environment/CSR and ethics

Question 1

benefits to businesses of ethical behaviour

Answer 1

• increased sales - consumers have shown to be influenced to buy from companies which behave ethically (eg. refused to buy products from South Africa during apartheid)
• increased employee motivation - employees who are aware of business ethical activities more committed to helping company succeed - more motivated
• easier to attract better quality staff
• providing non salary benefits (eg. childcare policy) results in more loyal workers who want to stay at company - reduce recruitment costs
• increased productivity - existing employees may be enhanced by the knowledge they work for a caring firm
• increasing environmental awareness means may attract more customer loyalty
• charge premium price as made in eco friendly manner
• stimulus to find innovative ideas (eg. sainsburys invention of biodegradable fruit and veg packaging) - lead to increased sales

Question 2

disadvantages of ethical behaviour

Answer 2

• may have to decline a business opportunity which may be financially lucrative. resulting in a decrease in profits
• buying raw materials from a country with bad human rights records could be cheaper than buying from elsewhere - increasing costs
• policies on recruitment and career advancement will require updating to ensure they provide equal opportunities, environmental policies and customer protection.
• companies who publicise their ethical stance are subject to greater publicity scrutiny than others (eg. when Coca Cola took over Innocent smoothies)

Question 3

positive impacts of following CSR policies on business

Answer 3

• can add CSR branding to packaging to promote sales for example Fair Trade Logo
• may release public relations statement outlining CSR policy to general public to improve image
  > may lead to loyalty from customers
  > allow the business to target a new market of ethically conscious consumers
  > (eg. the Co-Op was the first supermarket to stock a wide range of fair trade products which enabled them to attract customers who were concerned with exploitation)
• may give funds to local charity or sponsor local community project to enhance connection to local community
• new procedures may have to be implemented to ensure non-essential equipment is switched-off when not in use

Question 4

negative impacts of following CSR policies on business

Answer 4

• may limit who a business targets with its advertising which may affect sales growth for example not targeting children or vulnerable adults
• may limit what promotions it uses for example not celebrities who have been inappropriate
• may limit where a business advertises (eg. may not advertise in certain magazines etc due to their stance on certain issues)
• may have to purchase machinery or equipment which uses less energy or lower noise pollution which may be costly to do - staff also have to be trained to use
• may look to use local suppliers to reduce carbon emissions which could increase costs
• increased R&D to find ways of reducing the level of raw materials used in production process - costly