Business Ethics Flashcards

1
Q

Define BUSINESS ETHICS

A

Business ethics considers the moral ‘rights and wrongs’ of a business decision, with an ethical decision being one that is both legal and meets the ethical standards of a community.

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2
Q

What are the factors that influence business ethics?

A
  • Leadership style and personality of owner
  • Corporate culture
  • Employees
  • Stakeholder influences
  • Financial position
  • Pressure group action and the resulting public perception
  • Government intervention
  • Competitor behaviour
  • Type of product they sell or produce
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3
Q

Define a TRADE OFF

A

A trade off relates to a business decision regarding a choice. It occurs when two things cannot be fully achieved - having more of one thing means having less of another.

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4
Q

What are the advantages of behaving ethically?

A
  • Builds a loyal customer base
  • Improved brand image (distinctive capability which could lead to a competitive advantage)
  • Attracts the best workers who want to work for a company with high standards.
  • Improved worker morale, leading to increasing labour productivity and lower labour turnover.
  • Lower costs through recycling and less waste.
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5
Q

What are the disadvantages of behaving ethically?

A
  • Increased labour costs due to fair wages, employment conditions and training.
  • Raw materials that are ethically sourced are likely o be more expensive, meaning the business will have lower profit margins.
  • Loss of competitiveness to less ethical rivals
  • Minimising environmental impact may increase costs
  • Reduced growth prospects due to turning down unethical projects.
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6
Q

Define CORPORATE SOCIAL RESPONSIBILITY

A

Corporate social responsibility is a business’ decision to accept responsibility to its stakeholders for its social, ethical and environmental actions.

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7
Q

What are the advantages of CSR?

A
  • Improves the image and reputation of a business
  • Helps avoid government intervention
  • Attracts and retains employees
  • Reduces the negative impact of pressure groups
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8
Q

What are the disadvantages of CSR?

A
  • The business’ only responsibility is to create shareholder value
  • Doesn’t lead to the efficient use of resources
  • Extra costs incurred are passed on to customers
  • Chances of growth are reduced
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9
Q

What are examples of ethical issues?

A

Corruption and trading issues, treatment of animals and the environment, treatment of core workers, treatment of outsourced workers, treatment of suppliers, treatment of customers, level of executive pay.

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