Constituents of Responsible and Ethical Business - Essay Example

RESPONSIBLE BUSINESS REPORT- ETHICAL BUSINESS Responsible Business Report- Ethical Business The mode of running a business today is slightly different from the past strategies. Contemporary businesses do not exist in isolation. Instead, they coexist with employees, other business organization, and the communities around which the business operates. Besides, the operating environment for several business organizations has to contend with the upshots of climate change and the global fiscal crisis. The recognition of this reality together with the development of response strategies constitutes responsible business. Apparently, responsible business requires business leaders to account for the obligations and true costs of the activities of the business, both financial and non-financial. It should do this through reflection, responsibility, reporting and resilience. The main purpose of this account is to explore the concepts of responsible business and ethics together with their applications in the business world (McIntosh, 2003, p. 106). Constituents of responsible business Responsible business entails four key attributes that are essential for its dispensation. Its main constituents are business acumen, global knowledge, ethical compass and committed citizenship. Business acumen A business organization must have a high degree of professionalism and skills to demonstrate business acumen. This would enable the business organization to enhance the values of both shareholders and stakeholders of business on a long-term basis, and create wealth. Sadly, not many business organizations attain business acumen because several have failed due to dishonesty, greed and lack of managerial competence. One of the ways of attaining business acumen is engaging in social enterprise and corporate social responsibility. These will equip the business organization with relevant skills and professionalism (Sarkar, 2005, p. 152). Global knowledge Any serious manager of a responsible business must have a high level of refined knowledge. This knowledge should be gained from many years of experience and transcends beyond many boundaries across the globe. A responsible business leader must dedicate his listening to the opinion of other business leaders across the globe, and seek to expand knowledge on the prevailing economic circumstances and their relations to the business. However, not all business leaders want to pursue this attribute. A case in point is the knowledge of Chinese language. Despite the fact that China has emerged one of the greatest global business potential of the 21st century, many CEOs and members of their boards of management do not know the Chinese language (Bomann-Larsen, 2004, p. 87). One sure way of ensuring that businesses tap into this opportunity is to learn and acquire diplomacy and skillful policies that involve all parties. Responsible business leaders must seek the global knowledge on key business opportunities in a peaceful way. Therefore, they must raise their voices to oppose such acts as war and terrors that would ruin their business prospects. The business leader should be a renaissance person, with humility and intelligence to learn and rely on others for the achievement of the global knowledge. It is only through this strategy that the business leader can cope with the highly complex and integrated business world (Horrigan, 2010, p. 194). Ethical compass The polarity of the world concerning innovation, trade, manufacturing and finance must be useful to any business leader. Unlike in the past when the western countries dominated the economy, today all corners of the globe are experiencing rapid expansion of their economic realities. Additionally, the expanding economies also have unique cultures and values that govern their business directions. Orienting to these multi facet cultures and values is a big challenge and dilemmas to several business organizations. A responsible business leader must be sensitive to the conflicting cultures and values of other communities across the globe (Mallin, 2009, p. 239). Committed citizenship The global business elite seem to be detached from the rest of society. These people describe themselves as super class and live an outrageous life that the rest of the society can only see in a dream. However, this trend is not sustainable at all. A true business leader must always relate equally with the rest of society. It is pointless for a small group of the global population to live a highly luxurious life as they condemn millions to poverty due to high food prices currently being experienced today. Through corporate social responsibility, a business leader can succeed in convincing the society of some degree of equality (Banerjee, 2007, p. 194). Ethical Business Ethical business refers to the good conduct and mannerisms that a business entity assumes in its service to clients, community and the environment. Ethical business allows a business organization to adapt strategic behaviors by operating within some set values enshrined in its code of ethics. This simply implies that the business organization commits to complies with regulations and laws of the land. As it does this, it must ensure that its decisions take into account all the stakeholders’ interests. The guiding principle in business ethics is the corporate social responsibility that simply requires a business organization to observe the ethical values of accountability, responsibility, transparency and fairness in its dealings and operations (Fernando, Business Ethics: An Indian Perspective, 2009). Significance and importance of ethical business Maintaining ethics in a business organization has far-reaching benefits and impacts on the progress of the business organization. Some of the benefits are as outlined below. The potentiality to avoid fines Every jurisdiction or state has laws and regulations that govern the operations of business organizations within its territories. These are the local and national laws. Additionally, there also the international laws that companies are required to comply. Failure to comply with the provisions of these decrees can attract fines to the organization. The organization would likely to puncture its brand image, waste time and resources and lose employees. Worse still, such an organization would lose the loyalty that its clients had for it and this has the potential of reducing its revenue base. Conversely, when the business organization develops and commits to adhering to strong business ethics, it can greatly eliminate the likelihoods of being fined. Strong business ethics would discourage an organization from engaging in fraudulent, illegal, discriminatory or wrongful activities. Good corporate citizenship is an example of an ethical business activity that can help reduce fines (Ferrell, Fraedrich, & Ferrel, 2012, p. 79). Low vulnerability of the business organization The expansion of the operations of a company, decentralization of the functions of the business and empowerment of its employees require the development of appropriate ethical practices for employees’ training. This kind of training is instrumental in assisting employees making appropriate ethical decisions. In this regard, the employees would be empowered to develop and carry out ethical decisions of the company. Consequently, the likely harm and damages that could accrue due to misconduct by the employees are avoided forthwith. Therefore, the organization does not become vulnerable to lose its brand image and profit margins (Thompson, 2005, p. 40). Improved reputation and brand image A business organization with good ethical practices and reputation has the ability to hire the most competent and qualified employees, pull up investment capital and lure droves of customers. Additionally, during times of crisis, like the global financial crisis, such a company acquires the benefit of doubt from its customers and suppliers. Furthermore, the company would receive several awards that in turn help to attract more customers to the business. Business Ethics “100 Best Corporate Citizens” and Better Business Bureau Torch Award for Marketplace Ethics are some of the award schemes that appreciate the efforts of business corporations that practice good business ethics (Spenceley, 2008, p. 285). Capital access Some countries have extended financial benefits to business organizations that practice ethics in business. Companies that address the social, environmental and ethical issues now have increasing access to capital. In the United Sates, for instance the Social Investments Forum is charged with the responsibility of identifying and rewarding such companies (Fernando, 2009, p. 73). Financial performance Available reports show that business organizations that have strong corporate ethics and culture stand a better chance of making more profit even in highly competitive markets. These organizations have sound values, practices and purposes that help them achieve their long-term goals. Additionally, organizations that are strongly grounded on strong business ethics have incredible financial performances. In essence, commitment to ethical principles by a corporation helps it increase its annual revenues and sales as compared to companies without ethical values. Conversely, business organizations in the public domain for the wrong reasons of unethical business practices limit its chances of increasing its profitability (Pride, Hughes, & Kapoor, 2012, p. 29). Commitment of the employees The ethical integrity or lack of it has a direct influence on the decision of employees to continue working or seek work for the organization. Most employees consider employee treatment by the organization as an important consideration before deciding to work for any organization. This is a challenge to business organization. In order to attract the best brains in the industry in their organization, they must adapt appropriate business ethics that would allow them to treat their employees with respect and appreciation. This can include employee motivation, financial rewards and promotion (Sanford, 2011, p. 291). Customer loyalty Many customers are more concerned with business ethics more than any other thing from an organization. A business organization with strong business ethics and values attracts more customers and raises its revenue base. This is in view of the fact that business ethics would affect the customer’s judgment of the merchandise and services of the organization. Business organizations should be committed to behaving ethically and morally with the intention of attracting many customers (Maak & Pless, 2006, p. 105). Role of Government as an influence or barrier of Ethical Business The government of any country is normally the primary stakeholder while making decisions. In terms of a business corporation, it can play a role that influences the ethical business practices of that corporation. There are documented evidences that the intervention by the government to a business organization in its ethical conduct has resulted in positive and negative impacts (Chandrasekaran, 2012, p. 179). The government’s role in developing regulations for the promotion of business ethics can inflict immense harm and valid desire as well. Most businesses operate with the sole intention of benefitting the community. However, due to misdeeds by some actors in the field, the government seems to presume that business organizations are unethical and therefore require regulation. Some of these regulations are so harsh and acts to penalize even those enterprises with genuine ethical practices (Maak & Pless, 2006, p. 96). Government regulations also create new barriers and keeps new businesses out of the market. Some business fear the repercussions such as fines that come with the failure to comply with the government regulations (Smith & Vogel, 2010, p. 65). This creates biasness in the field of play as it offers the already existing companies unique competitive advantage against their potential competitors. Therefore, the influx of regulations by the government only favors the large companies that are already in existence. Additionally, the intervention of the government into businesses causes some business owners to neglect their customers and shareholders through the production of substandard goods and services (Ferrell, Fraedrich, & Ferrel, 2012, p. 149). Conclusion Responsible business is the latest terminology in conducting the affairs of an organization in a skillful and professional manner. It encompasses some key concepts such as corporate social responsibility, social enterprise, corporate responsibility and sustainability in business. Any business leader must inculcate these concepts in the business organization for the purposes of attaining the ethical business consideration of the business. Additionally, these concepts work well with the incorporation of the four major pillars of responsible business. These pillars are what constitute the responsible business. They include business acumen, global knowledge, ethical compass and committed citizenship. A business leader must develop or acquire skills and professionalism that will help him or her compete with global business leaders. He must also have an in-depth knowledge of the global business affairs and emerging events to stay afloat with the change of events. Knowledge and sensitivity of diverse cultures and values of world communities and religious groups should be of equal importance. Responsible business also requires the businessperson to stay in touch with members of the society and freely identify with them as well. Responsible business is easily manifested in ethical business. Ethical business is a commitment to adapt strategic behaviors with the necessary values for the benefit of business’ clients, the operating community and environment upon which the business operates. It also involves complying with the set rules and regulations set to guide the running of the organization. Ethical has several important benefits for the business organization. It enables a business enterprise avoid the likelihood of facing fines in addition to making it less susceptible to walk outs by employees or neglect from clients. Additionally, it also improves the reputation and brand image of business on top of enhancing its access to capital rewards from government institutions. Besides, the financial performance of the business improves and the employees become more committed to the organization. Reference List Banerjee, S 2007, Corporate Social Responsibility: The Good, the Bad and the Ugly, Edward Elgar Publishing, Cheltenham, Glos, UK ; Northampton, MA. Bomann-Larsen, L 2004, Responsibility in World Business: Managing Harmful Side-Effects of Corporate Activity, United Nations University Press, Tokyo ; New York. Chandrasekaran, B 2012, Corporate Governance And Social Responsibility, PHI Learning Pvt. Ltd, New York. Fernando, AC 2009, Business Ethics: An Indian Perspective, Pearson Education India, Prentice Hall. Fernando, AC 2009, Business Ethics: An Indian Perspective, Pearson Education India, Prentice Hall. Ferrell, OC, Fraedrich, J, & Ferrel, L 2012, Business Ethics: Ethical Decision Making & Cases, Cengage Learning, Mason, OH. Horrigan, B 2010, Corporate Social Responsibility in the 21st Century: Debates, Models and Practices Across Government, Law and Business, Edward Elgar Publishing, Cheltenham, UK. Maak, T, & Pless, N 2006, Responsible Leadership, Routledge, London. Mallin, CA 2009, Corporate Social Responsibility: A Case Study Approach, Edward Elgar Publishing, Cheltenham. McIntosh, M 2003, Living Corporate Citizenship: How Socially Responsible Companies Do Good Business, Prentice Hall, London. Pride, WM, Hughes, RJ, & Kapoor, JR 2012, Business, Cengage Learning, Mason, OH. Sanford, C 2011, The Responsible Business: Reimagining Sustainability and Success, John Wiley & Sons, San Francisco. Sarkar, CR 2005, Social Responsibility of Business Enterprises, New Century Publications, New Delhi. Smith, CN, & Vogel, D 2010, Global Challenges in Responsible Business, New York : Cambridge University Press, Cambridge. Spenceley, A (2008) Responsible Tourism: Critical Issues for Conservation and Development, Earthscan, London ; Sterling, VA. Thompson, D 2005, Restoring Responsibility: Ethics in Government, Business, and Healthcare, Volume 575, Cambridge University Press Cambridge, UK ; New York. Read More