Question

The perception of a firm’s ethical standards is dependent on its team of managers. The ethical
responsibilities of a firm’s managers vary with their specific job responsibilities. For example,
marketing managers are responsible for marketing a product in a manner that neither
misrepresents the product’s characteristics nor misleads consumers. Marketing managers must
communicate with production managers to ensure that product marketing is consistent with the
production. Any promotion strategies that make statement about product performance should be
assessed by production managers to ensure accuracy. A firm earns a reputation for being ethical
by ensuring that ethical standards are maintained in all business functions. If some members of
their teams are unethical, the entire firm will be viewed as unethical. Based on the statement,
how can a business fulfill their social responsibility to their customers and still earn a profit?
Explain the actions a firm can take to ensure that it fulfills its social responsibility to its
customers? How can the management tying their employee compensation to a firm’s
performance resolve some conflicts of interest?

Answer 1

A business can fulfill its social responsibility to its customers and still on a profit by making a balance between their ethical obligations and their economic objectives of earning profit.

The business should try to earn such profits by conducting business in an ethical way, where they consider the customers' needs and wants and provide excellent quality products to the customers to improve customer satisfaction, which would lead to resale by building customer loyalty. Moreover, the business should also try to consider the grievances of the customers seriously.

A firm can undertake various actions to ensure that it fulfills its social responsibility is to its customers. A business can build an excellent customer support service centers, and they can set up applications which would evaluate and focus on the public grievances.

Moreover, the business can also undertake some quality control measures to ensure that the customers are getting excellent quality services and goods.

Management can tie their employee compensation to a firm's performance to resolve some conflict of interest by providing them with some incentives that would help them link themselves with the organization and do their work effectively and efficiently.

The firm can undertake some monetary incentives like an employee stock option plan, which would help.

It would help in tying employees' compensation with the firm's performance by providing them a sense of ownership.