Strengths, limitations and challenges of ethical and socially responsible business practices The WritePass Journal

Strengths, limitations and challenges of ethical and socially responsible business practices Introduction Strengths, limitations and challenges of ethical and socially responsible business practices ) argues that implementing CSR initiatives may cause the company to lose its focus on its main objective, which is making a profit. However, given that companies depend on customers to make profits, they are obliged to ensure that they attract them by all means, one of them being creation of a good reputation through CSR initiatives. Pride et al. (2009) argue that ethical business practices minimize the opportunities for business to increase their profits. With reference to developing countries that are still characterized by corruption, multinational companies that are ethical may decline to offer bribes for favours. Therefore, they might fail to set up operations in such countries or if they start operations, an unfair competition orchestrated by political forces may limit them from attaining their operational capacity. There are also several companies where employees may be paid low wages or raw materials are bought are sub-standard prices to increase their profitability. Such â€Å"opportunities† may be missed out by companies that dedicated to acting ethically. However, it can be argued that restriction of company freedoms by ethical practices is beneficial to the wider society. Challenges of implementing ethical and socially responsible business practices One of the main challenges faced by businesses in implementing ethical and socially responsible business practices is the large number of stakeholders involved (Ferrell et al., 2011). While it is often at the interest of the business to cater for the needs of all its stakeholders, it is often difficult to achieve. This causes some business to unwillingly act unethically, either directly or indirectly. An example of such a situation is when a company gets its supplies from one supplier with which it has created a relationship over time.   If the company later realizes that the supplier uses child labour to prepare the supplied raw materials, it might be challenging for it to immediately cut off such a supplier. This is because the welfares of other stakeholders in the organization depend on the constant supply of raw materials. A case of a company that is in such a dilemma is Wal-Mart. In an effort to dissociate itself with factories with labour violations and safety problems, the company produced a list of 200 factories, barring them from supplying merchandise to them in 2011. However, two years later, the US customs records indicated that at least two among the two hundred barred companies were still sending merchandise to Wal-Mart. A similar case was established to be happening with Wal-Mart Canada. In Wal-Mart’s defence, it was stated that the companies were still supplying to Wal-Mart because of a confusion that existed as to whether its standards applied. This was because the supplier in question was producing garments under the label of another company (Grabell, 2013). This is a typical example of the challenges that companies face in implementation of ethical and socially responsible practices. To overcome such challenges, companies should formulate ethical policies that dictate the steps tha t have to be undertaken in case such situations arise. This will enable companies like Wal-Mart to avoid scandals of this type. Conclusion Ethical business practices are supposed to be carried out in all business aspects, which include product design, procurement, preparation of financial statements and recruitment of staff, among others. As it has been presented in this paper, adherence to principles of business ethics may be beneficial to the organization, customers, employee and other stakeholders that are affected directly or indirectly by the organization. It has also been pointed out that adherence to ethical and socially responsible business principles may be disadvantageous to the company. However, the organizational disadvantages that may be caused by this are argued to be advantages to the wider society. The key challenge to implementation of ethical and socially responsible business practices is posed by the large number of stakeholders involved. Therefore, whilst companies are encouraged to act ethically, they have to be aware of the limitations and challenges involved. References Chua, F. Rahman, A., 2011. Institutional Pressures and Ethical Reckoning by Business Corporations. Journal of Business Ethics, 98(2), pp.307-29. Ferrell, O.C., Fraedrich, ‎J. Ferrell, L‎., 2011. Business Ethics: Ethical Decision Making and Cases. Mason: Cengage Learning. Grabell, M., 2013. Walmart Accepted Clothing from Banned Bangladesh Factories. [Online] Available at: http://business-ethics.com/2013/06/17/1606-walmart-accepted-clothing-from-banned-bangladesh-factories/   [Accessed 11 november 2013]. Hopkins, M., 2012. Corporate Social Responsibility and International Development. New Jersey: Routledge. Lindgreen, A. Swaen, V., 2010. Corporate Social Responsibility. International Journal of Management Reviews, 12(1), pp.1-7. Pride, W.M., Hughes, R‎.J. Kapoor, ‎J.R., 2009. Foundations of Business. Mason: Cengage Learning. Rehak, J., 2002. Tylenol made a hero of Johnson Johnson: The recall that started them all. The New York Times, 22 March. Shaw, W.H., 2010. Business Ethics: A Textbook With Cases: A Textbook with Cases. Mason: Cengage Learning. Trevino, L.K. Nelson, K.A., 2010. Managing Business Ethics. New Jersey: John Wiley Sons. Strengths, limitations and challenges of ethical and socially responsible business practices Strengths, limitations and challenges of ethical and socially responsible business practices ) argues that implementing CSR initiatives may cause the company to lose its focus on its main objective, which is making a profit. However, given that companies depend on customers to make profits, they are obliged to ensure that they attract them by all means, one of them being creation of a good reputation through CSR initiatives. Pride et al. (2009) argue that ethical business practices minimize the opportunities for business to increase their profits. With reference to developing countries that are still characterized by corruption, multinational companies that are ethical may decline to offer bribes for favours. Therefore, they might fail to set up operations in such countries or if they start operations, an unfair competition orchestrated by political forces may limit them from attaining their operational capacity. There are also several companies where employees may be paid low wages or raw materials are bought are sub-standard prices to increase their profitability. Such â€Å"opportunities† may be missed out by companies that dedicated to acting ethically. However, it can be argued that restriction of company freedoms by ethical practices is beneficial to the wider society. Challenges of implementing ethical and socially responsible business practices One of the main challenges faced by businesses in implementing ethical and socially responsible business practices is the large number of stakeholders involved (Ferrell et al., 2011). While it is often at the interest of the business to cater for the needs of all its stakeholders, it is often difficult to achieve. This causes some business to unwillingly act unethically, either directly or indirectly. An example of such a situation is when a company gets its supplies from one supplier with which it has created a relationship over time.   If the company later realizes that the supplier uses child labour to prepare the supplied raw materials, it might be challenging for it to immediately cut off such a supplier. This is because the welfares of other stakeholders in the organization depend on the constant supply of raw materials. A case of a company that is in such a dilemma is Wal-Mart. In an effort to dissociate itself with factories with labour violations and safety problems, the company produced a list of 200 factories, barring them from supplying merchandise to them in 2011. However, two years later, the US customs records indicated that at least two among the two hundred barred companies were still sending merchandise to Wal-Mart. A similar case was established to be happening with Wal-Mart Canada. In Wal-Mart’s defence, it was stated that the companies were still supplying to Wal-Mart because of a confusion that existed as to whether its standards applied. This was because the supplier in question was producing garments under the label of another company (Grabell, 2013). This is a typical example of the challenges that companies face in implementation of ethical and socially responsible practices. To overcome such challenges, companies should formulate ethical policies that dictate the steps tha t have to be undertaken in case such situations arise. This will enable companies like Wal-Mart to avoid scandals of this type. Conclusion Ethical business practices are supposed to be carried out in all business aspects, which include product design, procurement, preparation of financial statements and recruitment of staff, among others. As it has been presented in this paper, adherence to principles of business ethics may be beneficial to the organization, customers, employee and other stakeholders that are affected directly or indirectly by the organization. It has also been pointed out that adherence to ethical and socially responsible business principles may be disadvantageous to the company. However, the organizational disadvantages that may be caused by this are argued to be advantages to the wider society. The key challenge to implementation of ethical and socially responsible business practices is posed by the large number of stakeholders involved. Therefore, whilst companies are encouraged to act ethically, they have to be aware of the limitations and challenges involved. References Chua, F. Rahman, A., 2011. Institutional Pressures and Ethical Reckoning by Business Corporations. Journal of Business Ethics, 98(2), pp.307-29. Ferrell, O.C., Fraedrich, ‎J. Ferrell, L‎., 2011. Business Ethics: Ethical Decision Making and Cases. Mason: Cengage Learning. Grabell, M., 2013. Walmart Accepted Clothing from Banned Bangladesh Factories. [Online] Available at: http://business-ethics.com/2013/06/17/1606-walmart-accepted-clothing-from-banned-bangladesh-factories/   [Accessed 11 november 2013]. Hopkins, M., 2012. Corporate Social Responsibility and International Development. New Jersey: Routledge. Lindgreen, A. Swaen, V., 2010. Corporate Social Responsibility. International Journal of Management Reviews, 12(1), pp.1-7. Pride, W.M., Hughes, R‎.J. Kapoor, ‎J.R., 2009. Foundations of Business. Mason: Cengage Learning. Rehak, J., 2002. Tylenol made a hero of Johnson Johnson: The recall that started them all. The New York Times, 22 March. Shaw, W.H., 2010. Business Ethics: A Textbook With Cases: A Textbook with Cases. Mason: Cengage Learning. Trevino, L.K. Nelson, K.A., 2010. Managing Business Ethics. New Jersey: John Wiley Sons.