Business Ethics

Question 1

how can we define capitalism?

Answer 1

capitalism can be defined as an economic system based on the private ownership of how things are made and sold, in which businesses compete freely with each other to make profits

Question 2

what is a shareholder?

Answer 2

a shareholder can be defined as a person who has invested money in a business in return for a share of the profits

Question 3

how can we define corporate social responsibility?

Answer 3

corporate social responsibility is the sense that businesses have wider responsibilities than simply to their shareholders, including the communities they live and work in and to the environment

Question 4

how can we define whistle - blowing?

Answer 4

whistle-blowing can be defined as when an employee discloses wrongdoing to the employer or the public

Question 5

how can we define globalisation?

Answer 5

globalisation can be defined as the integration of economies, industries, markets, cultures and policymaking around the world

Question 6

what is a stakeholder?

Answer 6

a stakeholder can be defined as a person who is affected by or involved in some form of relationship with a business

Question 7

how can we define consumerism?

Answer 7

consumerism can be defined as a set of social beliefs that put a high value on acquiring material things

Question 8

what did MILTON FRIEDMAN say about business responsibilities?

Answer 8

• FRIEDMAN argued that businesses have no other responsibility but to increase their profits
• he said it was unethical to do anything else: taking money away from making profits to fund corporate social responsibility projects was the equivalent of stealing money from shareholders

Question 9

what are the 3 reasons for businesses taking on corporate social responsibilities?

hints:

• image
• negativity
• restriction

Answer 9

• businesses take on social responsibilities because they think these will improve their image with customers, a certain type of investor or a certain type of employee
  > there are many investors who only want to put their money into “ethical” businesses: for example, the FTSE4Good index series provides information for investors on businesses that demonstrate “strong Environmental, Social and Governance practices”
  > an example of this could be reducing greenhouse gas emissions
• another reason for businesses to take on social responsibilities is that they fear that if they don’t, they will be viewed negatively by customers
  > they may improve facilities/offer employee discounts because they’re worried that if they don’t, employees will go and work for the competition
• another reason could be fear that without adopting self regulation, businesses will face far more restrictive regulation on their activities from the government
  > for example, newspapers may agree to restrict their intrusion into the lives of celebrities for fear of government legislation being introduced that bans all intrusion into people’s private lives

Question 10

how do CRANE+MATTEN define stakeholders?

Answer 10

• in their book “Business ethics: a European perspective”, CRANE+MATTEN said a stakeholder of a corporate. is an individual or group which either is harmed by or benefits from the corporation, or whose rights can be violated or have to be respected by the corporation

Question 11

what challenge comes with the concept of stakeholders?

hints:

• advance
• cheap
• campaign
• competition

Answer 11

• identifying in advance how a business’ actions will be perceived by its stakeholders can be very challenging, as stakeholder interests seldom overlap
• for example, supermarkets compete intently for customers and have found that the best way to do this is by offering very cheap prices on everyday basics, e.g. milk
• to do this, they use their purchasing power over the dairy suppliers: if the suppliers want supermarket business, they have to sell their milk below the cost to produce - makes customers happy, suppliers unhappy
• however, if suppliers campaign to raise awareness of unethical supermarket purchasing practice, customers may be unhappy that the supermarket is behaving unethically, so take their business elsewhere
  > yet if the supermarket increases the price of milk, the customer may still move to a cheaper competition
• therefore, although some businesses always try to “do the right thing”, most tend to have a mix of approaches to their social and stakeholder responsibilities: businesses are both choosing to act ethically and being required to face up to their social responsibilities, so perhaps business ethics is best described as a process

Question 12

give the Kantian responses to corporate social responsibility:

hints:

• ends
• balance
• treat
• misleading

Answer 12

• Kantian ethics focuses on the need to treat people as ends, not just means
• companies that control employees excessively seem to be without respect for the dignity of human beings
• companies that don’t ensure safe and fair working conditions and payment for employees would seem to be using them for an end other than the interest of the employee
• balance between the interest of the company and the employee is important for a Kantian perspective as it affects how companies treat customers
  > not fixing a defective product or misleading the customer with false information are both examples of treating people merely as means to an end

Question 13

give the Utilitarian responses to corporate social responsibility:

Answer 13

• Utilitarian ethics focuses on the consequences for the greatest good, which could be seen as the greatest profit
• this may lead to a ruthless attempt to maximise income at all costs
• however, utilitarianism has this greatest good principle to try and set aside selfish interests for the broader interests of many more people
  > this would mean not just acting in the interests of shareholders, but also the interests of workers and all other stakeholders, including the communities the business operates in and its environmental impacts

Question 14

can whistle - blowing be seen as ethical?

hints:

• responsibility
• conduct
• law
• anon

Answer 14

• whistle-blowing may be seen as an individual moral choice, but in some cases employees would have a legal responsibility to report unethical behaviour due to the likelihood of the behaviour being criminal
• often a code of conduct would require a member of that profession to report certain kinds of wrong doing: for example, if an accountant discovered the business they were working for wasn’t paying tax, if would be their legal and professional duty to report this to the relevant authorities
• in the UK whistle-blowing is protected by law: the Public Interest Disclosure Act, and under UK law they are treated as witnesses, so not required to provide evidence of what they reported
• in UK also possible to wb anonymously, although this can make investigating the claim more difficult
• this is all to encourage wb as something the serves the public interest

Question 15

can whistle-blowing ever be unethical?

hints:

• accusations
• army
• risk

Answer 15

• legal protection for wb doesn’t continue if the person is discovered to be simply making accusations because they have a problem with the business they work for or the individuals within it
• some types of work aren’t covered by the PIDA, including those who work for the armed/intelligence services
  > this is because wb in these areas could risk national security, which could have negative impacts on the public or on public trust in those who are supposed to protect them

Question 16

explain the Kantian responses to whistle-blowing:

hints:

• universality
• contract
• ends
• duty

Answer 16

• a Kantian employee would find it difficult to allow a situation where a company broke the rules through what they did, as in general companies are expected to follow the rules: this doesn’t sound like universality
• however, an employer sticking to the contract seems close to the sense that people should keep to their promises they have made in business
• wb involves breaking those promises, but if a company was exploiting customers/employees/communities, a Kantian may interpret this as humans not being treated as ends, but only as means for private greed
• beyond the specifics of a contract there is a wider sense of duty that must sometimes inspire someone to take a personal risk

Question 17

explain the utilitarian responses to whistle-blowing:

hints:

• resist
• balance
• greater good

Answer 17

• utilitarians may resist wb depending on how much harm was done by the activity
• they would have to weigh the balance of good or harm for all with an interest/stake in the business and whether this outweighed what was done
• it may be justified for a company to break some rules to succeed in a particular instance or create happiness through the success of the company
• however, a rule utilitarian may feel there was a greater good of having companies always following the rules in general to keep the system of companies ethical, even if it would’ve create more happiness to not blow the whistle

Question 18

explain the idea that “good ethics is good business”:

hints:

• other decisions
• inherently unethical
• everyday
• trust
• more

Answer 18

this idea can be understood in different ways:

• there is nothing different between business decisions and any other decisions (business decisions aren’t inherently unethical, so a good business decision, like any kind of good decision, is likely to also be ethical)
• business decisions are inherently unethical as they are interested only in what benefits the business (this can have negative impacts on the business, and such businesses will do better if they make their decision making based on good ethics
• most everyday business decisions don’t involve ethical choices, but occasionally business decisions do involve a choice between doing the right thing and doing something that might be wrong (at this point, those making the decisions would benefit from ethical guidance, perhaps in the form of a policy that sets out what the business must do in such circumstances)
• because customers like to do business with companies they trust, it seems obvious that good business will also be good ethics
• businesses that act with integrity and honour their agreements should therefore have more customers and make more revenue than business that don’t act in the same way

Question 19

how can we challenge good ethics being good business?

Answer 19

• good ethics being good business isn’t the experience that most of us have with businesses
• if businesses always practised good ethics then why would it be easier to move to a more expensive phone contract than it is to leave a phone company?
• when a business acts with complete integrity and offers an honest price for an honest job, why do other businesses immediately draw customers away with cheaper deals?
• these examples suggest that self interest leads many businesses away from “doing the right thing”: this self-interest is driven by the desire to increase profits and is supported by the business’ shareholders

Question 20

explain the idea that good ethics can actually be bad business:”

hints:

• competition
• loyalty

Answer 20

• competition is the driving force of our capitalist economy
• if being ethical risks increasing costs and reducing profits, then most businesses will take the “hard headed” decision to stay competitive: yet is this the fault of businesses?
• although customers and some shareholders have been an important factor in pushing businesses to accept their CSR’S, it’s also consumers+shareholders who demand constant updates and lower prices
• customers/investors have very little loyalty to one business if another produces something they like more: so in a consumer culture, businesses have to do something to stand out
• rather than all businesses becoming ethical businesses, ethics seems to be a branding choice that businesses make in order to be noticed

Question 21

explain the idea that good ethics can SOMETIMES be good business:

hints:

• recession
• unrealistic
• individuals

Answer 21

• the 2008 recession could’ve been prevented
• although there was nothing illegal about what was happening it was obviously unethical, as sub-prime mortgages were being sold to people who it was clear couldn’t keep up with their mortgage payments
• however, the money was so good and the process so complicated to understand that no one wanted to stop it
• what would’ve been better was good ethics, even if it meant lower economic growth, as in the long term the cost of this unethical financial dealing was extraordinarily high
• if permanent commitment to high ethical standards seems unrealistic in our capitalist culture, then perhaps businesses should instead commit to involving ethical expertise when important decisions are being made
• individuals use ethics in this way, and big businesses are more complex than individuals, with more possible consequences from decision making because of their wide range of stakeholders: then, good ethics would help business make good choices

Question 22

explain the Utilitarian approaches to the idea that good ethics is good business:

Answer 22

• Utilitarianism fits well with business decision making as businesses are used to making cost-benefit decisions
• it can be difficult to quantify utility objectively: since businesses are used to putting a number on cost and benefit, businesses might struggle to say how much pleasure or pain a decision would cause to each stakeholder involved

Question 23

explain the differences between act/rule utilitarian approaches to the idea that good ethics is good business:

hints:

• 0 hours example
• h/l pleasures
• overall benefit
• more efficient

Answer 23

ACT:
- when a business is deciding whether or not to move all employees to zero-hours contracts to give the business more flexibility, act may conclude that anything is permissible if it increases pleasure for the greatest number, so many should be moved to 0 hours as more customers would benefit from the cheaper products that could be produced

RULE:

• MILL would distinguish between higher+lower pleasures, and might consider the exploitation of employees a lower pleasure compared to their good treatment
• a rule utilitarian would be concerned about the behaviour or businesses as a whole and be prepared to restrict the conduct of businesses in some circumstances because of a perceived overall benefit to a wider range of goods, not just the good of profit
• therefore, ru’s might agree that zero hours contracts on principle cause more pain than pleasure: this would form the basis of their decision making
• therefore, a rule based approach would seem to fit better with the “good ethics is good business” approach since this is more efficient

Question 24

explain the Kantian approaches to the idea that good ethics is good business:

hints:

• self interest
• acceptable
• aspirations
• everyone

Answer 24

• Kantian ethics would fit best for this view of “good ethics is good business” in which the assumption is that the business is naturally unethical as it always goes for self interest
• the categorical imperative would clarify for a business just what actions are/are not permissible
• however, the demand of ke’s don’t sit easily with a highly competitive, capitalist business environment
• 3rd maxim of the CI requires that a business acts only in ways that would be seen as acceptable by everyone: this principle fits well with CSR as society demands certain ethical standards of businesses
  > however, recent history suggests that while one business tries to act in a fully responsible way, others take advantage of its competitive weakness that result from this: so it becomes good ethics, but bad business
• 2nd CI maxim says people shouldn’t only be treated as means, their own aspirations should also be considered
  > fits well with the concept of business stakeholders, but following it could potentially tie a business up in complex considerations of stakeholder outcomes
• 1st CI maxim demands that any action is only right if it’s right for everyone
  > businesses that followed this maxim would always tell the truth, because if everyone lied then nothing would work

Question 25

explain the concept of globalisation:

Answer 25

• transnational corporations have been key to the development of the global economy, and the size of these businesses mean the range of their stakeholders extends from national governments to child workers in developing countries
• the negative impacts of globalisation aren’t restricted to developing countries: manufacturing jobs in the west have been lost to lower wage countries in the developing world

Question 26

explain moving production and globalisation:

hints:

• TNC’S = transnational corporations
• China
• moving
• hollowed
• betrayed

Answer 26

• moving production from the west to lower wage countries, e.g. China, has rapidly increased economic development and technological know-how
• although the wages paid by TNC’S in countries like China are lower than the wages they would need to pay in the west, they’re still much higher than what Chinese peasant farmers used to earn
  > this has had enormous economic benefits for stakeholders in these emerging countries
• moving production to low wage countries has also had major impacts on stakeholders in the west: consumers have benefited from cheaper products, fuelling a consumer culture
• however, this shift has hollowed out manufacturing in most developed countries, as the manufacturing+the jobs it created has disappeared
• therefore, TNC’S have been criticised by those who used to make the products for them, with those left behind by globalisation feeling betrayed

Question 27

explain the Rana Plaza disaster:

Answer 27

while global business has the power to bring investment to poorer countries, these countries have often had weak government regulations, allowing unsafe working conditions

• in 2013 a poorly made Bangladeshi factory that supplied many western companies, such as Primark, collapsed, and over 1100 died
• the building was called the Rana Plaza
• day before, shops on ground floor were closed due to cracks, but workers were ordered to return to work and threatened with a months pay docked
• an investigation after the disaster showed the upper factor floors were build with no permits and no reinforcements for the machines

Question 28

give an argument against the view that globalisation exports unethical business practices:

Answer 28

• TNC’S do sometimes help to improve business ethics in the countries they operate in, and international reactions to disasters such as Rana Plaza can lead to these corporations being pressured into accepting CSR for more of their stakeholders
• although the Rana Plaza workers weren’t employees of the western companies they produced clothes for, public opinion in many countries was that these corporations shared some responsibility for the disaster of not showing concern for the safety of their stakeholders

Question 29

explain the utilitarian responses to globalisation:

Answer 29

• the creation of the greatest good can be understood in global terms
• supporters of globalisation argue its benefits in utilitarian terms: the good it does outweighs its disadvantages, proved by the small number of countries that keep trade barriers to block this globalisation
• the World Bank calculated that 800 million Chinese people have been lifted out of poverty since China began to open its economy
• those in developed countries have benefited from the cheap products delivered by globalisation

Question 30

how can we criticise the Utilitarian responses to globalisation?

Answer 30

• critics of globalisation say that utilitarianism is the self-justification of the rich countries that want poor countries to open their markets to western goods
• these critics would say that instead of producing the greatest good for the greatest number, globalisation actually deepens global inequalities

Question 31

explain the Kantian responses to globalisation:

Answer 31

• Kantian ethics supports the Utilitarian criticisms as Kant argued that everyone should have the same degree of freedom
• he accepted that the government would restrict people’s freedom a bit, but only to ensure that everyone had the same freedom, as without government control humans would act like animals, with the strong dominating and the weak loosing everything
• therefore, Kant’s views on equality would clash with the inequality generated by globalisation, which is tolerated by those who benefit from it

Question 32

explain what BOWIE said in Business Ethics - a Kantian perspective:

Answer 32

• BOWIE suggest that Kantian thinking can inform all businesses on how they should organise meaningful work
• the Kantian idea of meaningful work includes work that is freely chosen, supports human autonomy, provides a salary enough to live independently and doesn’t undermine the workers moral development
• BOWIE also suggest some features of business that Kant would expect: the firm should consider all affected stakeholders when decision making, ensure no one stake holder automatically takes priority in any decision and ensure that relations with stakeholders are governed by rules of justice
• his point about not simply considering the number os stakeholders affected is a clear swipe at utilitarian ethics

Question 33

how can we agree with the view that CSR is nothing more than “hypocritical window dressing” covering the greed of a business intent on making profits:

Answer 33

• although some businesses are motivated by social concerns, e.g. green energy producers, for most the association with social issues comes from a calculation that this association will increase profits by building a positive brand
• businesses would be acting hypocritically if they pretended to be something they weren’t by using CSR to cover their real intentions, e.g. when car companies say their cars are environmentally friendly when actually the company cheated their emissions test
• there is an external pressure on businesses to act ethically: if this is the case, then can they be accused of acting hypocritically when they’re obliged to accept the responsibilities they have to their customers and other stakeholders?

Question 34

how can we disagree with the view that CSR is nothing more than “hypocritical window dressing” covering the greed of a business intent on making profits:

Answer 34

• MILTON FRIEDMAN’S argument that “the social responsibility of business is to increase its profits” argued that everyone benefits more if businesses do just focus on making money: a business is not an individual, and it cannot accept responsibility
• it’s hypocritical of society to expect anything else of business other than the intention to make a profit
• there seems to be a requirement that people use their power as stakeholders to make businesses act ethically: so we shouldn’t expect businesses to be genuinely charitable, but we can use our choices in the market+campaigns to persuade companies to be good for sound business reasons

Question 35

give some reasons for the idea that humans can flourish in the context of capitalism and consumerism?

Answer 35

• consumerism grants individuals the power to make choices and acquire more products, which drives the economy
• this drive has been behind many tech developments, and the creation of a mass market for consumer products has revolutionised western economies
• capitalism is linked to the Protestant work ethic, with the idea that hard work+discipline are aspects of salvation
• capitalism incentivises human behaviour as their is self interest in the outcome: if you can make your business better you will get more rewards, and the more your activity is controlled by others, the less incentive there is to try to make your business better

Question 36

give some reasons against the idea that humans can flourish in the context of capitalism and consumerism:

Answer 36

• capitalism encourages individuals/businesses to pursue wealth and become greedy, meaning they may act irresponsibly in the pursuit of gain
• capitalism reduces the way we think about the planet to a collection of natural resources for us to acquire, and consumerism encourages a wasteful approach to our products
• it’s not clear that the ever-increasing ownership of goods is something the planet can sustain for everyone, or something everyone will be able to afford
• therefore, maybe the whole capitalist economy just encourages greed, ans greed leads to greater moral corruptions

Question 37

give some reasons why globalisation encourages the pursuit of good ethics as the foundation of good business:

hints:

• statements
• asian
• own values
• perhaps

Answer 37

• this idea includes the concept that a strong ethical foundation will improve the business’ success, and TNC’S seem to have embraced this concept as shown through their mission statements, e.g. General Electric’s mission statement includes “to build, move, power and cure the world”
• some TNC’S have made sincere efforts to live up to their mission statements, e.g. microsoft has donated $1 billion to charity
• not all TNC’S are western: many of the biggest are now asian businesses with operations all over the world, including the west
• these corporations bring the ethical values of their own cultures and have to deal with the ethical demands of western society when making decisions, e.g. deciding to shut down operations in UK plants, which risks unemployment
• as societies demand more CSR from TNC’S, perhaps good ethics will actually become good business

Question 38

give some reasons why globalisation actually discourages the pursuit of good ethics as the foundation of good business:

hints:

• 19th century
• costs
• front

Answer 38

• instead of spreading the most basic foundations of ethical business (safe work place, good pay) from the developed word to the developing one, globalisation seems to have instead allowed western businesses to return to a 19th century view of business practice, with low wages and poor working conditions
• with this view of globalisation, cut throat competition is engaged in the pursuit of profits, and good ethics in the countries of production is discouraged if it increases the costs of production
• therefore from this perspective, good ethics is at most a promotional front to stop Westerners thinking too much about the people making their products and the effect this had had on their lives, e.g. their goals/dream

Question 39

explain R. EDWARD FREEMAN’S stakeholder theory:

Answer 39

• this theory is the main rival to the shareholder theory
• FREEMAN says that corporations should be run for the benefit of all stakeholders, not just for the shareholders
• executives have a duty to promote the interests of all affected parties: they must also balance their interests appropriately when those interests conflict
• often, other groups have a greater “stake” in the well being of the company than the shareholders, e.g. an employee with job specific skills has much more of a stake in the fortune of the company than a shareholder who has several diversified investments

Question 40

how can we challenge FREEMAN’S stakeholder theory?

Answer 40

• it’s extremely difficult for executives to identify+balance the interests of all stakeholders
• it gives a lot of power to management as they are the ones who balance the interests: this can be abused
• if adequate laws don’t exist, a business may be at a competitive disadvantage: e.g. trying to serve the local community best by reducing the discharge of toxic waste far below what the law require

Question 41

what did ADAM SMITH say about the relationship between employers/employees?

Answer 41

• his theory of free market competition explored the way that employers could best serve the interests of their employees
• he saw the relationship as being based on the need of the employer for labourers and the need of the employee for work
• he saw the employer as having a responsibility to employ people fairly and justly and avoid selfishness

Question 42

what did TED SNYDER say about the relationship between employers/employees?

Answer 42

• he supports FRIEDMAN, and believes that profit is more important than general matters of principle
• however, he also believed that businesses do have an element of social responsibility towards their employees and their stakeholders, but that this responsibility is secondary to the requirements to make profit
• his research led him to suggest that moving business outlets to less developed countries benefits the workers in these countries more than it would’ve benefited those left behind in the western nations

Question 43

what did KARL MARX say about the relationship between employers/employees?

Answer 43

• he saw the relationship as unequal
• to live and survive, the workers (proletariat) had to work for the employers (bourgeoisie), so were forced to accept the work on the employers terms
• bourgeoisie control the market and the proletariat have no bargaining tools except their labour
• he saw this as a relationship of exploitation and called for a revolt

Question 44

what did ROBERT SOLOMON say about business ethics?

Answer 44

• he disagreed with the idea that business ethics was a contradiction in terms
• he claimed that sound ethics is a necessary precondition of any long term business entreprise
• excellence in business must exist on the foundation of values that most of us hold dear
• he saw values such as fairness, trust and honesty as essential for a business to succeed: without these, a business will fail

Question 45

explain WILCOCKSON’S duties of employers:

Answer 45

• the employee enters a contract with his employer: he must carry out the role for which he is hired
• he is protected by employment laws and he sometimes has to balance a number of conflicting considerations

Question 46

explain 3 factors of WILCOCKSON’S duties of employers:

Answer 46

• loyalty to the company: the employee has a duty to be loyal and the employer has a duty of care (to comply with health&safety regulations)
• balance of benefits: in return for their loyalty to their employer, employees should expect to be reasonably treated
• conscience: the employee may feel they have a moral and professional duty to the public or the consumer/client: but this may involve a betrayal of loyalty to the firm, which can lead to dismissal and may make it hard/impossible for the employee to find similar employment in the future as they are now seen as a “whistleblower”

Question 47

how can we challenge WILCOCKSON’S idea of duties of employers:

Answer 47

• does the factor of conscience mean that an employee shouldn’t act if they discover unethical/illegal practices in their workplace?
• there are now organisations to protect whistleblowers
  > Freedom to care says it promotes our “ethical right to accountable behaviour from large organisations” and that employees have an “ethical right to express serious public concerns” in the work place and to go public if necessary

Question 48

give some general points relating to the relationship between employers and employees:

Answer 48

• legal requirements (safety at work/health+safety requirements)
• employees involved in the ownership of the company gain financial dividends, e.g. Co-operative group
• psychologists suggest investing in and valuing employees has a positive effect on their well being and on the company
• unhappy employees = high rate of sick leave+high turnover of staff
• good working conditions are essential (e.g. holidays, mat leave) these may cost time/money, but the company gets advantages in return: happy, well rested staff will work more effectively, be absent less and stay with the company longer
• MNC’S: should they lower pay/conditions when outsourcing work in poorer countries?
• MNC’S also need stringent checks on enforced overtime, fair wages and child labour

Question 49

explain business and the environment:

Answer 49

• economic growth is a double edged sword
  > it brings enormous benefits, e.g. greater prosperity
  > however, the constant pursuit of economic growth also has detrimental effects, e.g. environmental harm
• MNC’S face many ethical dilemmas as they consider the impact of their business practices on the local workforce and environment

Question 50

explain the Rio Earth Summit:

Answer 50

• this summit brought the issue of sustainability to the forefront of business ethics
• however, sustainable development isn’t a simple idea
• there often has to be a trade off of what WILCOCKSON refers to as the “triple bottom line” of economic, social and environmental values

Question 51

explain WILCOCKSON’S issue of bottled water:

Answer 51

• bottled water produces 1.5 million tonnes of plastic waste per year, and 80% of this is thrown away, not recycled
• water supplies are increasingly privatised by MNC’S and local communities no longer have control over what should be theirs by right
• however, there is a demand for bottled water
• so therefore, there is a duty to either improve the taste/quality of tap water or to encourage the recycling of plastic bottles and increase the CSR of MNC’S in countries where water is scarce

Question 52

explain JAMES LOVELOCK’S Gaia hypothesis:

Answer 52

• the Gaia hypothesis called for business corporations to respect the earth, or human survival is in jeopardy
• there have been calls by governments and the public for companies to reduce carbon emissions by reducing their carbon footprint, and some companies advertise when they’ve done this
• supermarkets are becoming more concerned about plastic packaging and their “food miles”
• responding to consumers and protecting their reputations has meant that concern for the environment has become an important aspect of business and has had a real link to profit

Question 53

give some benefits of globalisation:

Answer 53

consumer tastes have changed as they are more willing to try foreign products, making it easier to run a business in foreign countries, source raw material from other countries and make profit due to cheap labour+trade in other countries

Question 54

give some impacts of globalisation:

Answer 54

• large MNC’S control significant amounts of worldwide trade, they control 2/3 of all global products: are they too powerful?
• globalisation provides opportunities for countries to develop economically and become more involved in international trade, allowing less economically developed countries to become more prosperous
• could lead to exploitation: large corporations still profit because they exploit the cheap labour of the locals. They would justify this by arguing that the cost of living is lower in those countries, and that they still pay more money than the average wage in that country. However, this exploitation means that LEDC’S can’t stand on their own: they should be able to exploit their own economic potential
• a country experiencing increases in labour demands due to globalisation may lead to an increase in child labour, sweatshops, ect
• it can lead to unemployment rising in some manufacturing areas by outsourcing work (e.g. company moves from UK to Thailand could be discrimination against MEDC’S)
• most goods can be brought in most places, so countries individuality is diminishing

Question 55

how can we deal with the bad effects of globalisation?

Answer 55

• Amnesty International lead a campaign for a global human rights frame work for businesses, based on the United Nation’s norms for businesses
• the world council of churches campaigns for responsible lending and unconditional debt cancellation
• trade justice campaigns have been led by charities, e.g. CAFOD
• the United Nation’s development project aims to make the ideals of globalisation a reality, aiming to ensure that it’s just and fair: “globalisation has fundamentally altered the world’s economy, creating winners and losers”

Question 56

what did WILCOCKSON say about the relationship between business and consumers?

Answer 56

• WILCOCKSON said that “calling people consumers rather than customers suggests a subtle but significant shift in the way businesses regard people”
• by regarding people as consumers, the role of the business (e.g to make goods) is to “satisfy the needs of the consumer at whatever price the market place can bear”
• some may see nothing wrong with this view if that’s what it means to be human: at a basic level, humans need food, shelter and the exchange of goods
• however, others can see this consumer model as “demeaning to human nature” and “allowing us to be treated as objects and not as persons”
• so therefore he agrees with the consumer model, but sees why others disagree

Question 57

what did ADAM SMITH say about the relationship between business and consumers?

Answer 57

• SMITH, an ethical egoist and economist, says humans as individuals act only in regard to what satisfies their own interests and desires: they help others to benefit themselves
• a business person who thinks as an ethical egoist won’t produce a bad product as it will only bring profit in the short term, as the consumer will require a better product

Question 58

how would an ethicist interpret the relationship between business and consumers?

Answer 58

for an ethicist people have special value, so many ethical systems would resist the tendency to think of humans just as consumers

Question 59

how do consumers have power in their relationship with business?

Answer 59

• consumers have power in this relationship as if they don’t buy the product, the business won’t make a profit
• however, their power is limited against large MNC’S
• yet, boycotts of products by the consumer can affect products/reputation: e.g. there was a boycott about Nestle over them selling dried milk in poor countries
• therefore companies are eager to keep consumers on their side
• consumers are making more ethical demands, such as green products, and this affects the company’s policies: however, is it ethical to go green to increase profits?
• fair trade products have become more common, as businesses see the demand for ethical products and aim to provide them and keep them at a reasonable price

Question 60

explain MILTON FRIEDMAN’S ideas about business ethics:

Answer 60

• an economist, he claimed in the early 1970’s that “the social responsibility of business is to increase its profits”
• he claimed social responsibility in business was a delusion: to him, the only responsibility for corporations was to their stockholders
• only activities which increase profits are to be encouraged
• he claimed business should engage in “open and free competition without deception and fraud”: he calls this “the rules of the game”, and businesses must not violate these rules even if doing so would increase their profits
• he justified his theory by appealing to ADAM SMITH’S invisible hand theory

Question 61

explain ADAM SMITH’S invisible hand theory:

Answer 61

• SMITH holds that in the economic sphere, self interested actions tend to promote the general welfare
• many claim that one of the greatest virtues of capitalism is that through the workings of the invisible hand, it makes the motives of greed and economic self interest work to promote the general welfare