Ethics Flashcards
In what areas can there be ethical conflicts for businesses?
Between different stakeholders, pay and working conditions, environmental issues, marketing issues and supply chain considerations
Explain the stakeholder vs shareholder conflict
Shareholders have a motive of profit and other stakeholders have wider motives. There is conflict as to what approach a business should choose to keep all stakeholder satisfied.
Explain the pay and working conditions conflict
Many MNCs move their operations abroad to take advantage of cheap labour costs in LEDCs. However this brings the accusation of exploitation of workers as well as ethical questions asked about lack of jobs offered in their home country.
Explain the environmental considerations made by a business
Developed countries have strict environmental legislation, prompting MNCs to relocate to LEDCs which have more lax environmental regulations. This saves costs and helps them to remain competitive but damages the environment.
Explain the supply chain considerations made by a business
Complex supply chains lead to unethical practises by suppliers (exploitation of labour, anti-trade union activities, poor health and safety) which can often be overlooked by the MNC.
This can be rectified by the MNC using backwards vertical integration to buy suppliers, so they can control them.
Explain the marketing considerations made by a business
Unethical conduct by MNCs occur when they exploit the weaker regulations of LEDCs - usually in developed nations marketing legisalation, such as the misleading labelling of products is strictly controlled.
Define STAKEHOLDER CONFLICT
Stakeholder all ultimately have different objectives for a business and when a decision is made, there will be some disagreements between them.
Define ENVIRONMENTAL CONSIDERATIONS
Environmental considerations are external influences that impact on the behaviour of individuals and businesses in an attempt to reduce their negative impact on the natural environment.
Define SUPPLY CHAIN CONSIDERATIONS
Supply chain considerations factors that influence business behaviour when it comes to the network of organisations involved in the production of their products.
