3.4.4 business ethics

Question 1

business ethics definition

Answer 1

the moral principles that underpin decision making

Question 2

ethics businesses should consider

Answer 2

• environmental- ethical businesses would ensure they do not damage the environment.
• employees- Ethical businesses will ensure employees have good working conditions, fair pay and care for their overall well-being and health.
• corruption- Ethical businesses will do business in a fair, honest and open way
• suppliers- Ethical businesses treat their suppliers fairly, including paying them a fair price for their resources

Question 3

trade-offs between profits and ethics

Answer 3

• sometimes the drive for profits can conflict with ethical principles.
• a business can make more profit in the short-term by being less ethical.
• being ethical means spending more money e.g. creating good working conditions for employees
• customers who are concerned about ethical issues might be willing to pay higher prices for ethical products
• employees may also prefer to work for ethical businesses- reduce recruitment costs & staff turnover.

Question 4

pay and rewards definition

Answer 4

used to attract and sufficiently motivate a workforce: highly motivated staff are more productive.

Question 5

keeping employees happy:

Answer 5

• keep above national minimum wage
• don’t have a pay gap
• those higher up in the chain of command should be paid more but businesses should not make the gap too big as those at the top can only succeed through the efforts of those at the bottom.

Question 6

corporate social responsibilities definition

Answer 6

the desire to run a business in a morally correct way, attempting to balance the needs of all stakeholder groups.

Question 7

national minimum wage definition

Answer 7

the minimum pay per hour all workers are entitled to by law

Question 8

reasons for advocating CSR

Answer 8

• Consumers with higher levels of consumer income are prepared to pay a premium so that they can buy with a clear conscience from businesses– businesses selling these goods can develop a point of differentiation
• Businesses that do not run their business in a morally correct way risk the possibility of bad publicity

Question 9

reasons for doubting CSR

Answer 9

• critics claim that certain
  businesses exercise CSR as an extension of their public relations department, without committing to behaving in a socially responsible manner.
• CSR has costs, which shareholders may see as a misuse of funds. This can lead to them withdrawing their investment, or pressuring firms to stop their CSR activities