Question

Distinguish between ethics and social responsibilities as sources of guidance concerning the societal implications of pricing decisions.

Answer 1

The main objective of any business is profit maximization. In order to achieve that aim, it tends to keep the price of its products as high as possible. But this doesn't mean that its increases the prices to the extent of violation of the public. Hence there are certain rules for guiding the firm in its pricing decisions. The main are Business ethics and Social Responsibility. Although these two seem similar terms, there is a distinction between the two.

Ethics are defined as the moral character or values. They focus on what is good or bad, right or wrong. Ethics in business signify that the firm must follow the correct behavior in order to be beneficial for the society and also the other stakeholders. On the other hand, social responsibility is a certain obligation of a firm towards the society in which it prospers.

Following are the points of difference between the two;

• There are certain good things for society which are not good for business. This is where social responsibility comes into picture. For example, providing pension to the retirees is beneficial for them but increases the expenses of the firm. But pension is a social responsibility

On the contrary, some things are good for the business which are not good for society. This is where ethics are required. Increasing production of a certain commodity also leads to increase in air pollution. This might be good for the firm but poses a threat to the environment. The ethics should focus on reducing the pollution.

• Social responsibility is more of a policy or a duty towards the community, whereas ethics is more of a conscience and are voluntary.
• Business is focuses on profits in coordination with social responsibility. It is still obliged to perform beneficial activities for society, while business ethics are a kind of   a positive move for society.
• Without social responsibility, there will be no benefit to the community. However, business ethics, lead to worst form of capitalism.