Wednesday, April 15, 2009

Ethical dilemmas & social responsibility issues

Business Ethics

Ethics refers to a system of moral principles- a sense of right & wrong & goodness & badness of actions, & their motives & consequences.
Business ethics refers to the application of ethics to business.

To be more specific, business ethics is the study of good & bad, right & wrong, & just & unjust actions of business.

Sources of Business Ethics

(1) Religion
(2) Cultural Experience
(3) The legal system


Why Ethic is Important?

(1) Ethics corresponds to basic human needs
(2) Values create credibility with the public
(3) Values gives management credibility with employees
(4) Values help better Decision – making
(5) Ethics & profits
(6) Law can’t protect society, Ethics can



Corporate Social Responsibilities

Corporate Social Responsibilities (CSR) is understood as the obligation of decision-makers to take actions that protect & improve the welfare of the society as a whole along with their own interests. Every decision the business person makes & every action he or she contemplates has social implications. Whether the issue is significant or not, the manager should keep his or her social obligation in mind before contemplating any action.

The CSR Debate

Their are arguments for & against business’s social responsibilities.

Arguments For CSR

(1) Changed public Expectations of business
(2) Better environment for business
(3) Balance of responsibility with power
(4) Business has the resources
(5) Prevention is better than cure
(6) Moral responsibility
(7) Globalization
(8) Better employees

Arguments Against CSR

(1) Profit maximization
(2) Society has to pay the cost
(3) Lack of social skills
(4) Business has enough power
(5) Social overhead cost
(6) Lack of accountability
(7) Lack of broad support


Corporate Social Responsibilities & Ethics in International Business


Corporate Social Responsibilities & International Business

An international business faces several challenges while undertaking social actions. These are as follows:
(1) managing the type of the government obtaining in a host country where subsidiary of an MNC is located
(2) Relationship between home & host country
(3) Host government’s attitude towards Foreign investment
(4) Social problems of host country
(5) International laws is weak in addressing social effects on business


Business Ethics & International Business

Two ethical issues are important in international business.
(1) Bribery & Corruption
(2) Work practices & worker remuneration



Areas of Corporate Social Responsibilities & Business ethics concerns for the MNC




Stakeholders Affected Ethical/ Social Responsibilty Issues

Customers Product safety, fair price, proper disclosures & information

Stockholders Fair return on Investment

Employees Fair wages, safety of working conditions, child labour, Discrimination by sex, race colour, or creed

Host- country Impact on local economies, following local laws, impact on local social institutions

Society in General Environmental protection, raw material depletion




MNC’s code of conduct

The main points which should be concerned by MNC is as follows

(1) Respect basic human rights & freedoms
(2) Minimize any negative impact on local economies policies
(3) Maintain high Standards of local political involvement
(4) Transfer technology
(5) Protect the environment
(6) Consumer protection
(7) Employment practices

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