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1. > > > > > > > >Topic 8
BUSINESS ETHICS AND
CORPORATE SOCIAL
RESPONSIBILITY

2. Learning Goals
Explain the concepts of
business ethics and social
responsibility.
Summarize the responsibilities
of business to their
stakeholders
Describe the importance of
business ethics
Explain the importance of
corporate social responsibility.
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3. Business
Ethics
Meaning of Business Ethics
These are standards of conduct and moral
values governing actions and decisions in the
business work environment.
It is the application of moral standards to
business situations. It includes corporate social
responsibility and balance between what’s right
and what’s profitable.

4. Corporate Social
Responsibility
Corporate social responsibility is a concept in
which an enterprise is accountable for its impact
on all relevant stake holders.
It is the continuing commitment by business to
behave well towards its stakeholders. These
stakeholders may include; employees,
customers, society, shareholders, government,
suppliers/creditors and competitors among
others.

5. Importance of
Business Ethics
Helps to avoid expensive and embarrassing
law suits.
Better public image.
Increases sales.
Brings about customer loyalty.
Reduces labour turnover.
Increase employee morale.
Increases productivity.

6. Importance of Business
Ethics
 Allows easy accessibility to finances (funds).
 Limits government interruptions in business
operations.
 Increases the possibility of the business to achieve
its profitability targets.
Increases ability to attract and retain quality human
resources.
 Leads to good employment relations and thus avoids
strikes.

7. Meaning of Corporate Social Responsibility
Corporate social responsibility is a management concept
whereby businesses/companies integrate social and
environmental concerns in their business operations and
interactions with their stakeholders.
Alternatively
•Corporate social responsibility is a business model that helps a
business organization/company to be socially accountable for
itself, its stakeholders, and the public.
CORPORATE SOCIAL
RESPONSIBILITY

8. Scope of CSR
Responsibility to share holders
Shareholders are owners who invest their money in the
business. The CSR towards shareholders include:
•Safeguarding the capital of the shareholders by making
profits for them.
•Providing a fair return on their investment (reasonable
dividend) that is commensurate to earnings.
•Ensuring adequate reserve to provide dividend in lean
years.

9. Responsibility to Share
Holders
• Ensuring longevity of business: By growth,
innovation, diversification, the business
should consolidate and improve its position
and help to strengthen the share price.
• Transparency in the operation of business-
Expectation of ethical and moral behavior.

10. Responsibility to
customers
According to Ducker “The customer is the foundation of
business that keeps the business in existence.” The
CSRs to the customer include;
•Right to safety: Provide quality products that are safe.
•
•Efficient distribution system to ensure stoppage of hoarding and
black-marketing (unfair trade practices).
•Supply products at reasonable prices & offer after sale service.
•Understand customer needs and take necessary measures to
satisfy these needs.

11. • The right to product knowledge & education; disclose
through advertisements both the positive and
negative effects of the products.
• The right to full value; ensure product utility &
performance as advertised.
• The right to justice; ensure good customer service
and treatment.
Responsibilities to
Customers

12. • The right to product choice; ability of
consumers to choose the products and
services they want-avoid monopoly
• The right to be heard. Ability of consumers to
express legitimate complaints to the
appropriate parties.
• Ensuring fair measurements.
• Avoiding misleading through advertisement
Information about the product.
Responsibilities to
Customers

13. Responsibility to
Employees
Employees are key recourses of business.
•Payment of fair wages or salaries, based on the nature
of work and prevailing market rates.
• Ensuring healthy and safe working conditions.
• Provision of labor welfare facilities (Housing,
transportation and medical facilities)
• Providing training and education.

14. Responsibility to
Employees
•Proper atmosphere for accomplishment and
promotion; fair staff adjustments
•Grievance handling system
•Provision for their participation in decision
making.

15. Responsibilities to
Government
Responsible companies are good corporate citizens.
They contribute to the development of industry and
economy. These responsibilities include:
•Follow the guidelines of the government while setting
up the business.
•Conduct the business in a lawful manner; shouldn’t
indulge in any corrupt practices or unlawful activities.

16. Responsibilit
ies to
Government
• Pay the taxes honestly and on time.
• Provide legally required data.
• Implement government schemes.
• Respect government rules and regulations
regarding business operation.

17. • Public Health Issues. What to do about inherently dangerous
products such as alcohol, tobacco, vaccines, and steroids.
• Protecting the Environment. Using resources efficiently,
minimizing pollution.
• Recycling. Reprocessing used materials for reuse.
• Developing the Quality of the Workforce. Enhancing quality of
the overall workforce through education and diversity initiatives.
• Charitable work. Cash contributions, donations of equipment and
products, and supporting the volunteer efforts of company
employees; contribute to the general welfare of the community.
Responsibiliti
es to
the Community

18. • Preserve and promote social and cultural
values.
• Generate employment opportunities
• Provide infrastructure such roads, hospitals
and schools.
• Contribute towards the upliftment of weaker
sections of the society (Women, youth and
the disabled).
Responsibilit
ies to
the Community

19. Responsibilit
ies to
Creditors
These include suppliers of raw materials and
other components to the business organizations
who usually provide these on credit and
financial institutions from which funds are
borrowed.
A good relation with suppliers and financial
institutions is essential for quality & continuous
supply of raw materials, other inputs & funds for
continuous production.

20. Responsibiliti
es to Creditors
Responsibilities to creditors include the
following:
•Avoiding unfair practices such as breaking a
contract, delayed payment, taking advantage of
loopholes.
•Providing honest payments and on-time to the
creditors

21. Responsibilities to
Competitors
To engage in healthy competition , the good business
strategies & practices of competitors should be
learned. Therefore, the responsibilities towards
competitors include the following:
•Competitors brand assassination.
•Avoiding restrictive trade practices such as price
discrimination, tie-up sale, exclusive dealership, etc.
•Avoiding unfair trade practices such as misleading
advertisement, tricky prices, un-reasonable product
guarantee.

22. Benefits of
CSRs
create and maintains high reputation.
There is limited disruption of business operations.
Create a better safer & stimulating working condition.
Increased business efficiency.
Protect from boycott action.
Make it easy to access funds.
Allow business to easily attract and retain quality human
resources.
Decrease enterprise risk-strikes.
Contribute to increased productivity.
Enhances production of quality products.
Promote good public image.

23. Limitations/barriers to
CSR
 Lack of finances/inadequate financial resources. This
affects almost every business entity.
Lack of competences i.e. skills/ability to identify and
undertake beneficial CSR programs in society.
 Limited authority from society. Responsibility and
authority are inseparable i.e. whoever assumes responsibility
must have authority. As a result business cannot assume
social responsibility unless it has the right authority which has
to be acquired from society to solve its problems e.g. a
business organisation cant repair roads in Kampala without
the authority of KCCA.

24. LIMITATIONS OF
CSR
• Absence of one agreed moral code (Universal Moral
Code). Morals differ in different communities i.e. different
people have different morals.
• Pursuit of profit as major objective. This may lead to
production of poor quality products , misleading adverts etc..
with an aim of maximizing profits
• Unfair ambitions of managers and owners e.g. ambitions
to own and belong to big organisations may lead to
exploitation of workers and production of poor quality
products with an aim of reducing production costs to make
abnormal profits for fast growth.

25. POSSIBLE
QUESTIONS
1. Using an organization of your choice, show how it is fulfilling
or not fulfilling its obligations towards the stakeholders?
2. Using an organization of your choice, show how they are
undertaking Corporate Social Responsibility?
3. Using examples, show the extent to which business
organisations in Uganda are fulfilling their obligations to their
stake holders?
4. Discuss the obligations of the a business organisation
towards its stake holders?