Stakeholder Issues in Business Ethics

Date: Nov 22, 2018

Introduction

Corporate social responsibility is a form of business self-regulation incorporated into a business model. Policy of the corporate social responsibility operates as a self-regulatory instrument whereby the corporation monitors and confirms its compliance with the spirit of the law, ethical principles, and international customs (Lindgreen, & Swaen, 2010). In the implementation of the corporate social responsibility, a corporation may perform some actions, which are social goods and beyond the interest of the business that is required by law. The objective of corporate social responsibility is to embrace responsibility for the firm actions and promote a positive impact on the environment and stakeholders, including communities, consumers, investors, and employees (Lindgreen, & Swaen, 2010)

Impact of Corporate Social Responsibility Policy

Positive Image

Companies that do not follow ethical policies, such as those that ignore environmental rules and standards on how employees should be handled, may suffer damage to their status when these lapses are exposed. The firm’s image affects its relationship with all stakeholders (Eisingerich, & Bhardwaj, 2011).

Stable cash flow Capital is a tool of success for every company and enables a company to grow. Ethical and socially responsible company can avoid the cost of a lawsuit and other problems that may have negative impact on the firm’s cash position. Sustaining a steady cash flow keeps the firm on its growth track.

Access to funding Companies require money for expansion and to enable them to achieve their objectives. Capital is viewed as a mechanism that assists a company to maintain its stability. Before investors give funds to any organization, they look at the ethical and social values exhibited by it. Some investors focus solely on the organizations that have an evident track record of ethical responsibility.

Customer retention Customers have discretion to choose not to do business with organizations that have a reputation of being ethically irresponsible. Equally, companies that have a reputation of being socially responsible can attract and retain customers who share these values. The good the organization does is part of the supposed value of its product and services and can lead to greater consumer satisfaction. The contented consumers are likely to do business with the firm. Thus, a steady and loyal consumer base is a valuable asset.

Employee recruitment Small organizations struggle to retain their top talent employees and not to lose them to competitors. Companies, on the other hand, compete to get best talents. Younger members of staff, in particular who have grown up in the age of intensified responsiveness of environmental safeguard and an organization’s commitment to the environment and society can be a substantial even influential, factor on whether they chosen to join an organization. Other impacts include:

  • An organization is able to win more new businesses;
  • An organization can develop and improve relationships with all stakeholders;
  • An organization can differentiate itself from rivals;
  • An organization can generate invention and learning, and improve the influence.

Coordination of Corporate Social Responsibility

Firms can successfully engage in socially responsible activities to increase profits for shareholders (Ferrell, & Fraedrich, 2014). Investment in corporate social responsibility can lead to enhancement in brand reputation, which may lead to higher sales, premium prices, better attraction, and retention of staff. An organization can engage in activities, such as environmental protection that can help reduce costs in the firm. A firm can also engage in activities that are aimed at improving the welfare of employees. Improving the welfare of employees helps in reduction of costs and increases motivation. An organization can provide fair working conditions aimed at increasing their effectiveness thus profit maximization.

Organization and Ethical Issue

Apple Inc. is a multinational American company, which manufactures and sells consumer electronics, computers, software, and online services. One of the ethical issues in Apple Inc. is fair working conditions for employees.

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Ethicality

Companies are anticipated to provide safe working conditions for their employees. On the other side, being accountable to employee administration usually involves high labor cost and use of company’s resources. Good pay and benefits to workers is also another aspect of fair workplace. Another essential element of fair workplace is provision of nondiscriminatory work environment that again means more costs on the company to provide training. Employees must be compensated for extra hours worked and be provided with safety equipment in the workplace. On several occasions Apple Inc. has been criticized for acting unethical in treating its employees. In 2011, Apple Inc. was accused of handling its employees inhumanly and like machines (Guardian, 2011). To cut costs and maximize profits, Apple Inc. hired employees to produce its products in China. Several complaints were raised as for the conditions of work for those employees. Employees complained about working for long hours without compensation for the work done and extra hours. They alleged that they worked 98 hours, which triple the time they are required to work, according to the company’s policy. In addition to the long working hours, they were paid peanut for their hard work. Other unethical practices in Apple Inc. include the use of underage workers, forced labor and high-visibility suicides (Guardian, 2011)

Primary Stakeholders

Employees

Employees of Apple Inc. are internal stakeholders of the company because they work in the organization. Some of the employees, like managers, can make significant decisions in the organization. Managers can, therefore, make decisions to improve the working conditions of employees and their pay. The relationships that exist between Apple Inc. and its employees are that they work in the business and therefore have a say in the decision-making of the company.

Owners

The owners are internal stakeholders of Apple Inc. and therefore have the most influence in the decision-making. Owners of Apple Inc. have the responsibility of making ethical decisions. They have a role of ensuring that ethical practices of the company are adhered to. They have the power to ensure safe working conditions for employees. Owners also have a responsibility of formulating corporate social responsibility policies of the organization.

Directors

The board of directors is a body that is responsible for making major decisions affecting the company. Before any action is taken in the company, it has to be approved by the directors of Apple Inc. Directors have a responsibility to ensure that the company’s actions contribute to the welfare of the company’s stakeholders. Directors are also responsible for making ethical decisions.

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Financial and Legal Implications on Employees

Employees

Failure of Apple Inc. to act ethically may have an adverse impact on employees. Most of the employees can leave the job, and this means they will become unemployed. High rate of unemployment will lead to high poverty level and low economic growth. Managers can find themselves behind the bars if involved in unethical practices. Employees of Apple Inc. can sue managers and owners of the company for engaging in socially irresponsible practices. Managers and owners of the company may be tried in a court of law and fined for unethical practices. Directors of the company will also be tried in a court of law for engaging in unethical issues.

Local Community

The local community depends on the company for jobs or money from the business. When Apple Inc. treats its employees unethically, they leave their jobs, and the community will be mainly affected because there will be no source of income for the members of the community.

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