- 20 Marks
SCS – L3 – Q39 – Ethics and social responsibility
Question
(a) You have been recently employed as a Finance Manager of a large manufacturing company. At its first management meeting, the Director of Finance presented information on management’s intention to takeover one of the company’s key suppliers. An old school friend of yours works as an accountant for the targeted company. The Finance Director knows and has asked you to try and find out anything that might help the takeover, but it must remain confidential.
Required:
Identify and explain THREE fundamental ethical principles that could be breached in the above scenario. (b) Corporate social responsibility (CSR) requires that organizations give back to the society by way of investing part of their profits in socio-economic activities of their host communities. Companies adopt different strategies to realizing their CSR obligations to the host communities.
Required:
Identify and explain FOUR strategies for managing Corporate Social Responsibility in organizations.
Answer
(a)
Conflict of interest
Deception
Unprofessional behavior
First, you have a conflict of interest as the finance director wants you to keep the takeover a secret, but you probably feel that you should tell a friend what is happening as it may affect their job.
Secondly, the finance director is asking you to deceive your friend. Deception is unprofessional behavior and will break your ethical guidelines. Therefore, the situation is presenting you with two conflicting demands. It is worth remembering that no employer can ask you to break your ethical rules.
Finally, the request to break your own ethical guidelines constitutes unprofessional behavior by the finance director. You should consider reporting him to their relevant body. (b)
Strategies for Managing CSR
Proactive strategy – strategy which a business follows where it is prepared to take full responsibility for its actions. A company which discovers a fault in a product and recalls the product without being forced to, before any injury or damage is caused, acts in a proactive way.
Reactive strategy – This involves allowing a situation to continue unresolved until the public, government or consumer groups find out about it. The reactive strategy refuses all kind of CSR and then does not implement what the stakeholders expect.
Defense strategy – This involves minimizing or attempting to avoid additional obligations arising from a particular problem. The defensive strategy accepts the idea of some CSR but defines and implements only the minimum of what stakeholders expect.
Accommodation strategy – This approach involves taking responsibility for actions, probably when one of the following happens: Encouragement from special interest groups; Perception that a failure to act will result in government intervention. The accommodating strategy integrates CSR and tries to implement what the stakeholders expect. The proactive strategy anticipates the requirements and expectations of the stakeholders; it defines objectives and implements actions going beyond what stakeholders require (this is the case of the linked and integrated CSR).
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