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Ethics and Social Responsibility in Business Strategic Planning

In: Business and Management

Submitted By Ace247
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Ethics and Social Responsibility in Business Strategic Planning
MGT/498
June 20, 2014

Company stakeholders may not only be investors in a company they may also have voting power that can influence the social and financial impact of a company. With this voting power comes a social responsibility to the employees, customers and anyone associated with the company. The company's bottom line is not the only thing that must be considered when using their influence to shape company goals. Ethics, social responsibility and planning Strategic planning is the process of creating a mission statement, vision statement, policies, and functional decisions to ensure a company’s success. Since, the company’s success is the vital interest of the stakeholder, certain considerations must be taken into account in the planning process. Ethics are usually seen as “doing the right thing”. In business it can be much more than that. Companies could do all the write things but the outcome could be on that does not benefit everyone; it only benefits a certain group within the organization. For example, stakeholders may have the opportunity to increase their own wealth if they push to merge the company's subsidiaries into the parent company. This merger, however, could limit the company's ability to serve multiple markets, hinder its product diversification or create other problems. This clearly shows that the interest was not in the long term status of the company, but on the immediate return on investment that a merger may bring. Where is the interest of the employees, investors and other people and companies that may rely on the company to survive? The merger may be legal but does it undermine the social responsibility the company should exercise? Stakeholders must consider the interests of their market when implementing company policy or new business strategies. The needs and desires of stakeholders may not align with those of the consumers for which the company produces products. An example for this would be a company that produces high-optioned vehicles for low prices might be able to squeeze more profit out of customers by charging for the options, but it would alienate its customers. Stakeholders must consider the social impact of their segmentation, targeting and positioning (STP) in the marketplace. (Schiffman, Kanuk, Wisenblit 2010). The company's STP is the type of customer to which it sells products (segment), the advertising method it uses to reach that customer (targeting) and the current marketing advantage it has among competitors in the industry (positioning). Monitoring and auditing is critical to ensure that a company is socially responsible. A company can significantly limit its tax burden by storing profits in off-shore bank accounts. However, this practice might put the company in a legal gray area that could make potential investors stay away. Stakeholders have to insist on company transparency and adherence to industry norms to avoid breaking their unwritten social contract to consumers. Employee pay, safety, health quality and job security might sometimes rest in the hands of stakeholders. It is the social responsibility of the stakeholder to ensure that the employees of the company work under the best conditions available. A company could potentially increase its profits by working employees harder for less pay, but the effects on the employees would be negative. Stakeholders must push for profits and employee satisfaction, simultaneously.
An example of an unethical behavior for a company or individual was when ImClone's stock price dropped sharply at the end of 2001. They were producing Erbitux, an experimental monoclonal antibody that failed to gain FDA approval. It was later revealed by the U.S. Securities and Exchange Commission that prior to the announcement (after the close of trading on December 28) of the FDA's decision, numerous executives sold their stock. Martha Stewart was tipped her off that ImClone was about to drop and sold about $230,000 in ImClone shares on December 27, 2001, a day before the announcement of the FDA decision. Although Stewart maintained her innocence, she was found guilty and sentenced on July 16, 2004 to five months in prison, five months of home confinement, and probation for two years for lying about a stock sale, conspiracy, and obstruction of justice. This behavior could be prevented by people making the correct decision and not doing anything illegal. This does not always happen so there must be monitoring in place to prevent this type of activity from happening. It may not always catch every situation but it will help set procedures in place that can evolve into a system that can develop checks and balances for decision making.
Conclusion
Companies have an obligation to its stakeholders, employees, customers and communities. The decision makers need to ensure that the balance held by all the entities previously mentioned remains equal with the longevity of the company in mind. There if the balance is shifted or one sided the life of the company will be in jeopardy.

Reference
Brown, A. (2008, Winter). The Consumer Is the Medium. The Futurist.
Schiffman, L. G., Kanuk, L. L., & Wisenblit, J. (2010). Consumer Behaviour (10th ed.). Upper Saddle River, New Jersey: Prentice Hall.

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