Ethical legal and environmental factors

Question 1

What is an ethical business

Answer 1

Considers the needs of all stakeholders when making decisions.

Question 2

What are the key ethical issues for different groups of stake holders

Answer 2

1 employees - most valuable asset take care of their health and safety and pay living wage. - including paying workers down the supply chain a fair price
2 suppliers - sticking to agreed contracts , sharing burdens of developing /suppluing products and paying on time
3 customers - fulfil moral commitment
4 environmental ethics
5 animal welfare - look down supply chain to ensure farmers treat livestock well

Question 3

What is corporate responsibility

Answer 3

The concept that a business has a responsibility to go beyond profits for their shareholders but must take responsibility for the impact they have on social welfare and the environment

Question 4

Some large companies produce social and environmental audits along with their accounts what might they address in such audits

Answer 4

1 how well they ensure human rights
2 do they use suppliers who use child labour
3 do they pay the correct pay for the job
4 how many women are there in senior positions
5 do they support any local charities
6 have they broken any laws
7 do they compete fairly
8 do they comply with all health and safety legislation
9 is advertising truthful
10 have they caused pollution

Question 5

How does acting ethically effect profitability

Answer 5

1 costs are likely to rise eg paying a living wage compared to minimum wage
2 revenue is likely to fall eg a construction company that refuses to offer a bribe to government of 3rd world country will not get the project
3 some customers are attracted to businesses that adopt ethical practices growth of fair trade movement
4 acting ethically can improve public relations nad have positive impact on image

Question 6

Name some areas business legislation covers

Answer 6

1 company law -
LTDs employ company secretaries to ensure the on-any meets required legislation as failure can to company directors being fined , struck off or compulsory liquidation
2 employment legislation - there are a number of different types which regulate the relationship between employees and employer
2B health and safety legislation - employer has responsibility to ensure a safe working environment and employees understand the risks.
2C employment rights - regarding employee terms and conditions, they should have a written contract stating pay, holiday entitlement, rights to maternity pay, pension, disciplinary procedures and length of notice
2D anti discrimination legislation - workers are protected in a number of areas age, race, sex, sexual orientation
3n consumer protection — legislation clarifies the contract between customer and supplier and how the supplier is required to behave
4 minimum wage legislation - introduced April 1999 to boost pay for low paid workers it is reviewed and goes up each year. Younger workers have benefitted most
4B. Argued minimum wage has made UK unattractive to foreign investors and other have moved production from uk
4C overall wage cost have invcreased becasue pressure to keep wage differentials in place so as the lowest paid workers wage increase so must the wages of the next level employees
5m competition policy - focuses on controlling the abuse of market power of big business, behaviour of existing monopolies is monitored by CMA who also monitor mergers or companies acting together to limit competition
6 intellectual property law - covers legal rights of companies in regards to design, inventions and artistic work
6B trademark legislation covers design and artwork such as branding and logos
6C patent law covers inventions giving rights to the inventor for a limited time to stop others from making a similar product
6D copyright law gives creators of literary, dramatic, musical or artistic work rights to control how their work is used
7 Data protection - concerned with how personal data is gathered used and kept secure. Businesses are required to have a data protection officer data gathered must be used fairly, for a limited and specific purpose, accurate, kept no longer than necessary, handled according to a persons rights and kept safe and secure

Question 7

What is the impact of legislation on a business

Answer 7

To improve or adjust to comply can increase costs.
2 minimum wage legislation has impact