Facilitator:
Introduction
An important aim of most businesses includes profit maximization. Profit maximization gives an assurance to the business that it will grow and that the shareholders will get reserves and profits apportioned to them (Kagabo, 2011). However, business’s success is not entirely dependent on its ability of making huge among of profits. The sales of a business determine its revenue, which in turn defines its profit margin. In order to increase the sales of a business, the society that consumes the products must have a good attitude towards the business. The image of the business lies in the goods done to the society, evident through corporate social responsibility. At the same time, the business must perform their duties according to some basic procedures, which outline the ethical base of the business. For maximal profits, the business must operate ethically and undertake corporate responsibility as a way of building its relation with the society. The paper analyzes the importance of balancing the profit objective of the business with corporate social responsibility and business ethics in the corporate world.
Social Responsibility and Business Profitability
Companies must balance profit making and corporate social responsibility because of various reasons. Initially, corporate social responsibility acts as a staff attraction and retention strategy. Most employees want to get associated with the company that promotes the society in which they live. The business instils in the potential employees that it cares for the society by engaging in simple corporate responsibility activities such as cleaning the rivers in its area of production. This makes the potential employees develop a strong interest in working for the business. Accordingly, the labour turnout in the business increases hence the society believes in the business. The result of such trust presents through increased profits and reduced cost like the costs of hiring new employees all the time (Said & Haron, 2006).
Corporate social responsibility attracts customers to the business. In most cases, customers feel safe consuming products from the businesses that undertake social responsibility, as opposed to the businesses that solely target revenue expansion and profit maximization. Through engaging in social activities, the business earns trust from the consumers, which increases the consumption base. People consider business’s social activities as its brand of the generosity enabling the company stand from its competitors. In this respect, customers purchase from the business regularly thus, business increasing its revenue and eventually, the profit margin of the business increases. This means that social responsibility proves the business as reliable and laces the business a step ahead of the competitors (Kagabo, 2011).
Corporate social responsibility attracts investments to the business. The capital base of any business determines the size of activities that the business accomplishes in any fiscal year. Corporate social responsibility frames the business to investors as a simple and well reputable investment ground. The business ensures that investors have a good reputation of the business and that it can yield positive returns for the investors by being socially responsible (Said & Haron, 2006). When the business has sufficient capital, the management can invest in more sophisticated production systems, which increases the profitability of the business. For example, when a company engages in corporate social activities, the investors are motivated into investing to the company because they have assurance that the company has support from the customers, which increases its likelihood of being successful.
A business that undertakes corporate social responsibility encourages professional growth among the employees and staff in the business. Social activities provide a chance for the management and staff in the manufacturing company to learn affirmation of their leadership and management roles. Essentially, the individuals develop great leadership and project management skills when they involve in a well-designed corporate social responsibility programs. This may be as simple as team building and bonding exercises, encouraging employees to form meaningful strong relationships with people they would not normally meet. However, at the end of the whole exercise, every member of the team can move to assert well-mastered skills in their arsenal.
Well-undertaken corporate social responsibility boosts the morale of the employees and the staff of a business. When the manufacturing company goes to the field to undertake a corporate social activity, the employees will understand the customers’ values. In most cases, due to the continued social responsibility activities in the region, employees get the impression that people value their work, which motives them to work harder. In addition, some of the customers may volunteer to help the company employees in social activities, which proves to the employees that people appreciates the company. This boosts the employees’ morale resulting to increased output. Increased employees’ output means increased output of the business. The result of such increase comes out through increased revenue hence the profits of the business expand considerably (Said & Haron, 2006).
Apart from the elements that increase the profit margin of the business, the business feels accomplished when the solutions to the social problems have attachments to the business’s activities. Undertaking social responsibility activities are effective in marking the business by building it profile. Organizations have a guaranteed responsibility to the society to respect the environmental considerations and conservation procedures and take care of amenities within the environment off the business (Coleman, 2007). For example, by cleaning up the river, the business takes care of the water resources of the society and ensures that consumers have access to clean water.
Avoiding pollution is often challenging especially on course of production, and authorities may be unable to address environmental problems comprehensively. In this context, the society assigns business entities a responsibility of addressing social problems, such as air pollution and water pollution. A socially responsible business builds its market by out weighing its competitors. The strategy simply ensures that the society trusts the business and that people can purchase from the business without shying from the services of the business. Confidence of the customers wins the supply of the business and the profits most likely increase when the business has a good reputation of social responsibility (Coleman, 2007).
Business Ethics and Profitability of a Business
Ethical standards of a business entity determine the quality of goods and services that the business delivers to the public. Ethical actions of a business revolve around how the management and the employees deal with their respective areas and how customers are handled by the business. For the business to have success and excellence, the customers must feel the satisfaction, evident only through ethical practice and standards. High levels of ethical standards benefit the business in various ways. Initially, the business avoids legal collisions when its members maintain high ethical standards (Spence, 2009). When the members of the management treat their activities in morally and ethical correct ways, the legal authorities will not clash with the business hence the business can build it profile. For example, when the customers get appropriate advice on how to use the goods manufactured by the company, minimal accidents occurs hence the business will not clash with the legal authorities. Furthermore, businesses that engage in unethical practices command low sales due to customers’ low trust upon their activities. For example, consumers are likely to shy from buying from a company that is associated with low quality or harmful products even if it retailed its products at a reduced cost (Said & Haron, 2006).
According to Byrne (2011), when the business spend less time in conflicts with the authorities, it gains in two ways in that the society trusts the business and demand their products more, and the business spends little on legal fees. This increases the profit margin of the business. High ethical standards help the business to maintain a good public image. Business profile plays an important role in the sales and the general revenue levels of a business. When a company or its employees engage in behaviour that is either ethical or unethical in the society, the members of the public who interact directly or indirectly with the company are aware of these activities, and they may retaliate at some point. For example, when the customers get the right advice on the use of the products manufactured by the company, consumers acknowledges the good advice thus appreciate the business. In their grapevine chats, the customers take note of the company hence they develop habitual purchases from the company. This increases the revenue, which in turn increase the profit margin of the company (Coleman, 2007).
Maintaining high levels of ethics in the business helps the business survive in the market even during the recession periods. Most of the manufacturing firms decline and collapse because of competition from the other firms during periods of low demand. However, when the business maintains high levels of ethical standards, the customers develop trust in the brands that they produce to the market (Said & Haron, 2006). During the times of hardships, the business can fend off competition because the customers already trust their products. The demand can help equal the marginal costs and revenue, which will increase the profit for the business. For example, when the manufacturing company gives the right advice to the customer on the best ways to use our products, the customers are satisfied that the business offers the best deals. In the recession period, they still buy from the company, which help the business maintain a positive profit margin (Spence, 2009).
High ethical levels safeguard the consumers while protecting the shareholders and owners of the company. The interests of various stakeholders in the manufacturing company lay in the hands of the people who interact with the environmental factors contingent to the business. Employees have a role to play in the fate of the investments made by the shareholders and the owners. At the same time, the business owes the public in the sense that the public expects good service delivery and quality from the business. Good ethical standards ensure that the consumers get the quality services and goods from the business. For example, when the customer buys goods directly from the manufacturing company, the business has the task to give advice on how the goods can be effectively used. Stakeholders benefit in various ways from such advice. For example, customers get commodities of high quality and satisfaction as they have all the details concerning the commodity (Spence, 2009). Furthermore, shareholders and the owners have the guarantee of continue profitability as the customer will buy from the business more in the future. The business also avoids legal collisions, as satisfied customers are not likely to challenge the business in courts.
Conclusion
Ethical standards that a business maintains coupled with corporate social responsibility of the business affect the profitability of the business in a range of ways. Initially, the business develops its profile, which attracts more customers to the business. Particularly, the business gets a good corporate name and image that pulls the public to get interest in the business through purchases and investments. The business can also fend off competition when they engage in the social responsibility services as well as ethical activities. At the same time, different stakeholders benefit when the business engages in good deeds as they can get their needs satisfied without much strain. Balancing the quest of making profits and corporate activities is essential because corporate social responsibility elements have the high potential of determining business’s profits. This means businesses must balance the hunt for profits with good public image because the image of the business among the people determines stakeholder’s trust on business and later the returns that the business gets from the people.
References
Byrne, E. F. (2011). Business ethics should study illicit businesses: To advance respect for human rights. Journal of Business Ethics, 103(4), 497-509. doi:http://dx.doi.org/10.1007/s10551-011-0885-y
Coleman, D. G. (2007). Linking social responsibility activities to social responsibility strategies and determining their impacts to the firm. (Order No. 3255202, The University of Utah). ProQuest Dissertations and Theses, 281-n/a. Retrieved from http://search.proquest.com/docview/304791348?accountid=45049. (prod.academic_MSTAR_304791348).
Kagabo, L. (2011). Business ethics as field of training, teaching and research in francophone africa. African Journal of Business Ethics, 5(2), 74-80. doi:http://dx.doi.org/10.4103/1817-7417.86039
Said, R., Zainuddin, Y. H., & Haron, H. (2009). The relationship between corporate social responsibility disclosure and corporate governance characteristics in malaysian public listed companies. Social Responsibility Journal, 5(2), 212-226. doi:http://dx.doi.org/10.1108/17471110910964496
Spence, L., & Bourlakis, M. (2009). The evolution from corporate social responsibility to supply chain responsibility: The case of waitrose. Supply Chain Management, 14(4), 291-302. doi:http://dx.doi.org/10.1108/13598540910970126
