Business ethics Flashcards
Define the term ethics.
Moral principles that govern a person’s behaviour or the conducting of an activity
Define the term morals.
Standards of behaviour; principles of right and wrong
Explain ethical decisions.
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)
A prime example of a pharmaceutical company’s exploitation of medicinal availability is GSK created a monopoly of HIV/AIDS medications in South Africa that resulted in drug availability to only 10 percent of the people who needed it.
Explain the ethics vs profitability conundrum of deepwater horizon.
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
Explain the ethics vs profitability conundrum of Nestle.
Nestlé has been voted the least ethical company of the last 25 years by readers of Ethical Consumer.
The Swiss food company ‘won’ with 15% of the vote, finishing just above Monsanto (14%) and the UK’s number one tax avoider Amazon (12%).
Nestlé is currently subject to the longest ever running consumer boycott. For over 20 years Baby Milk Action has called a boycott of the company for its irresponsible marketing of baby milk formula, which infringes the International Code of Marketing of Breast-milk
Explain the different corporate social responsibility of shareholders and stakeholders.
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
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
Explain the ethical issues of bankers bonuses.
Bankers are set to be awarded £5billion in bonuses, including £2.2billion for staff at scandal-hit HSBC.
The vast sum is expected to be paid out to bankers at HSBC despite it being embroiled in a tax dodging row.
And Royal Bank of Scotland, bailed out by the taxpayer after the financial crash, is likely to hand its staff £500million in bonuses.
Explain the ethical issues of sponsorship.
Christiano Ronaldo earns $8 million a year from sponsorship by Nike alone, but his total endorsement deals add up to $21 million a year
This is on top of his $200,000 a week football salary
What is corporate social responsibility?
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
Explain the impact of CSR on us as citizens.
CSR means that a business considers the impact that its decisions have on us as citizens
The business also considers what responsibilities they have towards society as stakeholders
It is generally accepted that CSR principals are incompatible with profit maximisation objectives
However many businesses now use their CSR credentials as a selling feature of their products, services or brands
List some corporate social responsibilities.
Reduce climate change positive links with community Using sustainable resources Ethical trading policies Positive regard for human rights in employment Reduce negative environmental impact
What are the advantages of a CSR approach?
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
What are the disadvantages of a CSR approach?
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?
