43. Business Ethics

Moral principles that should underpin decision making. Decisions made on ethical grounds may reject most profitable solutions in favour of one of greater benefit to society as well as the firm.
What are business ethics?
1. Code of behaviour considered morally correct. Shaped by: behaviour of parents, religion, peers, society (live and work).
2. Important ethical considerations:
  1. Dealing honestly and fairly with customers
  2. Protecting the envrionment (sustainable raw materials)
  3. Testing products on animals
3. Two major influences shape moral behaviour of businesses:
  1. Individuals who have their own moral codes, values and beliefs
  2. Cultures shape corporate ethical standards
The developing ethical environment
1. Cadbury and Nestle convert to Fairtrade.
2. Sustainability. Supply products in such a way as to not compromise the lives of future generations.
3. Reducing carbon footprint.
4. e.g 'Eurostar goes carbon neutral'
Business ethics and business objectives
1. 'Why do businesses exist?' make maximum profit? Most people would consider it to be unethical to make staff redundant if to add bonuses.
Ethical codes of practice
1. 'meaningfully contribute to local, national communities in which we trade'
2. As a response to consumer expectations and competitive pressures.
3. Intended to improve behaviour and image
4. Companies publicise them - important element of marketing strategy.
5. Public relations exercise?
Pressure groups and ethics
1. 'Greenpeace' - environment
2. 'Action on Smoking and Health' - opposes tobacco
3. 'Compassion in World Farming' - end factory farming
The ethical balance sheet
1. Advantages
  1. Marketing
    1. Consumerism (more well-informed) so can think carefully before spending money
    2. Ethical behavior = USP (Body Shop)
    3. 'Caring image' = increase sales
  2. Public relations
    1. Enhance image.. increase sales and profits
    2. Co-op not lend to company in 'arms trade', strong supporter of Fairtrade.
  3. Pos effects on workforce
    1. Recruit staff: better qualified, motivated, large numbers apply.
    2. Innocent Drinks low labour turnver
2. Disadvantages
  1. Reduced profitability
    1. Face higher costs
    2. Turn down investments
    3. Cant expolit cheap labour
Ethical Behaviour: future developments
1. Ethics will be of increasing importance
2. The adoption of ethical practices
  1. 80% businesses in UK have implemented ethical code of practices.
3. The commercial success of high-profile 'ethical' companies
  1. Toyota - commitment to sustainable methods of production
  2. Co-op £117m operating proit 2010, shows ethical principles can be highly attractive to customers.

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43. Business Ethics

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	Created by charcrawford over 10 years ago