Explain how the introduction of ethical policies can cause conï¬‚icts between two stakeholder groups identiï¬ed
A stakeholder is anyone who has an interest in, or is affected by the behaviour, of a firm.
Internal Stakeholders: employees, managers, directors.â€¨ External Stakeholders: shareholders, customers, suppliers, general
In the short run there may be conflict between these groups as they have different interests:
For example shareholders want maximum profit to increase their dividends, which may not be the case if managers decide to implement ethical approaches, which cost more. A firm donates money to local charities to improve its image and to show it is socially responsible. This is a COST and so reduces profit. This is good for the local community (general public), but lowers dividends â€“ there is a conï¬‚ict of interest.
may wish for better terms and conditions and to be treated with respect and provided with better than a basic package. This again may reduce profits in the short termâ€¨ - suppliers may wish for fair prices and to be paid on time. If competitors are exploiting cheap labour then their prices may be lower, which ultimately will reduce profits and even put the firm out of business customers may look for low priced products. Ethically produced goods may be more expensive.
Analyse the advantages and disadvantages to a company of implementing socially responsible and ethical objectives.
attracts customers and employees who agree with the policy. This may have a positive influence on motivation and staff turnoverâ€¨ has a positive long-term effect on the local and world environment
improves corporate image, which may provide competitive advantage and marketing/promotion opportunities
may pre-empt legislation, and may save costs in the long runâ€¨ improved image may influence local and national governments in granting of planning permission or the...