Business Ethics Flashcards
Ethics
Moral principles that govern an individual’s behaviour
Morals
Standards of behaviour and principles of right and wrong
Ethics of strategic decisions: trade-offs between profit and ethics
A conflict can exist between ethical objectives and profitability and a trade-off occurs when the selection of one choice results in the loss of another.
For businesses, acting ethically when not required to do so by the law can have a negative impact on profit in a number of ways. The result cam be a trade-off.
It can raise costs:
Paying higher wages than is necessary to overseas workers increases costs.
Adopting an ethical code of practice can raise costs, as employees have to be trained to implement it.
Paying workers more than a legal minimum.
It can reduce revenues:
A business might lose a contract if it refuses to give a bribe.
Selling medicines at lower prices to growing economies might increase sales but total revenue is likely to be lower.
Pay and rewards
Businesses use pay and rewards for different purposes:
To attract skilled employees
To reward and motivate existing staff
Thus, maximise productivity levels.
Businesses need to make profit to survive therefore they attempt to minimise costs as much as possible. This can also be done legally by reducing wages to the legal minimum, however though it is legal it may not always be ethical.
Many believe that national minimum wage is not enough to provide a satisfactory standard of living.
Corporate social responsibility (CSR)
CSR is a form of self-regulation that involves the business ensuring that its activities consider the interests of all stakeholders.
Social and environmental audits might include:
Employment indicators- how well are staff member treated?
Human rights indicators- do their suppliers use child labour?
Does the company discriminate on grounds of race, religion, gender etc..
The communities in which the business operates
Business integrity and ethics
Product responsibility
The environment
