Ethical influence on business Flashcards
What are business ethics?
Refer to whether a person decision is thought to be morally right or wrong.
Ethical issues for business
*Ethical marketing
*Dealing with suppliers
*Animal rights
*Social responsibility
*Treatment of workers
*Fair trade
*Ethical policies
Ethical marketing
*All marketing publications should be truthful and honest
*All employees involved in marketing should make and support ethical decisions
*All groups of consumers should be treated fairly
*Consumers information should always be kept private
Dealing with suppliers
*Paying low prices meaning the supplier is unprofitable
*Delaying payments
*Threatening to withdraw orders unless unfavourable terms are accepted
*Not responding to complaints from suppliers.
Animal rights
*Not using animal skins or fur to manufacture products
*Not conducting any experiments on animals
*Not using animals for entertainment (circuses)
*Not using animal for hard labour (pulling heavy weights or ploughing land)
Social responsibility
*Using more expensive sources of raw materials that do not damage the environment
*Pay employees a higher rate than set out in minimum wage laws
*Provide facilities for local communities such as playgrounds for children. Greggs, the baker provides breakfast clubs in school
*May choose to donate a part of its profits to charity
Treatment of workers
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*Not using zero hour contracts
*Offering employees the opportunity of high quality training despite the costs
*Paying wages sufficient to allow employees a decent standard of living
Fair trade
When producers in developing countries are laid a fair price for their work, by companies in developed countries. It’s when the price paid for products gives enough money to afford life essentials (food, education)
Ethical policies
An ethical policy set out actions that a business will take to ensure that its decisions and actions are ethical.
Business ethics and profits
*Using environmentally friendly resources or fair trade products, which are more costly.
*Providing employees with high quality training
*Offering lower-priced products to certain groups such as pensioners
*Acting in a socially responsible way by taking into account the needs of all stakeholders when making decisions and not just those of the stakeholders
Advantages of ethical policies
*Charging higher prices- consumers are happier to pay higher prices for ethical products.
*Employee motivation- ethical businesses are attractive to employees
*Increased attraction to customers- customers believe business should behave morally
*Stability of suppliers- suppliers want a stable and long term relationship with ethical business.
Disadvantages of ethical policies
*Higher costs of production and lower profits- using materials that do not damage the environment or paying higher wages is normally more costly.
*The risk of being shown to be to unethical- businesses that present themselves at ethical or environmentally friendly have to ensure that they are being genuine. If they are found out not to be so, they can receive very damaging publicity.
