Government Influence on Responsible Business - Essay Example

Task Table of Contents Introduction 3 Responsible Business 3 Ethical Business 4 Example of Ethical Business 7 Government Influence on Responsible Business 8 Conclusion 9 References 11 Responsible Business Introduction The aim of this essay is to understand the concept of responsible business. The study builds interpretation of this concept and range of views and interpretation related to the meaning of responsible business. This study also analyzes the term “responsible business” with other concepts that are related to it. Ethics are an important part of every business. This essay evaluates the concept of ethical business and draws a relevant example regarding business ethics and how organizations develop ethical practices in their business activities. The essay also evaluates the ways in which ethics affect business behaviour and the society. In the end, this essay analyzes the role of the government on approaches to responsible business and in relation to ethical business. Responsible Business According to Paul Herman, “[a] responsible business thinks strategically, comprehensively, and inclusively with all stakeholders.” The responsible business describes a more complete, connected, and systematic way to think and act on decisions and problems. The responsible business approach also offers an enlightened approach for leaders from the board of directors to the front line sales team and for government and not-for profit organizations (Pohl & Tolhurst, 2010). Responsible business frequently refers to doing business which reflects ethical, social and environmental objectives in addition to being a good employer and attempting to make a profit. Responsible business practices can be employed in different areas of the daily working of the company. For example, these practices generally include the provision of a healthy working environment for employees. Additionally, responsible businesses encourage equality and justice when relating to the employees and do not tolerate any type of bullying, harassment or discrimination (Sanford, 2011). In responsible business practices, environmental and societal responsibilities are broadly considered and applied. In this regard, responsible business is usually aimed at influencing others. Responsible business practices also refer to reducing risks in the workplace. These practices include minimizing safety, health and environmental risks posed to the society, community and employees through employing safe facilities, operating procedures and technologies (Smith, 2010). Responsible business is a term with a broad coverage. Some of the concepts that it encompasses are CSR, ethical and sustainable business and the social concept. By following all of these concepts, a company can run a responsible business. This type of business follows those practices that affect the society’s code of ethics. Responsible businesses follow such practices in order to continue their business in a profitable way. A related concept to responsible business is corporate social responsibility (CSR), which is the process of evaluating the responsibilities of an organisation and their impacts on the society (Kotler & Lee, 2011). Ethical business is also related to responsible business. A distinction between a sustainable and ethical business is that a business that places emphasis on a specific code of conduct is referred to as an ethical business, while a sustainable business is one that is able to continue operations through sustainable trading. Ethical Business Ethics is one of the issues make up an individual’s personality, makes the basis for behaviour, morals and determines the values that form the basis of society. However, with the difference in origins and backgrounds of all individuals, the definition of ethics is complicated. From every individual’s background, the environment, education and rules imposed ensure that the definitions of ethics differ across cultures and individuals (Ferrell, Ferrell, & Fraedrich, 2012). Ethical businesses are those that follow a specific code of conduct and ethics within their business activities and environments. The aim of the business ethics practices is to accomplish particular results from usual practices, for example, increasing understanding regarding the problems that are related to ethical practices, reduce wrongdoing and improve decisions. Most organizations use ethical business practices to run the organizations effectively (Kerzner, 2010). Business ethics is the study of the appropriate moral standards of human activities and the objectives of business organization. It is not a simple set of certain moral standards, and is a tool for analyzing and solving problems that confront the moral man and business. With the application of business ethics, two important tenets of a company are achieved; the rules and procedures that govern the members and ways of controlling these rules and members (Carroll & Buchholtz, 2009). This means that business ethics are simply laws derived from common values and used to define or govern businesses. In the society, the term value refers to the qualities upon which the society makes its judgement about the appropriateness of choice. This term is differentiated between societal and business values, where the society places emphasis on values like conscience, respect and justice while business tries to ensure that the quality of products provided and customer satisfaction are aligned with product rules and safety. This means that business ethics are based on both achievement of company purposes and respect for outside stakeholders in the business, including the competition (Carroll & Buchholtz, 2009). Competition is healthy for the business to continue, so management should accept the different market players and participants in order to succeed. Business ethics are concepts derived from the common cultures and traditions the society from which the population is born. This means that social ethics are the foundation for business ethics, and the concepts used for business ethics cannot be separated from the concepts used for business ethics. Business ethics can be subdivided into three main levels of operation, with the first one being world class business ethics (Ferrell, Ferrell, & Fraedrich, 2012). World class business ethics refer to the actions that make up business ethics and are applied universally to determine the operation of any business. Basically, world class business ethics encompass the tenets of social responsibility, where the company works to improve the lives of the different stakeholders, both internal and external. Examples of this include the creation o employment for the society, increasing trust between the stakeholders in the business, encouraging positive environmental practices, and other actions that are deemed morally positive in society. For a business to achieve world class business ethics, it must be prepared to provide high quality products to its customers, prepare advertisements that are true to their products and ensure that all customers are treated fairly and with dignity. For the employees, a business must provide decent wages, consider the needs of disabled employees, be an equal opportunity employer and provide opportunities for career advancement for the different employees. The business should also ensure that the owners and investors earn a fair return on the original input to the business, have access to required information and operate by the law. Suppliers should be treated fairly in terms of pricing and licensing of their products, engaging in fair competition in the selection of suppliers, and competitors should be treated with mutual respect (Ferrell, Ferrell, & Fraedrich, 2012). The second level of ethical business is at the macro level, which is presented across the industry or national level for business. The macro level of business ethics is involved with the respect for private investment and the competition between the players in the market, fair provision of information and fair selection of players in the labour market. Finally, the third hierarchical level of business ethics is at the micro level, which deals with the relationship between the firm and its clients. The main principles that govern this relationship are trust and non-discriminatory practices between the firm and all the primary stakeholders including the customers, suppliers, employees, management and shareholders. Example of Ethical Business A classic example of perfect business ethics is shown in the following example, which demonstrates the choices that a company can make in order to place stakeholder interest and business ethics first before business success. A company, Johnson and Johnson, was faced with a situation in which consumers died after consuming its product, a medicinal drug called Tylenol. In this situation, a different company would consider the interest of shareholders the first priority in this issue, where the company would try to salvage its image and protect investments in the market. This means that the companies would usually try to safeguard their stock, engage in myriad lawsuits that try to absolve them from the guilt, while at the same time waiting to see what happens to the product. However, the management at Johnson & Johnson immediately decided to pull the product off the market in the interest of consumer safety. This decision hacked off a major part of the company’s stock value, creating a problem for management in the long-run. Looking at this instance, it can be seen that the company put the interests and safety of the shareholders first before the interests of management and financial gain (Jennings, 2012). The response by the management of Johnson and Johnson to the near tragedy provides one of the best ways of demonstrating the application of business ethics. The company managed to respond to the tragedy in a way that upheld business ethics and demonstrated skill of operation. In the 18 months after the incident, the company managed to regain the value of its shares that had fallen, a fact that can be attributed to the way the incident was handled (Jennings, 2012). According to the management of the company, the course of action that they took was the only one that was morally viable, meaning that they could not consider any other course of action. Currently, between the scientific community and the business world, there is a growing consensus on the need to improve the "ethical conscience" of business professionals in conducting their business. Some experts point out the need to improve corporate social responsibility, while others cite increasing cases of corruption in government offices and the high ranks of big corporations. Government Influence on Responsible Business The primary responsibility for assuring responsible business practice depends on a business, however, governments also play significant roles in this field. The OECD Policy Framework for Investment (PFI) incorporates responsible business practices in 10 policy fields that are to be dealt with by the government attempting to raise their investment environment (OECD, 2010). With this policy, the governments are encouraged to furnish an environment that clearly defines the various roles that businesses and governments play in developing practices of responsible business. One of the main roles of the government in relation to responsible business practices is providing laws that are to be followed by the different companies. The government fosters a discussion on norms for business activity to and responds to the expectations of the society communicated through ways other than the law. The high level aim of the UK government is to create an environment that will foster responsible business practices in order to maximise the contribution of businesses to the society (Grande-Bretagne, 2005). Most organizations use ethical business practices to run their organization effectively. With the use of business ethics, the activities and actions of the different players in a business is carefully monitored and corrected as needed. The government and regulatory agencies help in developing and enforcing business ethics in the organization by forming and defining different substantive and normative ethics for the business to follow. Normative business ethics are usually created to regularize the distribution, sales and management of a company’s stock, and are decided by the Securities and Exchange Commission. Conclusion From the above analysis, it is evident that responsible business is an issue that encompasses different stakeholders in the business. The business and its management should ensure that the practices that it engages in reflect the moral and ethical standards of the society in which they operate. The analysis has also differentiated ethics from sustainability and indicated that, for sustainability to be achieved, a business must first ensure that it engages in ethical business. The two terms, ethical and sustainable business, both combine to give responsible business, which determines the operations of a business to make profits and act responsibly to the society and other stakeholders in its operation. From the example given above, ethical business practices sometimes overrule the practices that a business performs in order to remain sustainable. In this case, it is sometimes necessary to engage in actions that might harm the company but uphold societal values. References Carroll, A. B., & Buchholtz, A. K. (2009). Business & society: ethics and stakeholder management. Mason, OH, South-Western Cengage Learning. Ferrell, O. C., Ferrell, L., & Fraedrich, J. (2012). Business ethics: ethical decision making and cases. Australia, Houghton Mifflin. Grande-Bretagne. (2005). The UK government sustainable development strategy. London, The Stationery Office. Jennings, M. (2012). Business ethics: case studies and selected readings. Australia, South-Western, Cengage Learning. Kerzner, H. (2010). Project Management Case Studies. Chichester, John Wiley & Sons, Inc.  Kotler, P. and Lee, N. (2011). Corporate Social Responsibility: Doing the Most Good for Your Company and Your Cause. John Wiley & Sons. OECD, (2010). OECD economic surveys: China. Paris, OECD. Pohl, M., & Tolhurst, N. (2010). Responsible business how to manage a CSR strategy successfully. Chichester, U.K., John Wiley & Sons. Sanford, C. (2011). The responsible business reimagining sustainability and success. San Francisco, Jossey-Bass. Smith, N. C. (2010). Global challenges in responsible business. Cambridge, Cambridge University Press. Read More