Monday, November 7, 2011

(26) What Are the Social Responsibilities of Business?


Definition - the obligation - beyond that required by the law and economics - for a firm to pursue goals that are good for the community...i.e., the goals of the company should be in harmony with the goals of the community. It basically involves fairness and honesty with employees, customers, competitors, stockholders, creditors, bondholders, suppliers, governments, debtors, distributors, and society in general.

Responsibility is a charge for which one is accountable and must answer or respond.

The Mission of Business - to serve the people with a good or service, to provide jobs for the members of the community, to contribute to the socioeconomic development of the community while making a profit. Business can only exist because the community provides needed human, material, and financial resources as well as its customers. Therefore, Business must answer to the community as to how it performs this mission. Since Business has so much power, it must be responsible in its use.

The Business Organization - a community of stockholders, managers, and workers organized to utilize human material and financial resources in the production and distribution of goods and services at a profit for the mutual benefit of the firm, the employees, the customers, and surrounding community and society in general. Thus, social responsibility is intrinsic to business in its very definition and mission.

The Interdependence Between Business and Society - The firm depends upon Society for its sales; capital (stocks and bonds); human resources; community and government services (medical care, recreation, education, sewage, police and fire protection, utilities, etc.); infrastructure (roads, bridges, power plants, schools, etc.); supplies; and raw materials.

Society depends upon Business for goods and services to satisfy needs, income, and capital gains on investments (stocks and bonds) by individual citizens; interest on individual saving accounts; jobs; economic development as a result of investment by companies in new plants and expansion (multiplier effect); purchases of raw materials, supplies, and equipment, and taxes to pay for government services.

      The Social Responsibilities of Business

1. Pay a just wage that permits a life worthy of the dignity of a human being. Factors to be considered: 
  1. Sufficient to modestly support a family of 3-4 children. The spouse should work not because he/she has to, but because he/she wants to.
  2. The contribution of the worker to profits.
  3. The economic situation of the firm or ability to pay.
  4. The common good of the community.
  5. Difficulty of the job.
  6. Skills required.
  7. Supply and demand.
    2. Provide humane working conditions.

    3. Produce goods and services of maximum quality relative to price to satisfy needs.

    4 Manufacture products that do not harm the health or safety of the customer.

    5 Make a reasonable profit. The stockholders have invested their money at a risk instead of a U.S. bond. Pension funds own stock. All classes of the community directly or indirectly own stock.

    6. Maintain fair prices.

    7. Conserve the environment.

    8. Be aware of the social consequences of its decisions.

    9. Observe the law and cooperate with local, state and national governments.

    10. Pay its taxes according to the law.
 11. Contribute to the socioeconomic development of the community as good citizens.....not PR, but a duty.

1     12.  Maintain its commercial and professional ethics.
   13. Conduct itself ethically as a guest in a foreign country with responsibility and respect for the   sensibilities, laws and customs of the people. CITIZENS FIRST; BUSINESSMEN SECOND.

1     14. Keep the customer accurately informed as to what is in the product, its limitations, how to avoid   problems, how to maintain and use it, advertising that is not misleading, etc.

   15. To be conscious of consumer needs and complaints.

      16. To provide equal opportunities for all. All that matters is ability and preparation. CAN HE OR    SHE DO THE JOB?

  17. To compete fairly, refraining from monopolistic practices as collusion and price fixing with competitors so that consumers can freely choose the best quality for the price.

       18. To be concerned with the general welfare and common good of the community.

    In sum, customers expect a firms products to be safe, reliable, and reasonably priced. Employees demand to be treated fairly in hiring, promotion, and compensation as well as with decent working conditions. Competitors expect the firms competitive practices to be fair and honest. Business is built on trust. When ethics and social responsibility are violated, the market system begins to break down. Fortunately, 99.9% of all business transactions are honest.

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