Role of Ethics Essay

800 Words Mar 7th, 2011 4 Pages
Explain the role of ethics and social responsibility in developing a strategic plan, considering stakeholder needs.
Society expects businesses to be responsible both socially and ethically. “Businesses are supposed to respect the environment, pursue fairness in dealing with internal and external customers, and strive to improve their communities” (Romani, 1998). Ignoring the ethical standards will have an adverse impact on businesses as well as the consumers. Although some unethical practices are exercised by some businesses, many businesses recognize the importance of ethics in their operations and enforce the ethical standards. Operations managers are expected to act ethically when making business decisions. Strategic plans help
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Various objections against the profit maximization are:
1) Vague: Since there are multiple meanings of Profit it cannot be ultimate goal. For example profit after tax, retained earnings.
2) Uncertain: "Profit cannot be ascertained well in advance to express the probability of return as future is uncertain, hence the timing of the profit can't be estimated” (freemba).
3) Profits ignore the time value of money; hence cash flow is a better measure.
4) Narrow outlook: “The goal to maximize profits is considered to be a narrow outlook because when profit maximization becomes the basis of financial decisions, it ignores the interests of the community on one hand and that of the government, workers and other concerned persons in the enterprise on the other hand." (freemba).
Ethics and Societal responsibility
“Stakeholder can be a person, group, organization, or system who affects or can be affected by an organization’s actions” (Wikipedia). This means that the firms should satisfy the objectives of customers, suppliers, government agencies, families of employees, special interest groups. (Tutor2u, 2009). This will also help the firms in achieving the success in the long run. Organizations should also consider non financial objectives to satisfy the other stakeholders of the organization. An organization should stress the importance of culture of ethical and societal responsibility. The organization should make commitment to a

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