A-Level Business Studies: Business Ethics and Corporate Social Responsibility

Definite the concept.
Analyse the consequences resulting from businesses when they engage in unethical act. (1) loss of confidence from customers, businesses loss sales; affect profitability (2) negative publicity; adversely affect business reputation; value of capital share value drop; hurt the shareholder interests (3) possible legal actions taken against the enterprise if the result of unethical act causes harm to the physical well-being of the consumers or occurrence of damage to properties (4) risk of operation being shut down by the relevant authority

Reasons(1) people are not aware of the unethical business acts or their individual rights; they may be uneducated to know this (2) people may be aware but do not care; refuse to take action in making complaints and hold protest (3) no significant backlash to severely harm the business operation and its financial bottomline (4) business is a monopoly; has the leverage to be unethical especially when pursuing the purpose of profit-maximisation (5) the business enterprise does not wish to operate in long-term; unscrupulous company - come into the market, make as much money as possible and as fast it can before exiting the market (6) take advantage of the specific norms of the sociocultural environment (students make reference to the practice of bribery where 'gift-giving' is a norm) (7) pressure from the management or the competitive environment upon individual executives, specific departments or business divisions to meet certain objectives or achieve an imposed quota

CSR is the discretionary (optional) responsibility in which businesses can choose and commit themselves to do good for the community and environment instead of just operating to make profit. CSR is engaged by businesses to achieve their triple bottomline objectives for the purpose of building a more sustainable business.
Keyword: do good, community, environment, not for profit making only, triple bottomline, business sustainability

Explain the benefits and importance of CSR.(1) in most developed (Western) countries, doing good is demanded. The society has become dissatisfied with the greediness of large corporations. Failure or refusal to engage in CSR may result in loss of sales due as certain group of consumer refrain from making purchase for such company. Customers may go for competitors who are willing to do good to the community and the environment. (2) help build positive reputation. Improve brand equity. Encourage more sales as consumers may find businesses that do good are trustworthy and therefore result in them to be more willing to make purchase from such companies. Potential to increase profit and provide opportunity for the business to pay out higher dividend to shareholders. (Allow to maximise shareholder value)
(3) build goodwill among other stakeholders; encourage the stakeholders to have a more positive sentiments on the business corporations. Help build the business reputation which can subsequently leads to the increase of share capital value. (4) make the business more attractive for (quality) employees to seek employment. (5) add value to consumer purchase. Provide opportunity for consumers to satisfy their self-actualisation needs by giving them a platform to contribute to the society via the CSR activities that are initiated by the business corporations. Other ideas(1) taking advantage of the tax incentive given by the committing in support of company who do good to the community and the environment (2) have 'content' for the company to use for publicity purpose (3) CSR is used as a tool to distract the relevant stakeholders from the 'misdeeds' that the business is committing in order to manipulate them to have a positive attitude towards the company.

Reasons for CSR as being not so important(1) businesses operating in country where CSR are considered to be optional(2) poor economic environment and/or poor profit performance; businesses are forced to channel resources to other more important or critical business activities. In such situation, we often see budget for CSR will be slashed or not allocated at all.
(3) business is small or operating at medium size. Does not have sufficient capital to commit to CSR.(4) business is a monopoly and does not see the benefit of committing itself to CSR to build its company reputation