Homework Question on Business and Society: Stakeholders, Ethics, and Public Policy
- While social reports often discuss issues related to a firm’s performance in the four dimensions of social responsibility, as well as to specific social responsibility and ethical issues, ethics audits have a narrower focus on assessing and reporting on a firm’s performance in terms of ethical and legal conduct.
- Which do you think matters most to the average consumer (ethical or legal conduct)? What matters most to the stockholders? Explain your answer.
Homework Answer on Business and Society: Stakeholders, Ethics, and Public Policy
It is evident that both ethical and legal conduct matter to the consumer. First, ethical conduct and legal conduct are the ones that build reputation for any kind of business, whether big or small. The two conduct levels also ensure that customer loyalty is maintained for long periods of time. Every consumer wants to know that the product he or she is purchasing is legal. Therefore, legal risks are prevented from occurring through the implementation of strict legal conduct by the auditors.
Additionally, consumer behavior towards a given company is highly dependent on the respect attributed to them by the company. For instance, a customer will go back to a hotel that he or she was treated well other than the one that he or she was mistreated by the workers. Customers also desire recognition through appreciation from a genuine organization or company. With this, they are able to return for more business since their confidence is built and efforts appreciated.
On the other hand, stockholders regard legal conduct as more important to them. To stockholders, illegal trading has the full ability of ruining a business. Businesses fail mostly because of penalties and fines from the Consumer Commissions. Legal conduct determines the level of confidence of consumers in a given market. Illegal business ruins the reputation of a company, and this, in turn denies profits to the stockholders who have invested heavily on businesses.