The role of ethics and social responsibility aids organizations in developing a strong strategic plan, while addressing the needs of stakeholders. Ethics and social responsibility require social awareness to address the needs of the environment and to increase the knowledge of employees, which will lead to a corporation focused on supplying the customer with what is needed, managers equipped with solid decision-making abilities, and employees who believe that he or she are an asset to the business.
It is the executive manager’s responsibility to establish a clear vision for the corporation and place a specific focus on understanding stakeholder’s needs. In an effort to support these requirements agendas and regulations will be developed to maintain and enforce business ethics within the organization. It is vital for an organization to establish a firm code of ethics for employees and managers to agree and adhere to equality within the organization.
Establishing a universal understanding of ethics and expanding the knowledge and of ethics will strengthen the corporation socially by enforcing respect towards everyone, respect for the organization and a corporation that is working together to form a universal business. Ethics are the morals, values, and beliefs of individuals it is the right and wrong behavior and believes of individuals. The importance of establishing and maintain an ethical business is to prevent various types of litigations against the company; protecting the business, stakeholders, managers, and employees.
Smart corporations operate proactively rather than reactively, preventive measures such as human resource training modules, computer based training (CBT), employee handbooks, and semi-annual reviews, and company surveys will serve as a matrix to measure and identify the ethics and social responsibility of the organization. Deciding to open a new business can be a difficult task. Appropriate planning is essential to establishing a productive business.
An individual must have capital, an idea, licensing, and the will to make establish and sustain a successful business. Business planning is a strategic part of formation; contractual agreements are another important factor of communication so that each member has the same understanding of the commitment that he or she has made. Each individual has to be dedicated and responsible to the outcome of the entity no matter how big or small the business; responsibility, and knowledge are the foundation to start a business.
The fall of the housing market is an example of how business ethics can change the environment. Mortgage lenders were approving individuals and families for loans that he or she could not afford. The lender would make a commission off of the loan and most banks were aware that over half of the loans begin approved were bad loans. Ethically this is not right, the lenders were deceiving the borrowers leading them to believe that the home was affordable and within his or her price range.
Another corporation that operated unethically was Ford Motor Company with the production of the Ford Pinto. To compete with international competition and achieve Lee’s goal of producing the Pinto within a small time frame led to designing and manufacturing flaws. This resulted in a fuel tank design that would put the Pinto in a combustible situation should rear end accidents penetrate the poorly designed fuel tank. Realizing the design malfunction and deciding how to fix the fuel tank brought about a difficult management decision.
Analyst determined it was more affordable to keep the current flawed design and save $11 million knowing some of their customers would ultimately be killed by this decision (Trevino, L. K. , & Nelson, K. A. 2007). Organizations must remember that when a product or service is rendered the company assumes risk and liability associated with the production and efficiency of the product. Corporations such as Ford who willing put stakeholders at risk are not ethical corporations, the reputation of the business is at stake which flows down to all stakeholders both internal and external.
Lee Iacocca was concerned with the increasing profit of Ford in the small car department; however his choice came with a costly price. Innocent people were killed and harmed and the company faced a tremendous down fall. Organizations have a social responsibility to all stakeholders and an ethical reputation to uphold as a reliable, profitable company working to provide world class service. Reference Trevino, L. K. , & Nelson, K. A. (2007). Managing Business Ethics (4th ed. ). Hoboken, NJ: John Wiley and Sons.