International Brand Expansion

What are some ethical issues that an org...

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What are some ethical issues that an organ...

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International Brand Expansion Student Name: Institution: Course Code: Date Due: Managing Brand Geographic Boundaries ...

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1. Business Ethics and Corporate Social Responsibility: Conceptual Definitions The concepts of business ethics and social responsibility are often used interchangeably, although each has a distinct meaning. The term business ethics represents a combination of two very familiar words, namely "business" and "ethics". The word business is usually used to mean "any organization whose objective is to provide goods or services for profit" (Shaw and Barry, 1995, p. 3; also see Velasquez, 1998, p.14), whereas organizations are defined as "(1) social entities that (2) are goal oriented, (3) are designed as deliberately structured and coordinated activity systems and (4) are linked to the external environment" (Daft, 2001, p. 12). One of the most important organizational elements highlighted by this definition is that organizations are indeed open systems, i.e. they must interact with the environment in order to survive. …. "The organization has to find and obtain needed resources, interpret and act on environmental changes, dispose of outputs, and control and coordinate internal activities in the face of environmental disturbances and uncertainty" (ibid, p. 14). The fact that business organizations are open systems means that although businesses must make a profit in order to survive they must balance their desire for profit against the needs and desires of the society within which they operate. Hence, despite the fact that in market economies business organizations are traditionally allowed some degree of discretion … being "ostensibly free to choose what goods and services they produce, the markets they aim to serve and the processes by which they produce" (Smith and Johnson, 1996, p. 28), organized societies around the world did indeed establish principles and developed rules or standards of conduct - both legal and implicit - in order to guide businesses in their efforts to earn profits in ways that do not harm society as a whole. The word ethics in the term business ethics comes from the Greek word ethos meaning "character or custom" (Shaw and Barry, op.cit, p.3). Ethics has been defined in a variety of ways, inter alia, as: "the study of morality" (Velasquez, 1998, p.7); "inquiry into the nature and grounds of morality where the term morality is taken to mean moral judgments, standards and rules of conduct" (Ferrell and Fraedrich, 1997, p.5); and/or as "the code of moral principles and values that governs the behaviors of a person or group with respect to what is right or wrong" (Daft, opcit, p. 326). Based on these conceptualizations, the definition of business ethics adopted here comprises "the moral principles and standards that guide behavior in the world of business" (Ferrell and Fraedrich, opcit, p. 6), whereas "an organization's obligation to maximize its positive impact, and minimize its negative impact, on society" is being termed corporate social responsibility (Ferrell and Fraedrich, p. 67). Corporate social responsibility is a multidimensional construct comprising four subsets of (1) economic; (2) legal; (3) ethical; and (4) voluntary philanthropic responsibilities (Carroll, 1989, pp 30-33; Ferrell and Fraedrich, ibid, p.6). The economic responsibilities of a business are to produce goods and services that society needs and wants at a price that can perpetuate the business and satisfy its obligations to investors. Thus social responsibility, as it relates to the economy, encompasses a number of specific issues including how businesses relate to competition, shareholders, consumers, employees, the local community and the physical environment. The legal responsibilities of businesses are simply the laws and regulations they must obey. It is the bare minimum required of business organizations by society in return for allowing them to obtain the inputs they need from the environment, transform inputs into outputs and dispose of outputs -- in the form of goods and services acquired by consumers in order to satisfy their individual needs and wants. The legal dimension of corporate social responsibility thus refers to obeying local, national and international law regulating competition (procompetitive legislation) and protecting: workers' human rights (equity and safety legislation); the consumer (consumer protection legislation); and the natural environment (environmental protection laws). Ethical responsibilities are those behaviours or activities expected of business by society -- yet not codified in law. This subset of corporate social responsibilities may be interpreted as expressing the 'spirit of the law' vis-à-vis the 'letter of the law' in the previous case. Lastly voluntary philanthropic responsibilities are those behaviours and/or activities desired of business by society and referring to business contributions to society in terms of quality of life and society's welfare - for example, giving to charitable organizations and/or supporting community projects. Although there would appear to be little disagreement about the need for organizations to act responsibly toward the wider society and the natural environment in which they operate, organizations themselves have adopted a wide range of positions regarding corporate social responsibility. The various organizational stances vis-à-vis social responsibility in free-market economies fall along a continuum, ranging from a low to high degree of socially responsible organizational practices (Barney and Griffin, 1992, pp. 734-735). The few organizations that take a social obstruction approach to social responsibility usually do as little as possible to solve social and/or environmental problems. In such a case ….. "the organization does stand apart from society and functions best when it gets back to basics, when it is freed of government regulation and constraints and discards social engineering in favo...

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