3.4.4 Business ethics

Question 1

Ethics

Answer 1

Principles that govern which behaviours are morally acceptable to society, individuals or groups
Mission statements and corporate culture tend to show if firms have an ethical stance
Most businesses have an ethical code

Question 2

What are some ethical issues a business may need to include

Answer 2

1. Location
2. Suppliers
3. Bribery and corruption
4. Selling tactics

Question 3

Location

Answer 3

Labour costs may be cheaper in different countries so some firms tend to exploit
This is due to fewer laws regarding worker’s welfare
Eg; May pay under minimum wage with poor working conditions

Question 4

Suppliers

Answer 4

Firms need to decide if they will buy from cheap suppliers who exploit their workers for lower overhead costs or pay extra for a supplier that treats workers fairly

Question 5

Bribery and corruption

Answer 5

Some firms tend to bribe people and use other corrupt behaviours
This puts their firm at an unfair advantage

Question 6

Selling tactics

Answer 6

Some firms persuade customers to sign up to contracts with hidden costs and make it hard for them to leave the contract by charging higher exit fees

Question 7

Trade off between ethics and profit

Answer 7

Being ethical can be more expensive therefore, making less profit
In order to make more profit, they’ll need to charge higher prices which may decrease demand
Being ethical sacrifices making more profit
However, some customers are concerned with ethical issues so are willing to pay higher prices
Employees may also prefer working for a more profitable business

Question 8

How are employees and ethics related ?

Answer 8

Business ethics are concerned with how much pay there is between different levels of staff
Eg; is the amount of experience they have worth the amount they are being paid
Pay is necessary when attracting employees

Question 9

CSR

Answer 9

Corporate social responsibility
The idea is that businesses should go above and beyond what is required to help society as a whole
Eg; reducing the negative impact on the environment, donating to charity, treating their workforce ethically
Most businesses publicise how they meet their social responsibilities

Question 10

Evaluation of CSR

Answer 10

+ Improves brand loyalty and attracts new customers
+ Improves staff morale
+ Attracts more talented applicants

• Has costs which shareholders won’t be happy with
• Costs may be passed on to customers
• Puts small businesses at a disadvantage as they are less likely to have the funds