3.4.4 - Business Ethics

Question 1

What is ethics and morals

Answer 1

• (ethics) Moral principles that govern a person’s behaviour or the conducting of an activity
• (morals) Standards of behaviour; principles of right and wrong

Question 2

What are ethics

Answer 2

• Businesses want to appear to be doing “the right thing” but this is not always possible if they wish to make a profit
• Often there is a trade-off between ethics and profitability (compromise)

Question 3

example for ethics

Answer 3

• 2010 BP oil rig Deepwater Horizon caught fire
• 11 men lost their lives
• Obama said it was “the worst environmental disaster ever”
• Millions of gallons of oil spilt into the Gulf of Mexico
• All due to cost cutting by BP, failure to invest in training and health and safety
• Worst affected – fishermen and residents of the Gulf

Question 4

What are shareholders

Answer 4

• Shareholders are interested in the profit performance of the business and any potential dividend payout from it
• They are less concerned with costly ethical issues and may even discourage ethical initiatives on financial grounds

Question 5

What are stakeholders

Answer 5

• Stakeholders are interested in the way that suppliers of materials and components to the business are treated – for example; fair wages and good working conditions
• Pressure groups are interested in the use of child labour and sweatshops in the production process

Question 6

What is CSR

Answer 6

• In essence a (CSR) or Corporate Social Responsibility is a business approach that contributes to sustainable development by delivering economic, social and environmental benefits for all stakeholders

Question 7

What are the advantages of a CSR approach

Answer 7

• Happy customers; more loyal to a CSR business
• Happy staff; more motivated and productive workers who are proud of the business that they work for
• Happy investors; more funding and investment will become available, many investors seek CSR businesses
• New products new markets; working in a CSR way will stimulate innovation (in ways to save energy for example)
• Good PR; public relations which show the business in a positive light
• Happy community; trusted relationships built with the local communities
• Happy suppliers; who may choose a CSR business because of their ethical stance
• Cost reductions; in not having to re-hire staff, in energy saving in reducing waste, in keeping loyal customers

Question 8

What are the disadvantages of a CSR approach

Answer 8

• Fad?; Many business writers speculate that CSR is the latest fad and soon consumers will tire of it and move on to something else
• Motive?; Some businesses may have a CSR policy specifically for the good PR that it creates, the evidence for this is a CSR job would be working inside a PR department of a large organisation
• Cost?; Is the cost larger than the benefits for a business? If the competition are not bothering with CSR that does not necessarily give completive advantage it could just make for a more expensive product
• Care?; Do consumers care that the farmer that grew the coffee beans was paid a fair wage, or will they buy the coffee based on price or a nice looking jar?

Question 9

What is a Trade - off

Answer 9

• a compromise reached between one thing and another