the geography of corporate philanthropic disaster response: A study of fortune global 500 firms. Journal of Business Ethics, 84, pp. 589–603. Pivato, S., Misani, N. and Tencati, A., 2008. The impact of corporate social responsibility on consumer trust: The case of organic food. Business Ethics: A European Review, 17, pp. 3–12. Valor, C., 2008. Can consumers buy responsibly? Analysis and solutions for market failures. Journal of Consumer Policy, 31, pp. 315–326. Waddock, S., 2002. Leading corporate citizens: Vision, values, value-added. New York: McGraw-Hill. Read More