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Business Ethics - Issues

Author: Jim Riley  Last updated: Sunday 23 September, 2012

You’ll find lots of examples of business ethical decisions and dilemmas in areas such as:

Examples of typical business areas involving ethical issues

Let’s take one of the above – suppliers.

A business cannot claim to be ethical firm if it ignores unethical practices by its suppliers – e.g.

  • Use of child labour and forced labour
  • Production in sweatshops
  • Violation of the basic rights of workers
  • Ignoring health, safety and environmental standards

An ethical business has to be concerned with the behaviour of all businesses that operate in the supply chain – i.e.

  • Suppliers
  • Contractors
  • Distributors
  • Sales agents

The two articles below provide a good example of the ethical issues that arise in the supply chain: click on the images to read the stories:

Primark and business ethics

Pressure for businesses to act ethically

Businesses and industries increasingly find themselves facing external pressure to improve their ethical track record.  An interesting feature of the rise of consumer activism online has been increased scrutiny of business activities.
Pressure groups are a good example of this. Pressure groups are external stakeholders they

  • Tend to focus on activities & ethical practice of multinationals or industries with ethical issues
  • Combine direct and indirect action can damage the target business or industry

Some examples of business-related pressure groups can be found from the following links:

Business pressure groups

Direct consumer action is another way in which business ethics can be challenged. Consumers may take action against:

  • Businesses they consider to be unethical in some ways (e.g. animal furs)
  • Business acting irresponsibly
  • Businesses that use business practices they find unacceptable

Consumer action can also be positive – supporting businesses with a strong ethical stance & record.  A good example of this is Fairtrade.


Is ethical behaviour good or bad for business?

You might think the above question is an easy one for businesses to answer? Surely acting ethically makes good business sense? As with all issues in business studies, there are two sides to every argument:

The advantages of ethical behaviour include:

  • Higher revenues – demand from positive consumer support
  • Improved brand and business awareness and recognition
  • Better employee motivation and recruitment
  • New sources of finance – e.g. from ethical investors

The disadvantages claimed for ethical business include:

  • Higher costs – e.g. sourcing from Fairtrade suppliers rather than lowest price
  • Higher overheads – e.g. training & communication of ethical policy
  • A danger of building up false expectations
Campaign for Better Transport RSPCS





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Revision quizzes for business students

Starting a Business

Sources of Finance for a Startup
Franchising
Cash Flow Forecasting for a Startup
Creating & Protecting Business Ideas
Startups and Understanding the Market
Market Research for a Startup
Locating the Startup Business
Choosing a Legal Structure for a Startup
Employing People in a Startup
Generating and Protecting a Business Idea
Using Breakeven in Decision-Making

Finance

Revenues
Breakeven Basics
Costs, Revenues and Profits
Business Costs
Using Budgets
Using Breakeven in Decision-Making
Investment Appraisal Basics
Financial Strategies
Measuring and Improving Profit
Improving Cash Flow
Working Capital
Balance Sheet
Income Statement
Financial Efficiency Ratios
Profitability Ratios and ROCE
Liquidity Ratios
Gearing

Marketing

Competition
Products & Brands
Place (Distribution)
Promotion
Pricing
Price Elasticity of Demand

Business Organisation

Basics of Business Growth
Business Activities
Legal Structure Basics
Franchising
Sole Traders and Partnerships
Limited Companies
Generating and Protecting a Business Idea
Organisational Structures

People

Working in Teams
Communication Basics
Communication Methods
Workforce Planning
Recruitment, Selection & Training
Employee Motivation
Organisational Structures

Operations

Operational Objectives
Critical Path Analysis
Scale and Resource Mix
Lean Production
Capacity Management
Customer Service Basics
Managing Quality
Operational Decision-making
Using Technology in Operations
Working with Suppliers

Economic Environment

Economic Sectors
Government Spending & Taxation
Inflation
Unemployment
Interest Rates & Monetary Policy

Business Strategy

Leadership styles
Business Culture
Change Management






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