From another point of view, corporation are dependent to a large extent on their stakeholders to execute business goals successfully in society, and also depend on and obligated to each of their constituencies in different ways to achieve their combined aims. Normally, a corporation’s stakeholders include its stockholder, customers, and suppliers, employees worldwide, political and environmental groups that influence its transactions, unions, and international governments. The Stakeholder Moral Responsibility Matrix (Carroll, 1989) can help managers to determine what responsibilities and obligations the company has to each stakeholder (Figure 1). More and more organizations find that stakeholder approach is a response to the growth and complexity of the modern corporation and to its influence on the environment, the economy, and the public. It includes moral, political, ecological, and human-welfare interests as well as economic factors. A pragmatic way of understanding multiple, competing political, economic, and moral claims of a host of constituencies can seen by using this approach.
Figure 1: The Stakeholder Moral Responsibility Matrix
Now let’s look at some ethic issue for the primary stakeholders of corporations. First, the most important stakeholders are customers.
“Customers care” (Murray. D, 1997) has been a popular theme for almost all organizations. Some question will be asked first to the specific organizations to verify whether customers be satisfied or not. Firstly, do the organization keep its promises to customers, or make promises that they know they can’t keep? If once the promise has been made to products or services, it should be abided, or organization will loose all the trust. The second question is that do they honest about the quality and prices of products or services. In some case in China, nominal advertisement will cheat customer by alluring price or functions. However, in fact, they are not as good as they crow about. Once it happened, customers will feel being cheated. It gives deep influences to customer trust and market share. In addition, it is hardly to make change. Thirdly, do the working to build long – term mutually advantageous (win – win) relationships with customers.
Despite customer, employee is another important stakeholder for corporations. The ethical environment in a company can influence the attitude and performance of its current employees, as well as the calibre of future employees, which the company can entice to work for them (Davies, Peter W. F. 1997). On the one hand, if a company promotes a cutthroat environment, the employees will be less likely to have any loyalty towards fellow employees or to the company as a whole. On the other hand, an environment in which employees are encouraged to act ethically will inspire a cooperative atmosphere which will create motivated and loyal employees.
One of another primary stakeholders is supplier. Company must also consider the suppliers with whom they choose to associate. Being linked to a supplier who violates human rights can be very damaging to a company’s image. Companies are establishing policies regarding their suppliers. For instance, in 1992, Sears, Roebuck and Co. signed an agreement with the American Clothing and Textile Workers Union, promising to reject Chinese goods with forced or child labour. Salton – Maxim, which imports about 60 per cent of its inventory from Hong Kong, personally inspects its suppliers’ factories to make sure that there are no human rights violations occurring. Unfortunately, even establishing such policies does not necessarily ensure that human rights violations will not occur. Nike is am typical example, They not only made the employees working in force, but also use children with very low salary in China. Once I went to visit the one of a factory of China by opportunities, It is wondered that whether this place is a factory or a prison or hell. However, it does show that social responsibility now stretches beyond the confines of both corporate and country lines. Companies can no longer justify their position by pleading ignorance or excuse their actions by cultural relativism.
Most people would argue that a company’s ultimate responsibility is to the people who own the company: shareholders. Since it is the shareholders’ capital, which allows the company to stay in business, the company will strive to do what is in the shareholder’s best interests.
To illustrate the power one individual shareholder can have, consider the example of a Procter & Gamble shareholder who submitted a resolution in 1990 to boycott coffee from EI Salvador. Initially, Procter & Gamble did not respond to the shareholder’s resolution, which, in the meantime, gather support from other shareholders around the country. Procter & Gamble’s lack of responsiveness eventually led to media coverage of the problems in EI Salvador, which in turn forced the company to reconsider its business dealings in EI Salvador. The shareholder’s concern has led Procter & Gamble to become more careful in its dealings with EI Salvador and to adopt a policy where it deal with small coffee growers and is more sensitive to the political situation of the country (Henry 1993).
Other stakeholder includes investors, media, government, and so on. Sine the limitation of words, the detail of these stakeholders is not given in this essay. However, they also play important role when consider business ethic.
Aiduo is one of the biggest manufactory, which produces Video Player in China. This product innovated in China to replace VCR player. The record media is VCD, which is similar with DVD disk, which can record 60 minutes video data on single disk but half price than cassette. We can say this Product became popular in one night. However, the customer cannot copy any thing into the VCD disk. In addition, once the disk has nick, the data will be lost. Aiduo was the first one sells this kind of player with super reading function. No matter what kinds of nick, the disk can be play by player. By this advantage, this product rapid occupy the market and make enormous profit for company. However, this super reading ability can also read all of the copy disks. (Copy disks’ quality far worse than quality goods that many of them cannot be read by other player) To customer, the price of quality goods is ten times than copy ones. Consequently, the aim of customers buy this player is to watch copy disks. In this case, the interests of some stakeholder are related. Corporation make lost of profit from this product, and pay more product tax for government then before. Company use some money to change the working condition for employees to ensure product quality. Customers enjoy the special function and acceptable price with product. In addition, they don't need to buy expensive disk from shop. They can buy copy disk form private. It seems the entire stakeholder suffer the advantage form this product. Now, if we expend our view to widen social responsibility, we will find the answer. This product serious damages the Copyright of artists. Their achievement can be easily stolen by this easy and cheap way. Nowadays, these situations become even worse than before but difficult to solve. (www.a.com.cn)
If above discussion can be understood as what should the corporation do to be ethics. Then the following discussion about corporation behaviours can be recognized as how could corporation to be ethic. In another words, it analyse how can corporations satisfy their stakeholders. Some typical theories around this topic will be introduced in this part. These behaviours are base on the different strategy of each specific corporation. The relationship between strategy and social responsibility can be very close. Key strategic moves by organizations such as acquisitions, rationalization, relocation, product diversification and so on, inevitable result in an increase in satisfaction for some stakeholders but dissatisfaction for others. Modern organizations facing an increasingly turbulent environment often need to make significant strategic moves for defensive or offensive reasons. To help us understand the different aim of strategy in each level of business objectives, the Hierarchy of Business Objectives Model (Figure 2) will be introduced. In this model, “the strategic aim, or mission, is what the business exist to achieve, while the lower level objectives are distractions form the ultimate objective which have first to be satisfied. If any of the lower level objectives cease to be satisfied they become dominant, and the lower the level the stronger is its dominance when not satisfied.”(Pearson. G., 1995)
Figure 2: A Hierarchy of Business Objectives
As Gordon Pearson described, “the strategic aim is today widely envisaged as a concise statement which clearly identifies the organization’s strategic direction expressed in a form which is readily communicable and capable of motivating people in the organization.” Some famous example involve NASA’s “Put a man on the moon by the end of the decade” and Coca-Cola’s “Put a Coke within arm’s reach of every consumer in the world” Furthermore, the strategic aim drives the business. When other objectives intervene, the business is blown off course. For instance, the customer ceases to be pleased the organizational focus is distracted from its real strategic aim. Many businesses remain stuck at this customer – focused level on the hierarchy. Some one argued that corporation should have “passion” for customers, but this hardly rational. The supplier – customer relationship should not be passionate, but calculated. In some case, providing customer with an overabundance of some product attribute is simple wasteful and may be directly counterproductive. Moreover, sticking at this level inhibits the unique achievement of a strategically focused firm.
Satisfying stakeholders is the second level of hierarchy, which has been fully discussion in first part of this essay. Consequently, we not mention it here again.
Liquidity and profitability are measures of performance, which define minimum levels necessary for independent survival and to enable the business to focus its attention on the higher-level objectives. From time to time, the lower level needs inevitably become dominant and then the firm has to shift its attention. On the other hand, the failure to satisfy the minimum needs of society would result in that lower level objective becoming predominant.
The hierarchical view of objectives provides a systematic way in which a firm may balance the conflicting priorities of various opposing interests. It helps management to balance the long – term interests of the firm’s financial environment. Identifying the position of social responsibility in the objectives hierarchy demonstrates provides the key to how businesses might manage their ethical stance whilst rejecting the less realistic blandishments of ethicists. Now, two specific corporation behaviour will be state in following paragraphs to give a better understand of business ethic behaviours. Such examples include misleading pricing and product safety and design.
Companies should clearly be responsible for the safety of their products. Because consumers want and expect safe products although they seldom activity seek safety. Consumers depend on governments to guarantee that manufacturers and retailers will not sell unsafe products. However, firms sometimes face an interesting challenge: safer products cost more but consumers are not willing to pay for increasing cost. Even worse, in some countries, highlighting safety features could cause some consumers to question what the previously had assumed was a safe product. For example, Regina Corporation, a small appliance manufacturer in the United States, devised an immersion detection circuit interrupter for its home spa products. This device interrupts the circuits should someone accidentally drop an appliance in the water. Regina Corporation did not advertise the benefits of this new device because they believed it would frighten potential buyers (Nelson – Horchler 1988)
Another behaviour usually happen is misleading pricing. Sale pricing, the use of price comparisons, and the provision of manufacture’s suggested retail prices have been the target of complaints from consumers all over the world. Customers criticized the company for setting the initial price of goods at a high level for a brief period in order to advertise a sale and draw customer. With the introduction of seasonal sales in Japan, Consumers have complained that the regular prices are exorbitant.
In conclusion, since there is no exact definition for business issue, the essay avoids using too many words to find the real definition, but use poker as example to make readers have the brief of business ethics. Then the social responsibility of corporation was fully discussed next, which brings corporate behaviour to a level where it is congruent with the prevailing social norms, values, and expectations of performance. Five general responsibilities were explained with examples. In addition, corporation are dependent largely on their stakeholders. The Stakeholder Moral Responsibility Matrix (Carroll, 1989) can help managers to determine what responsibilities and obligations the company has to each stakeholder. The corporation behaviour was introduced by using the Hierarchy of Business Objectives Model, which helps organization to make appropriate strategic plan. Finally, business ethic becomes increasingly important and necessary for an organization, with the increasing demand by society.
Reference
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Journal
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INTERNET
03 March 2002
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