Assignment on: Chapter 3 – Social Responsibility and

Ethics in Strategic Management

Submitted by: Sana Syed

Roll # 16

Semester: 3rd

Session: 2018 - 2020

Subject: Strategic Management

Submitted Date: 17th Nov, 2019

Submitted Day: Sunday

Submitted to: Dr M Imran

Department of Management Sciences

Islamia University of Bahawalpur

 Social Responsibilities of Strategic Decision Makers

The conception of social responsibility describes that a corporation has responsibilities to society
aside from creating the profits. As an instance, a choice to lower the manpower and products
lines within the organization not solely impact the firm gain however it additionally effect the
staff, customers and therefore the groups that are coupled to the respective firm directly or
indirectly. While making a strategy, Strategic Decision Makers should keep the social effects in
their minds. The man who stands against the scenario of social responsibility is the “Milton
Friedman’s”. He says that the foremost and main objective of any organization is the
maximization of profit not outlay shareholders cash for the whole social interest. He argues that
the socially accountable decisions damage an organization’s potency.

“Archie Carroll’s” gave the four important responsibilities for the firm’s managers. That are,
Legal, Ethical, Economic and Discretionary. To continue the existence of the firm, economic and
legal responsibilities should be the highest priorities whereas the ethical and discretionary should
be the social responsibilities. He says that a scarcity of social responsibility ends up in increased
government rules that automatically cut back a business potency and effectiveness.

Business Firm Responsibilities:

Business Responsibility – Traditional Aspect of Friedman’s:

 He argues opposite the conception of social responsibility.

 He says that the one who stays “responsible” by decreasing the actual value of the
business’s product as well as stop inflation moreover to reduce the pollution creating
expenditures, hiring the unemployed, they are actually spending the wealth of
shareholders for the sake of society.
 He further clarifies that “one and sole social responsibility of any organization is to intact
in activities that are made only to extend the profit and to use its resources in a better way
and must engaged in free and open competition while not fraud or deception.”

Business Responsibility – Traditional Aspect of Carroll’s:

 He gave the concept of social responsibility by dividing the responsibilities into four
phases that every manager of firm has to fulfill them.
 1. LEGAL – this type of responsibilities are proposed in the form of laws by the
government and it is assumed to follow by all management.
2. ETHICAL – this type of responsibilities are defined by the management of any
organization and they reflect the behavior in a society. These responsibilities encourage
you to follow the generally held beliefs.
3. ECONOMIC – this type of responsibilities are also defined by the management of
business organization and they are responsible to produce goods and services that must
give benefit to society with the intention that the organization pay back its shareholders
and also creditors.
4. DISCRETIONARY – this type of responsibilities are assumed by the corporation that
these are totally voluntary obligations. For instance give training to the unemployed
group and build day care centers for public.

Discretionary Social
Responsibilities
Ethical

Economic Legal

Ethical Decision Making

With the enhancement in competitive advantage, to manage resources are becoming more
necessary by the organizations. The way used to utilize resources is critically important.
Therefore, in a firm these high quality decision developing skills serve as basic need for
competitive edge but for the companies managing ethical decision developing methods are
expected to be indirect for the sake of implication of performance. Strategic leaders can satisfy
the expectations of shareholders by using ethical decision developing method but sometimes it is
unable to make above average results. Though the attitudes control by the strategic leaders
towards ethical problems nearly influence the behavior of the firm intentionally. The abilities to
make decisions that fulfill every expectation should be duplicate/imitate easily, as this is the
most important factor that is observable. Under normal conditions and to fulfill the shareholders
maximum ethical standards, decision making must be drive by a desire and it should not produce
superior returns.

Unethical Behavior Causes:

 Difference in norms and unique cultural values of different places.

 System of government based on their behavior and relationship.
 Unique cultural values among stakeholders and the people of business.
 Lack of standards of conduct.

Concept of Moral Relativism:

Proposes that there is no such a way to decide which decision is better than the other decision
and said that morality is always related to social, cultural or personal standards. Few types of
moral relativism are given below:

1. ROLE RELATIVISM – Certain obligations to the role are carried out by the society that
is totally based on their belief.
2. CULTURAL RELATIVISM – Morality is always related to society, practical culture or
different types of groups that is totally based on their belief.
3. NAÏVE RELATIVISM – All individuals have the right to live their own life and their all
moral decisions are personal, totally based on their belief.
4. SOCIAL GROUP RELATIVISM – For an individual or any community, morality is
simply the concept of following the cultural values and norms, based on their belief.

Levels of Moral Development - Kohlberg

The biggest main reason of why business individuals can be seen as unethical is that they’ll
haven’t any developed personal knowledge of ethics. The moral character of an individual is full
of his or her level of ethical development, some personality traits and the situational factors like
the supervisor, firm’s culture and the job itself. Levels of moral development are the reason of
the progress of any individual. These three phases of moral development are as follows:
1. PRINCIPLED LEVEL - this type of level is characterized by an individual’s loyalty to an
internal moral code of ethics. To find universal principles or values, an individual concerns
beyond laws and norms.
2. CONVENTIONAL LEVEL - this type of level is characterized by the activities that are
accepted by an external code of ethics. It considers all the laws and norms of the society.
3. PRECONVENTIONAL LEVEL - this type of level is characterized by the children who
judge the behavior of others on the basis of their personal interest. Actually they are
concerned about themselves.

Encouraging Ethical Behavior

Code of Ethics – Tells about how the firm expects its workers to behave on the job. It is
necessary to promote the ethical behavior of organization.
Concept of Whistle Blowers – are the type of workers who report on the part of others
about unethical or illegal behavior.
Important terms in Ethics – ETHICS can be defined as the moral values that oversee a
person’s activities or the conducting of an activity. MORALITY can be defined as the
principles regarding the difference among the good or bad and right or wrong activities.
LAW can be defined as the art and science of justice that ensures that a community adheres
to the will of state.