Page 1: Ethics and business aims
Vodafone has grown rapidly since it was originally formed in 1984. It has responsibilities to its 60,000 staff and 151 million customers and shareholders. It also believes it has a responsibility to society. The company aims to continue to grow. Economies of scale improve efficiencies, enhancing the company's performance. This increases returns to shareholders and makes money available to improve services to customers. In order to grow, Vodafone must attract new customers and retain those it currently has. Serving customers well relies on the ability to attract and retain good quality staff. Both these stakeholder groups care about the company's ethics.
Vodafone has carried out extensive research which confirms what the company believed - operating ethically generates clear benefits. The results showed that customers are loyal to companies they trust. They also favour companies that operate in a responsible manner. Vodafone operates in a competitive market; its competitors also want to grow. In order to achieve competitive advantage, Vodafone must understand its position relative to its competitors. Research below shows the company's strong position.
Companies' actions are influenced by other stakeholders including pressure groups and government regulators. A business that did not care about ethics would simply seek to maximise revenues regardless of how its products affected society. It is unlikely that such a business would continue to grow because, for example:
- regulators would punish their actions e.g. imposing fines and revoking operating licences
- pressure groups would highlight unethical actions, adversely affecting what customers think.
Ethical companies do the right thing and concern themselves with the long term. This may damage financial performance in the short term. Ethics guide decisions. When Vodafone first included moderators into young people's chat rooms to create a safe environment for chat, the number of users dropped significantly. This led to reduced revenues for the company. However, the company believed that this was the right thing to do. The growing esteem in which the company is held by the wider public justifies this approach.