Pressuring Business to Achieve Higher Levels of Social and Ethical Responsibility - Research Paper Example

IKEA is an international home retailer dealing with diverse customer target. In this company, ethical problems arise when a man's assignment forces him to emphasize a single job objective--say, maintaining the profit margin on a particular product. But suppose that in order to meet this objective his only alternative is to sacrifice quality. Choices of this kind must be forced upward in the corporation; for--as one assumes increased obligations toward employees and stockholders-profit itself represents an ethical standard. IKEA adopts social corporate responsibility policies in order to meet ethical and moral questions and respond effectively to changing demands and laws (Carmichael and Drummond 2008). Thus, the main dilemma is how to respond to consumer’s social demands and expectations and meet social responsibility in marketing. Several years ago, IKEA was accused in unethical behavior patterns related to product names. So, it was found that IKEA uses Danish names for cheap rugs but names expensive and luxurious furniture after Swedish places. These issues led to a wave of criticism and negative publicity. “Ikea has chosen the objects with the lowest value and given them Danish names” (O'Mahony 2008). For IKEA, consumer citizens are pressuring business to achieve higher levels of social and ethical responsibility. Why should corporations, and especially marketers, respond to these new demands? Part of the answer lies in business concern with the "threat" of more governmental regulation. This is the argument which goes, "If we don't, government will". But part of the reason why business is moving to higher levels of social performance is to be found in consideration of the ethics of the situation. Socially responsible behavior on the part of the firm can be justified by standards of rightness as well as of economics and the law. It may be sound business practice, as well as morally right, for a marketer to attempt to meet socially responsible performance standards. The pressures imply the development of rules and standards by which business actions may be judged as "right" or "wrong". In other words, ethical decisions under free enterprise are "moral decisions", impelled by social sanctions, but modified by economics and environmental requirements. The growing professionalism in marketing is also stimulating the development and acceptance of pervasive "socially conscious" standards of ethics. Some insights into the changing social and ethical responsibilities of marketing are explored (Carmichael and Drummond 2008). In IKEA, expenditure of time and resources on such issues is still regarded by some managers as wasteful or as time spent on peripheral issues. However, allocating resources to such issues is no longer a matter of option. The questions of brand and furniture names should not be on the periphery of corporate planning, but an inescapable part of corporate planning and concern. The partial answers existing in accounting-economics terms do not satisfy growing concern with the corporation as a means to a social end--improving the quality of life. The quality of life issue is the major problem confronting business now. Meeting the issue will require management commitment and time, will be costly, and frustrating, but necessary. Corporate presidents can expect to spend more time on the quality of life issues--on consumer/environmental and social concerns--than their predecessors. Management's new task is to balance traditional profit and rate of returns on investment criteria with new definitions of social costs, social purpose, and social conscience (O'Mahony 2008). People in all paces around the world responded the same way to this problem as IKEA’s unethical behavior diminished cultural importance and unique identity of a nation. The starting point for socio-industrial progress analysis is not to be found in corporate traditions or corporate history or even industrial history. The starting point is to relate social progress of the corporation to national goals and to the social indicators being developed to evaluate the attainment of these goals. This approach sounds like socialism to some. It is not. Social progress was once considered to be a national by-product of economic progress. Society believed that social progress was achieved through continued economic growth and progress. The accumulation of material wealth and affluence is no longer automatically equated with social progress by a growing number of influential Americans. Public policy sees social progress as a goal to be achieved in itself and not necessarily the same as economic progress. With the new parity between social progress and economic progress, social progress is seen as a goal to be deliberately sought--by business and other social groups. Here is where national goals and governmental programs can be useful as indicators of major areas of social concern. IKEA’s international goals have business relevance as citizens move toward a social industrial complex. In a social industrial society national goals are increasingly relevant to business policy. Specialists concerned with social indicators are now developing tools and measures to appraise progress towards such goals. Social indicators are tools to be used to measure progress in quality of life areas. A social indicator is a describable trait/characteristic/attitude which either is applicable to a substantial segment of the population or has shown evidence of recent change in magnitude or intensity (Carmichael and Drummond 2008).. In order to meet changing social and economic requirements, IKEA should adopt a new concept called socio-business. Some chief executives think that the issue is whether or not business should give a little more or less money to solving some nonbusiness social problems or hiring more hard-core minorities. Adoption of a socio-business concept is no longer a matter of option for our major enterprises if the business is to be relevant to the new social progress concerns and social value changes (Singer 88). The socio-business concept offers a conceptual framework for integrating the firm's relationship to its ultimate environment. The socio-business concept is an extension of traditional management and marketing concepts with redefinitions of mission, service, consumer, product, and profit. The corporate mission is defined in social system terms of longrun profitable service to the consumer-citizen. Socio-business issues are seen as critical and urgent, impacting not only on profits but also being relevant to the survival of the enterprise in society. The risks of the IKEA’s approach are negative publicity and law suites against the company. Globalization creates new business environment and imposes new demands on global companies like IKEA. So, business programs should be evaluated and tested in terms of societal impact as well as traditional balance sheets and profit and loss statements. Products are defined as socio-business products, not just as economic goods. Analysis of socio-business product policies considers the social effects on the individuals within the corporate system--in larger systems within which the firm operates and with customers. The firm should be aware of its role as a molder of social values for both employees and consumer-citizens (Carmichael and Drummond 2008). Organizational structure, with its system of checks and balances and built-in auditing functions, becomes a less effective control device as you move up the ladder of responsibility. Like personal conscience and personal standards, and like the law and corporate policy, it is an important, but not totally adequate, source of ethical control for the corporate manager. References Carmichael S., Drummond J. (2008). Good business: A guide to corporate responsibility and business ethics. Hutchinson, London. O'Mahony, Paul (2008). “IKEA Guilty of Cultural Imperialism: Danes” The Local. http://www.thelocal.se/10054/20080220/. Read More