Ethical Issues in Business
Ethics are important in an organization because they govern the moral principles of carrying out business. Social responsibility is a concept in business ethics. It describes the operations of the business within the law while maintaining ethical standards to ensure a company increases its positive impact and reduces the negative impact (Crowther, & Rayman-Bachuss, 2004). The main aim of social responsibility is to ensure that an organization’s activities are acceptable to the consumers, employees, creditors, competitors, suppliers and the society (Crowther, & Rayman-Bachuss, 2004). These stakeholders ensure a business remains in operation to the future by determining what fair business practices are. Therefore, it is important for a business to build a positive image to continue surviving.
Company Q in the given scenario, does not have a good attitude towards social responsibility. The company has recently closed a number of its stores in areas of the city considered high crime rate areas. The closure is because these stores have been consistently losing money. The company fails to recognize the needs of the employees who have been working at those stores. The closure of the stores means that employees in those two stores have lost their jobs. The company fails to recognize the employees as part of their social responsibility duty. These employees after losing their jobs will negatively portray the company to other members of the society and may not buy the company’s products.
In closing the two stores, the company does not consider the impact to consumers who will have to shift their consumption to other grocery stores in the area. These consumers will have a negative attitude towards the company. The consumers may not shift back to the company’s products even if it reopens.
Despite the fact that the company was losing money, it was not a sufficient reason to close the stores. The company has a greater responsibility to protect the needs of its major stakeholders and these are the employees and consumers. The profit motive should not override the social responsibility concern of the company (Anderson, 1989). Company Q is now offering a limited amount of health-conscience and organic products, which are high profit items. However, this company took considerable time and the effort of customers to start offering these products. It is evident that the company was not concerned with the needs of its customers. The company has been neglecting its duty towards customers by taking too much time to respond to their requests. It is the duty of the company to be socially responsible to its customers because they ensure its existence. It is through such neglect that customers build a negative image towards the company. In the end, many customers leave the company for its competitors.
Company Q’s management declines to donate its day-old products to the local food bank. The company argues that employees will view the donation of food to the area bank negatively and may lose revenue it donates. The company instead decides to throw away the food, which creates a wrong impression to the public. The company fails on its duty towards the society. It is the responsibility of the company to assist the less fortunate in the society as part of its social responsibility program. If the company donates food to the area’s local bank, it will fulfill its social responsibility objective to the members of the society who will use that food. Throwing away food creates a negative image for the company in the society where it exists. It is not possible for employees to steal food from the company because these employees are also members of the society. Therefore, the employees will prefer the food donated to the food bank than thrown away.
Company Q needs to change its attitude towards social responsibility. Several areas of the company’s operations require change for the company to be more socially responsible. The company should restate its mission statement and include social responsibility as its major objective instead of profit making. The company closed two of its stores on the ground that it was losing money. This indicates that its major objective was profit making and failure to make that profit was an enough reason to close operations. However, the company needs to consider the impact of the closure on employees and customers who depend on its business. The major objective should be to protect the interests of its stakeholders over and above profit making (Anderson, 1989). The company should find measures to deal with the crime rates but not entirely close operations.
Another recommendation is that the company should improve its response to customers’ needs. The company should act immediately to the complaints and compliments it receives from its major stakeholders, the customers. The company has been taking years to respond to requests from its customers about offering the high margin items. After responding, the company offers a limited amount of the products. This should not be the case if the company expects to make profits. The company could lose customers by taking that long time. Therefore, the company should act with speed in responding to its customer’s needs.
In addition, the company should change its manner of disposing its old products. Instead of throwing away food, the company should donate it to the area’s food bank. This food will assist the less fortunate in the society where the company operates. The company should view the members of the society as part of their social responsibility. It is not logical for employees to resent donation of food to the food bank because they are also part of the society. Therefore, the company should donate its food and not use employees as an excuse for throwing it away.
Anderson, J.W. (1989). Corporate social responsibility: guidelines for top management.
Westport: Greenwood Press, Inc.
Crowther, D., & Rayman-Bachuss, L. (2004). Perspectives on corporate social responsibility.
Burlington, VT: Ashgate Publishing Ltd.