1.3 Org. Objectives

Law provides the standard for ethical behavior. However, there are circumstances in which the law does not qualify an action as ethical, even though it may be legal. A code of ethics serves to guide businesses and create an ethical culture and help managers make good judgments.

Ethical and responsible corporate behavior may not benefit the business in the short term, however the long-term results will be a society rewarding the business with trust, loyalty and continued patronage.

Differing views of social responsibility

Business organizations that only seek to ensure that the shareholders are granted higher returns on their investment are aligned to what is called the Inherence School of Thought. This is the case of the Meatrix example given above.

However a business from the enlightened self–interest school of thought recognizes that the shareholder is best served by being responsive to the society. The example of Johnson & Johnson and Tylenol above would illustrate this trait.

When business organizations are in economically less developed countries and adhere to the inherence school of thought, even though the of the country allow them to conduct their business accordingly, the issue of ethics as a component of social responsibility is critical to understand.

Nestle Corporation has faced boycotts and still finds it difficult to avoid accusations due to its marketing of infant formula in economically less developed countries in the early 1970’s. Because of poor sanitation, refrigeration and education, infants suffered serious health problems when Nestle convinced the public to use their products instead of natural breastfeeding.

A business’s reputation is as easily lost as that of an individual whose actions are unethical.

Policies to implement objectives of social responsibility (such as environmental auditing)

Social and environmental audits are self-imposed or external studies on the degree to which the business is meeting ethical standards of conduct. Because of the intensity of competition and pressures that are brought to bear on managers and business leaders, social and environmental audits serve to improve and foster an ethical culture. In line with this are codes of ethics that firms adopt to provide the needed guidance. Employees are also trained in these codes while self-reporting and investigation is an integral part of the social audit.

Nestle vs Environmentalists - the battle over water

Apply the Ansoff matrix growth strategies to a given situation.

Offshoring is when a company decides to move its business activities or business to another geographic region. Companies can achieve cost savings in production, improved taxation conditions more lenient company and employment laws, more lenient accounting and banking procedures/systems, more suitable political or legal conditions. By choosing to off-shore a company may be looking for domestic market penetration in its overall growth strategy at home. This can therefore be achieved by passing the savings through to consumers in the form of lower prices or an increased marketing campaign.

Outsourcing is the when a company decides to contract work that is not geographically sensitive. Outsourcing is similar to off-shoring in that cost advantages can be quickly achieved.

Ernst & Young outsources tax preparation work to India and is therefore able to more effectively penetrate the competitive accounting sector in its domestic base.