1. Outside stakeholders often demend that inside stakeholders' be suportinated to the greater good of society (ousiders). They believe that such issues as pollution, the disposal of solid and liquid waste, and the conservation of natural resources should be principal consideration in strategic decision making. On the other hand, inside stakeholders tend to believe that the competing claims of outsiders should be balanced against one another in a way that protects the company mission. For example, they tend to believe that the need of consumers for a product should be balanced against the water pollution resulting from its production if the firmcannot eliminate that pollution entirely and still remain profitable. Some insiders also argue that the claims of society, as expressed in government regulation, provide tax money that can be used to eliminate water pollution and the like if the general public wants this to be done.
There are four types of social commintment that managers must consider regarding social responsability:
Economic responsabilities represent the duty of managers, as agents of the company owners, to maximize stockholder wealth.
Legal responsabilities represent the company's obligations to comply with the laws that regulate business activities.
Ethical responsibilities represent the strategic managers' notion of right and proper business behavior (example: distibution of cigarettes is legal, smoking is unethical).
Discretionary responsabilities are responsabilities voluntarily assumed by a business organization (public relations, good citizenship, full corporate social responasibilities).
2. The Sarbanes-Oxley Act has redefined the structure of corporate governance and responsibility. This has heightened the priority of boards of directors’ thinking relative to business ethics and social responsibility as they are now directly involved in corporate audits. There are no longer layers of management between internal auditors and top managers as the officers are not allowed to be the sole provider of financial data. Sarbanes-Oxley also includes new certifications and regulations for financial statements as well as new disclosure requirements and penalties to those who fail to comply. With greater accountability placed on board members, both business ethics and social responsibility have become key obligations for them to uphold.
3. Five principals of collaborative social initiatives are:
Identify a Long-Term Durable Mission: Firms make the greatest social contribution when they indetify an important , long standing policy challenge and they participate in its solution over the long term. (Examples: Avon Poducts Inc., Home Depot).
Contribute ''What We Do'': Firms maximize the benefits of their corporate contributions when they leverage core capabilities and contribute products and services that are based on expertise used in or generated by their normal operations. (Example: Starbucks Coffee Company, IBM)
Contribute Specialized Services to a Large-Scale Undertaking: Companies have the greatest social impact when they make specialized contributions to large-scale cooperative efforts. Those that contribute to initiatives in which other private, public, or non-profit organizations are also active have an effect that goes beyond their limited contributions. (Example: AES company).
Weigh Government's Influence: Government's support for corporate participation in CSIs can have an important positive influence.Tax incentives , liability protection, and other forms of direct and and indirect support for business all help to foster business participation and contribute to the success of CSIs.
Assamble and Value the Total Package of Benefits: Companies gain the greatest benefits from their social contributiors when they put a price on the total benefit package. The valuation should include both the social contributions delivered and the reputation effects that solidify or engance the company's