External Environment - Business Ethics and corporate social responsibility

Question 1

What are Business Ethics ?

Answer 1

• Business ethics are the moral principles underpinning decision making. Ethical decisions involve more than just financial factors or the interests of shareholders.

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Question 2

What is Corporate Social responsibility ?

Answer 2

• Social responsibility is a business obligation to a wider society, particularly to external holders
• (CSR) refers to more holistic approach approach that an organisation takes to meet or exceed both internal & External stakeholders
• Expectations beyond those of simply making profits and meeting legal obligations

Question 3

CSR - Community involvement

Answer 3

• CSR requires org’s to treat their local community with respect & to engage in some kind of community investment
• Giving cash donations
• By offering your staff’s time and skills in developing and maintaining local projects

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Question 4

CSR - Community involvement

Answer 4

• CSR requires org’s to treat their local community with respect & to engage in some kind of community investment
• Giving cash donations
• By offering your staff’s time and skills in developing and maintaining local projects
• Loaning particular equipment for a particular project

Question 5

CSR - Employee Relations

Answer 5

CSR employers treat their staff fairly, equally and value diversity

• Respecting the talents and human rights of all individuals
• Being fair in the recruitment and promotion processes
• Supporting a good work/life balance
• Acting ethically and with integrity at all times

Question 6

CSR - Environmental Practices

Answer 6

CSR means doing more than complying with the law in treating the environment with

• Reducing energy consumption and minimising waste
• Preventing or minimising pollution
• Recycling and using recycled materials

Question 7

CSR - Stakeholder Responsibilities

Answer 7

CSR means you have an obligation to best serve the interests of stakeholders

• Meeting conflicting stakeholders demands e.g. maximising ROI for investors while providing high quality and low cost for customers
• Building sustainable relationships with your stakeholders to earn long-term profitability and respect

Question 8

Environmental Factors

Answer 8

• During production process businesses create external costs which are created by society such as pollution
• The more that is produced the greater the cost to the environment
• Governments intervene to limit the external cost by:
• Imposing a tax on businesses to take account of those external costs to society
• Offering a subsidy to businesses if they produce in a more environmentally way
• Introducing laws which force businesses to operate in a more environmentally friendly way

Question 9

Government Influence (Main policies)

Answer 9

• Fiscal policy: Which involves changes in taxation & spending within the economy, impacting businesses as increased taxation = less profit (VAT, Income tax, etc)
• Monetary Policy: The Bank of England is responsible for regulating the economy through interest rates, money supply and exchange rates, which can have a negative impact on businesses and consumers.
• Regional Policy: Companies in less affluent areas receive incentives to create employment and wealth.