The Role of Ethics and Social Responsibility

The Role of Ethics and Social Responsibility
Name
Institutional Affiliation
The Role of Ethics and Social Responsibility
Introduction
Ethics and social responsibility play a crucial role in an organization, especially in the development of a strategic plan. Ethics deals with moral principles that guide the actions of an individual or an organization. Ethical standards are not uniform across regions and organizations as every group of persons will have their accepted codes of ethical standards depending on what they consider right or wrong (Robin, 2007). Social responsibility is the duty that an organization has towards the environment that it operates. An organization should, therefore, balance its economic activities and maintenance of a wellbeing of the society.
The role of ethics in the development of a strategic plan
Observance of ethical standards in the development of a strategic plan of an organization enables the organization to be in line with the best interest of the stakeholders (Robin, 2007). All interested parties look upon the acts of the top and the middle-level managers as their actions will affect their wellbeing. The development of a strategic plan should factor in the interest of various stakeholders like the shareholders, employees, customers, and suppliers.
Ethical standards, when observed in the development of a strategic plan prevents corporate failures. Many organizations fail due to unethical behaviors of top managers (Robin, 2007). For example, the failure of Enron, WorldCom and Parmalat is attributed to ethical issues. The ethical standards of the managers in the development of the strategic plan serve the purpose of safeguarding the going concern of a firm. In the case of Enron, the top managers failed to disclose the key financial concern in the financial statements, the report, as a result, failed to reflect a true and fair view of the firm leading to failure of the corporation.
Ethical consideration in the development of a strategic plan of a business helps to develop and maintain the corporate image. The perspective in which the stakeholders’ view the firm’s operations affects the organizations directly. The company image serves a crucial role in the development of a customer base. Robin (2007) argues that a good corporate image will enable the organization to acquire merchandise on credits as well as obtaining cheaper finances from financial institutions. After the disclosure of the unethical activities of managers in Enron, the corporate image of the firm deteriorated.
The role of social responsibility in development of a strategic plan
Social responsibility ensures that a strategic plan of a company will work to maintain the reputation of the organization. A firm that not only aims at maximizing profits, but also the improvement of the welfare of the society or the environment around the area of its operations to gain a competitive advantage in a region (Bhattacharya, 2010). Corporate social responsibility results in acceptance of an organization in a societal setting. Organizational objectives aimed at the inv...