Ethics is defined as a prescribed code of conduct acceptable to all stakeholders in an organization; while social responsibility refers to an organization’s obligation to create positive impacts on various stakeholders: employees, local communities, customers, shareholders and the government. Ethics and social responsibility are very important aspects to be considered by the business entities in the development of strategic plans that would adequately address the needs of all stakeholders.
Ethics plays a very important role in managing the finances of the business. It ensures that the managerial forces allocate funds in the proper way and further put them in usage smartly. This enables the administrative team to earn confidence of stakeholders and attract more customers; thus, guaranteeing success to the business entity. Most important, ethical businesses consider welfare of their employees when making a strategic plan in order to fully produce their potential output. The plans of employees’ remuneration improvement are known to fasten the realization of the company goals all over the world. Finally, the socially responsible companies are manufacturing high quality products, creating employment opportunities to the locals and guaranteeing environmental protection movements. These could only be achieved if functional ethics are incorporated into the business strategic plans.
“Mattel”, a firm manufacturing cheap toys in China, is a perfect model of ethical and socially responsible company. When they learnt that their products (toys) contained more than 0.06% of lead in the years 2011 against the U.S. consumer standards, Mattel recalled more than 20.5 million toys from the world market so as to maintain its reputation (Nelson & Quick, 2012). The China based company further formulated and enforced new production measures and procedures in compliance with the world consumer safety standards. In summary, ethics and corporate social responsibility keep all business entities afloat.