3.4.4 Business Ethics Flashcards
Business ethics
The moral principles that guide the way the business behaves
Trade off
When one decision results in the loss of an alternative outcome, for each decision made there may be multiple trade offs
Ethics in strategic decisions include
Location - environment and exploiting workers, impact on workers, corruption - power over suppliers of customers, working with suppliers, ethical sourcing, fair payment terms
Benefits of ethical strategic decisions
Higher revenues - positive consumer support, improved brand awareness, better employee motivation, new sources of finance
Drawbacks of ethical strategic decisions
Higher costs and higher overheads, danger of building false expectations
Corporate social responsibility
A businesses initiatives regarding the community and environment and willingness to take responsibility for the effects the companies actions have on environmental and social issues
Pressure groups
A group that tries to influence company policies in the interest of a particular chase
Carroll’s CSR pyramid
Simple framework that helps argue how and why organisations should meet all their social responsibilities
The four responsibilities
Economic, legal, ethical, philanthropic
What is the economic responsibility
Profitability, survive and benefit society in long term, obligation to pay fair rate to employees and suppliers
Legal responsibilities
Obey laws and other regulations, eg employment and competition
Ethical responsibility
Act morally and ethically correct, businesses expand beyond narrow requirements of law
Philanthropic responsibilities
To give back to society and do good eg charitable donation
Strengths of Carroll’s pyramid
Model is easy to understand, simple to understand, emphasise important of profit
Weakness of Carroll’s pyramid
Too simplistic, ethics should be at top?, businesses don’t always do what they claim to do
