Chapter Outline

LO 3.1  Explain the relationship between social responsibility, ethics, and strategic planning.

The social responsibility and ethics of your business are the commitments you make to doing what is right. Strategic planning is the process of deciding where you want your business to go and how it will get there. All three concepts work together to form the foundation on which your entire business rests.

LO 3.2  Describe the impact of social entrepreneurship on small business.

You have an economic responsibility to make your business profitable. Without profit, your business cannot contribute anything to society. Your legal obligation to obey the law describes the minimal behavior expected for your firm to be part of society. Your ethical responsibility covers your obligation to do what is right. Philanthropic goodwill is contributing to others without expecting anything in return.

LO 3.3  Discuss the importance of ethics for your small business.

Business ethics encompasses more than deciding what should and should not be done in a particular situation. It supplies the fundamental basis for the course you want your business to take. A code of ethics offers a way for you to communicate your ethical expectations to everyone involved in your business. The code should represent your ethical ideals, be concise enough to be remembered, be written clearly, and apply to everyone in the organization.

LO 3.4a   Describe each step in the strategic planning process.

LO 3.4b  Explain the importance of competitive advantage.

The strategic planning process includes defining your mission statement, conducting an environmental analysis (internal and external, or SWOT, analysis), analyzing the competition and defining your competitive advantage, identifying strategic alternatives, setting goals, and establishing systems to measure effectiveness. A competitive advantage is the facet of your business that gives your company an edge over the competition. The strategic plan helps you to identify and establish competitive advantage by analyzing the environment and the competitive landscape.