Chaoter 9: Ethics and Sustainability

Question 1

What factors determine whether an action is right or wrong? (4)

Answer 1

1. The consequences (do the ends justify the means).
2. The motivation behind the action.
3. Guiding principles (treat others as you would like to be treated).
4. Key values (such as the importance of human rights).

Question 2

What are the fundamental principles? (5)

Answer 2

1. Objectivity= being unbiased.
2. Integrity= being honest.
3. Confidentiality= not disclosing private information.
4. Professional behaviour= complying with the law.
5. Professional competence and due care= possessing the relevant skills.

Question 3

Why is business ethics important for individuals? (3)

Answer 3

1. Consumer and employee expectations have evolved over the years.
2. Consumers may choose to purchase ethical items eg fair trade even if they’re more expensive.
3. Employees won’t blindly except orders that they believe are unethical.

Question 4

Why are business ethics important for the organisation? (4)

Answer 4

1. Good ethics should be seen as a driver for profitability rather than as a burden.
2. An ethical framework is part of good corporate governance and suggests a well run business.
3. Investors are reassured about the company’s approach to risk management.
4. Employees will be motivated knowing the work in an environment of good ethical corporate behaviour.

Question 5

What are the main ethical dilemmas you could face? (4)

Answer 5

1. Creative accounting.
2. Director’s pay= may come under scrutiny if the company is underperforming, might not be justified.
3. Bribes= used to benefit an individual at the expense of the organisation.
4. Insider trading= using private information to personally benefit.

Question 6

Why is creative accounting used (1)?

What is an example of creative accounting? (1)

How might it affect the business? (1)

Answer 6

To boost or suppress reported profits.

Eg suppressing undesirable transactions, understating provisions or recording transactions in the wrong period.

It could affect the performance and position shown by the financial statements influencing the stakeholder’s understanding of the company.

Question 7

What ethical dilemmas might production face? (3)

Answer 7

1. Whether they should produce something at all eg guns, tobacco etc.
2. Whether they should be concerned with the effects on the environment during its processes.
3. Whether they should test on animals.

Question 8

What ethical dilemmas might sales and marketing face? (3)

Answer 8

1. Whether they should engage in price fixing or other anti competitive behaviour.
2. Whether they should use targeted advertising at children.
3. Whether they should advertise by junk or spam emails.

Question 9

What ethical dilemmas might HR face? (3)

Answer 9

1. Employees should not be favoured or discriminated against because of gender, religion, race, age etc.
2. Employment contracts must be a fair power balance between employee and employer.
3. The office must be a safe and healthy place in which to work.

Question 10

What are a company’s internal policies? (2)

Answer 10

1. A brand generalisation eg corporate ethics statement.
2. Or a specific set of rules eg corporate ethics code.

Question 11

What might a standard code of ethics contain guidelines on? (3)

What does an ethics/ compliance officer do? (2)

Answer 11

Honesty, integrity and customer focus.

1. They monitor application of the policies.
2. They are also there to discuss ethical dilemmas with employees.