An overview of business ethics and corporate social responsibility
Business ethics entail the practice and considerations that ought to be incorporated in businesses as they seek to enhance their operations in the market. Business practices are often inclined toward increasing profits and reducing costs. In achieving this goal, firms engage in several practices, some of which are not in line with the standards and legislations that govern business practices. Ethics implies the observation of the set business laws and standards as firms strive to sustain their operations in the business environment in which they operate (Shumway, Elenkov & Badgett, 2012). A critical role of firms is to ensure that they take care of the environment in which they operate. The environment here refers to the community and the resources that back the livelihood of the community members. Thus, in most cases, ethical considerations or practices are likened to corporate social responsibility. Failure of an organization to adhere to laws, rules, and extended responsibilities often subjects firms to criticism from pressure or interest groups in the economic and socio-environmental realms. The level of ethical considerations in the operations of a firm is best brought out through an external assessment of the business model and approaches that are adhered to by the company (Scott, 2005).
In the course of their operations, a substantial number of companies strive to ensure that they address the issues that are found in the environment in which they operate. Anglo-American and Primark are examples of such companies. According to the business ethics model that was developed by Svensson and Wood (2008), an analysis of business ethics is best done by adhering to three important components. They include expectations, perceptions, and evaluations. These components are interlinked by five sub-components. These are: organizational values, beliefs, and norms, the expectations of the society, outcomes, reconnection, and society evaluate. Business ethics is, in itself, an iterative process.
Business ethics in Primark
Expectations
Primark operates as a retail group of the broader Associated British Foods. However, the company does not deal with food, but it deals with the distribution of clothing from manufacturers in its chain stores. A substantial amount of revenues and profits that are raised by ABF comes from Primark. The fashion or textile industry is quite dynamic in terms of the changes in fashion, which denote changes in the tastes and preferences of customers. The company works closely with different manufacturers and suppliers to ensure that it is up to the task with the changes in the industry. This implies that the company does not only deal directly with the customers but also several third party suppliers in diverse regions of the world.
Ethical sourcing is, thus, one of the critical ethical considerations that have to be given attention by the company. This comes out of the aspect of dealing with a wide range of suppliers as a way of ensuring that the demands and expectations of the customers are met, thereby enhancing the wellbeing of the company. Customers expect to receive the best value for their money by way of getting the required quality of fashion. The company has to ensure that it balances the value of products and services that are offered to the customers and the value that is attached to the manufacturers and suppliers (The Times 100, n.d.).
Perceptions and evaluation
The ability of the company to maintain a positive relationship between the customers, manufacturers and the chain of suppliers is an indicator of adherence to ethics in business advancement. The objective of the company embraces profitability, as well as sustainability. Sustainability is one of the critical components that guide a company toward responding to the social and environmental issues that prevail in the environment in which a company operates. The incorporation of sustainability in the objectives and operational goals of a company is presumed to be a crucial factor in observing business ethics and enforcement of corporate social responsibility.
However, it has come out in several cases that companies only highlight the issues of sustainability and corporate responsibility in their plans. Still, they fail in implementing most of the issues that are reflected in the goals and objectives. This case does not feature in the operation of Primark. What needs to be answered at this point concerns the nature of the activities that denote business ethics and corporate social responsibility in the real operations of Primark. Research denotes that Primark has a clearly defined code of conduct that denies the policies of the company, including the policies on sustainability. The company works near its suppliers and manufacturers as a way of ensuring that it delivers products that have adhered to ethical standards (The Times 100, n.d.).
Primark shows a total commitment by offering training on the manufacturers, suppliers, as well as the buyers on ethical issues that surround the production and consumption of the products. This is a weighty point on the part of the ethical considerations of the company. Most firms rarely engage buyers in their activities. Buyers are either looked at as the means to an end, where end means profits. The other critical thing in Primark is the embrace of external and internal auditing of the diverse operations and activities in the company.
Ferrell, Fraedrich, and Ferrell (2013) observed that internal and external audits are critical in unearthing aspects of derailment from the desirable standards of operation. Four important things have worked to ensure that the record of ethical standards of operation is at per. These are ethical sourcing, periodic auditing of the company, the suppliers and the manufacturers, the involvement of the buyers in molding the quality and standard of products, and the adherence to the standards of employee management as outlined in the International Labor Organization standards. What the company lags in is the development and enforcement of a substantial number of corporate social initiatives to crown the ethical foundation (The Times 100, n.d.).
Business ethics in Anglo-American
Expectations
Anglo-American is one of the largest firms in the global mining industry. The company operates across the globe. The company runs its operations in Europe and Africa. Being a mining company, the issues of sustainable development are critical in the operations of the company. This is because a substantial number of firms that deal in the active mining industry are part of the companies that have been in the limelight over the breach of ethical codes of business development, like the utilization of child labor and destruction of the environment. There is also the issue of embracing the laws of the countries in the regions where Anglo-America operates.
This emanates from the fact that minerals are natural resources and mining companies have to heed to the laws and state procedures that allow the company to go ahead with the mining activities. There are also issues to do with the compensation and treatment of people who live in the mine zones. Unethical practices have continued to live with the mining industry, which raises the question of whether any company operating in the industry can manage to absolve itself from the odds in the industry by embracing ethical business practices. As a company that embraces business ethics, Anglo Americana is expected that it supports the external practices that can help streamline the industry, besides ensuring that the internal operations are sustainable (Anglo American, n.d.).
Perceptions and evaluation
Anglo-America supports several initiatives that are critical as far as molding an ethical business environment in the mining industry is concerned. The company has played a crucial role in three main sustainability initiatives. These are the United Nations Global Compact, the Global Reporting Initiative, and the Extractive Industries Extraction Initiative. These three initiatives are quite important in shaping external sustainability in the external business environment.
Anglo American gives great attention to corporate social responsibility, having realized the worth of balancing between profit-making and business sustainability. The company values and embraces stakeholder participation in crafting and implementing its corporate plans. Ihugba and Osuji (2011) ascertained that stakeholder participation is one sure way of allowing the company to confront all issues of business ethics and sustainability that emerge in the operational environment of the company. The company takes into consideration the needs and concerns of the employees, government, customers, communities, and suppliers. This is why it has not come under any kind of immense pressure from any of the stakeholder groups (Anglo American, n.d.).
It is critical to observe that the company pays attention to all the vital stakeholders. Stakeholders are the company and the determinants of the direction of the company through the observation of the trends in the industry and raising concerns. This helps a company to maintain the desirable track towards sustainable business outcomes. Anglo American has developed a ‘Socio-Economic Assessment Toolbox’ to enhance positive relations with the communities in which the company runs its mining activities. This tool aids the company in assessing the impact of its business operations on the company itself, and most importantly, the community in which the company carries out the mining activities. The toolbox helps the company identify issues of sustainability that cannot be detected by the management and the employees of the company.
Corporate social activities are crafted and implemented based on the issues that are identified through the use of the toolkit. Social corporate activities that are centered on the community in which the firm operates have a deeper impact on the livelihood of the community, thereby strengthening the attachment of the community with the company. In South Africa, Anglo American is backing the efforts of the government of South Africa to enhance the economic empowerment of the black communities that were marginalized in the colonial era (Anglo American, n.d.).
What can be concluded from the study of business ethics and corporate social responsibility in the two companies is that companies adapt to diverse approaches when responding to ethical business practices and sustainability. The nature of ethical issues is also dependent on the industry in which the firm operates. Certain industries, like the mining industry, have had a poor record of observation of ethical issues. This is the reason why Anglo American has responded by cultivating a participative environment in responding to ethical issues in the business landscape.
References
Anglo America (n.d.). Anglo American: Business ethics corporate social responsibility. The Times 100. Web.
Ferrell, O. C., Fraedrich, J., & Ferrell, L. (2013). Business ethics: Ethical decision making and cases. Mason, OH: South-Western/Cengage Learning.
Ihugba, B. U., & Osuji, O. K. (2011). Corporate citizenship and stakeholder engagement: maintaining an equitable power balance. Electronic Journal of Business Ethics and Organization Studies, 16(2), 28-38.
Scott, G. (2005). A strategic response to Friedman’s critique of business ethics. Journal of Business Strategy, 26(6), 55-60.
Shumway, K., Elenkov, D. S., & Badgett, T. F. (2012). A meta-theoretical model of ethics in business organizations. Review of Business Research, 12(5), 1-12.
Svensson, G., & Wood, G. (2008). A model of business ethics. Journal of Business Ethics, 77(3), 303-322.
The Times 100. (n.d.). Primark: Providing consumers with ethically sourced garments. The Times 100. Web.