3.4.4. Business Ethics

Question 1

define corporate social responsibility

Answer 1

a business assessing and taking responsibility for its effects on the environment and its impact on social welfare. it involves the idea a business bear a responsibility that stretches beyond their shareholders

Question 2

define ethical codes of practice

Answer 2

statements about how employees in a business should behave in a particular circumstance where ethical issues arise

Question 3

define ethics

Answer 3

in the context of business ethics, consideration of the rights and wrongs of a decision at an often-strategic level, in accordance with the law and a business’s code of conduct in relationship to corporate social responsibility.

Question 4

define living wage

Answer 4

an hourly rate of pay based on the basic cost of living, set independently of government and updated annually.

Question 5

define national minimum wage

Answer 5

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

Question 6

define remuneration

Answer 6

the reward for work in the form of pay, wages, salary including allowances and benefits like company cars and health insurance

Question 7

define sanctions

Answer 7

restrictions imposed on trade or investment with the aim of influencing a policy change in another country

Question 8

define trade embargoes

Answer 8

often included in sanctions, where commercial shipments are banned in and out of a particular country or where an embargo is placed on a particular product

Question 9

how can ethics affect a business?

Answer 9

affects decision making as some decisions are affected by law e.g. its illegal to dump waste by the roadside
-business has a code of conduct which employees operate in respect of ethical business decisions, though employees on a personal level have differences of opinion

Question 10

what are ethics of strategic decisions?

Answer 10

those that affect how a business operates in the long term, these are part of their corporate strategy and are the responsibility of senior management
-affects direction of business

Question 11

what are some ethical issues which can affect a business?

Answer 11

the environment, animal rights, workers in developing countries, corruption, new technologies, product availability and trading issues

Question 12

explain codes of practice

Answer 12

lay down how employees in the business should respond in situations where ethical issues arise
-differ from business

Question 13

what are codes of practice statements about?

Answer 13

environmental responsibility, dealing with customers and suppliers in a fair and honest manner, competing fairly, the workforce and responding fairly to their needs

Question 14

what are ethical objectives?

Answer 14

derived from ethical codes of practice
can be explicit
carefully thought out
-unwritten and part of corporate culture & aim to deal fairly with customers

Question 15

what are the consequences of not following ethical objectives?

Answer 15

get bad publicity and a bad reputation

Question 16

how do businesses respond to concerns about CSR?

Answer 16

by auditing relevant activities -> made available in a corporate responsibility report

Question 17

what does auditing for csr involve?

Answer 17

inspecting evidence against established standards
-auditors can say the evidence presented is true and fair

Question 18

who are the accounting audit standards set by?

Answer 18

Accounting standards Board

Question 19

Is it true social and environmental audits are voluntary and have no rules about how audits should take place?

Answer 19

yes as companies are free to choose what standards they should be measured against and who the auditors will be
-most dont do social and environmental audits

Question 20

what do social and environmental audits involve?

Answer 20

Employment indicators e.g. if pensions are included
Human rights indicators e.g. does the business persuades its employees to join trade unions
the communities in which the business operates in e.g. how does it affect communities
environment e.g. the amount of energy used by the business

Question 21

How does pay and rewards affect a business?

Answer 21

if employees with similar skill sets are not paid equally, but pay those more skilled a higher rate
-attract employees by using high rates
-reward and motivate staff as aim is more profit
-maximise productivity levels

Question 22

what is the impact on profitability when choosing to behave ethically?

Answer 22

raises costs e.g. higher wages, costs of materials
reduce revenues e.g. selling to emerging economies at low prices

Question 23

what are some of the benefits that following the ethical stance produces?

Answer 23

Can be used in marketing to positively impact the businesses reputation/ brand image e.g. the body shop
businesses can be seen as behaving ethically and as a result are less likely to face serious penalties

Question 24

factors which can affect a business when making decisions and choosing to be morally right

Answer 24

have a responsibility to stakeholders and to employees to pay them well
businesses which treat employees well, retain staff well -> reduced recruitment costs
can increase chance of being profitable

Question 25

factors which can affect a business when making decisions and choosing to be profitable

Answer 25

unprofitable -> dont survive, an ethical stance is a luxury that businesses can be when established & successful
trade offs are made, like brand reputation, less competitive prices
b. are able to invest and innovate products that improve society

Question 26

what is carrolls view?

Answer 26

that profit is important to businesses they have a wider purpose and social responsibility

Question 27

what does Carrolls CSR pyramid look like

Answer 27

from top to bottom of pyramid
philanthropic
ethical
legal
economic

Question 28

what does philanthropic refer to in Carrolls csr pyramid?

Answer 28

a responsibility to give back to society, may be discretionary e.g. charity donations

Question 29

what does ethical refere to in carrolls csr pyramid?

Answer 29

responsibility to act morally and ethically by going beyond narrow requirements of the law

Question 30

what does economic refer to in carrolls csr pyramid?

Answer 30

responsibility of a business to be profitable, the only way to survive and benefit society in long term

Question 31

what does legal refer to in carrolls csr pyramid?

Answer 31

responsibility to obey laws and other regulations

Question 32

what are some advantages of Carrolls csr pyramid?

Answer 32

easy to understand
simple messages
emphasises the importance of profit

Question 33

what are some drawbacks of Carrolls csr pyramid?

Answer 33

should ethics be at the top?
businesses don’t do what they claim to do in the CSR

Question 34

what are advantages of the csr approach?

Answer 34

happier staff -> motivated and productive
good public relations -> positive light on business
cost reductions -> better staff retention, saving energy by reducing waste

Question 35

what are some disadvantages of using using a CSR approach?

Answer 35

may be a fad as some businesses wont follow through with their claims
-cost may be larger than the benefit to the business
-do consumers care enough about the ethics of a business to affect it?

Question 36

what are pressure groups?

Answer 36

a voluntary organisation that operate on all leels of society within the aim to change either political or commercial decision making

Question 37

how do pressure groups take action?

Answer 37

boycotts, campaigns, lobbyinh and protests

Question 38

give an example of a pressure group

Answer 38

Green peace