Explain ways ethics might affect the activities of a business.
CAMBRIDGE
A level and AS level
Year Examined
October/November 2022
Topic
Ethics & Corporate Social Responsibility
👑Complete Model Essay
Ethics and Business Activities
Ethics, the moral principles guiding decision-making, play a crucial role in shaping business activities. Businesses face a constant juggle between maximising profit and acting responsibly. This essay will explore how ethical considerations impact various aspects of business operations.
Impact on Business Objectives
Ethical businesses align their objectives with their ethical code. This might involve sacrificing short-term profits for long-term sustainability. For instance, Patagonia, an outdoor clothing company, prioritises environmental sustainability. They use recycled materials and donate a percentage of their profits to environmental organisations, even though these actions might reduce their profit margins (Patagonia, 2023). This demonstrates how ethical considerations can lead to a trade-off between profit maximisation and social responsibility.
Supply Chain Ethics
Ethical businesses scrutinise their suppliers to ensure ethical practices throughout their supply chains. They avoid suppliers who engage in child labour, forced labour, or operate sweatshops. Nike faced significant criticism for using sweatshops in the 1990s. This led to boycotts and reputational damage, forcing Nike to implement stricter ethical sourcing policies (Locke, 2003). This example highlights the importance of ethical sourcing and the potential consequences of unethical practices in the supply chain.
Influence of External Stakeholders
Pressure groups and consumer activism can significantly influence a business's ethical conduct. Consumers are increasingly demanding ethical products and services. For example, campaigns against palm oil use due to its link to deforestation have led many companies to seek sustainable alternatives (Greenpeace, 2023). This pressure encourages businesses to adopt ethical practices to maintain a positive public image and avoid consumer backlash.
Internal Stakeholders and Ethical Behaviour
Ethical considerations also impact internal stakeholders, particularly employees. A company that promotes fairness, diversity, and a safe working environment fosters a more motivated and productive workforce. Conversely, unethical treatment of employees, like discrimination or unsafe working conditions, can lead to low morale, high turnover, and legal repercussions. Google faced criticism for its handling of sexual harassment claims, leading to employee walkouts and reputational damage (New York Times, 2018). This case demonstrates the importance of ethical treatment of employees and the potential consequences of neglecting their well-being.
Ethical Considerations in Specific Business Areas
Ethics are tested in various business areas. In advertising, truthfulness and avoiding misleading claims are paramount. Personal selling requires ethical conduct, avoiding high-pressure tactics. Contracts should be fair and transparent. Pricing should be justified and avoid price gouging. When choosing suppliers, ethical considerations should include fair wages, safe working conditions, and environmental responsibility.
Attracting Ethical Customers
Increasingly, consumers are becoming more discerning and are willing to support ethical businesses, even if it means paying a premium. Businesses known for their ethical practices and commitment to social responsibility attract a loyal customer base that identifies with their values. This demonstrates that ethical behaviour can provide a competitive advantage by attracting conscious consumers.
Socially Responsible Activities
Ethical businesses often engage in socially responsible activities beyond their core operations. They may support local charities, implement environmental initiatives, or promote educational programs. These activities contribute to the well-being of the community and enhance the company’s reputation for social responsibility.
Conclusion
Ethical considerations significantly impact various aspects of business activities. From shaping business objectives to influencing relationships with suppliers, stakeholders, and employees, ethics are integral to long-term business sustainability. While ethical decisions might require balancing profitability with social responsibility, they ultimately contribute to building a stronger brand reputation, attracting loyal customers, and creating a more sustainable and equitable business environment.
References
Greenpeace. (2023). *Palm oil*. [Accessed on 2023-10-26].
Locke, R. (2003). *The Promise and Limits of Private Power: Promoting Labor Standards in a Global Economy*. Cambridge University Press.
New York Times. (2018). *Google Walkout: Thousands Protest Harassment*. [Accessed on 2023-10-26].
Patagonia. (2023). *Our Footprint*. [Accessed on 2023-10-26].
Explain ways ethics might affect the activities of a business.
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Introduction
This essay will explore the multifaceted ways in which ethics can impact the activities of a business. We will delve into how businesses navigate ethical considerations across various aspects of their operations, from internal practices to external stakeholder relationships, and how these considerations can influence their objectives, profits, and overall reputation.
Ethical Considerations in Business Objectives
Businesses increasingly recognize the importance of aligning their objectives with ethical principles. This means going beyond profit maximization to consider the broader societal impact of their decisions.
Compliance with Ethical Codes
A fundamental aspect of ethical business practices is the development and adherence to a comprehensive ethical code. This code serves as a framework for decision-making, ensuring that all objectives, strategies, and actions are consistent with ethical values. By establishing clear ethical guidelines, businesses set the standard for acceptable behavior among employees, stakeholders, and the wider community.
Sacrificing Profit for Social Responsibility
Ethical considerations often lead businesses to make choices that may impact short-term profits in favor of longer-term social responsibility. This could involve investing in environmentally friendly practices, fair labor standards, or community development initiatives. While such actions might result in reduced immediate earnings, they ultimately contribute to a more sustainable and ethical business model that resonates with conscious consumers and stakeholders.
Ethical Supply Chain Management
Businesses are increasingly held accountable not only for their own ethical practices but also for those of their suppliers. This has led to a growing emphasis on ethical supply chain management.
Addressing Labor Exploitation
One of the most significant ethical challenges in supply chains is the exploitation of workers. Businesses are under pressure to ensure that their suppliers are not engaging in practices such as child labor, forced labor, or unsafe working conditions. This necessitates rigorous due diligence and transparent monitoring of supplier operations.
Respecting Worker Rights
Ethical supply chain management involves upholding labor rights, including fair wages, reasonable working hours, freedom of association, and the right to collective bargaining. Businesses have a responsibility to ensure that their suppliers are providing a safe, healthy, and respectful working environment for all employees.
External Stakeholder Influence
Businesses operate within a complex web of stakeholders, each with their own interests and expectations. Ethical considerations often arise from the influence of these stakeholders, especially pressure groups and consumer activists.
Pressure Groups and Consumer Activism
Pressure groups and consumer activists can exert significant pressure on businesses to adopt ethical practices. They may engage in boycotts, public campaigns, and legal challenges to highlight unethical behavior. This pressure can influence a business's decision-making processes, leading to changes in policies and practices.
Ethical Brand Reputation
Businesses understand that their brand reputation is directly linked to their ethical behavior. Consumers are increasingly demanding transparency and ethical conduct from the companies they support. By embracing ethical practices, businesses can build trust, loyalty, and a positive brand image. Conversely, unethical behavior can lead to boycotts, reputational damage, and loss of market share.
Internal Stakeholder Considerations
Ethics also play a significant role in the internal environment of a business, impacting employee motivation, productivity, and overall workplace culture.
Ethical Considerations by Employees
Employees are increasingly concerned about the ethical behavior of their employers. They want to work for companies that share their values and engage in ethical practices. Ethical considerations by employees can influence their work ethic, loyalty, and willingness to go the extra mile.
Ethical Working Environment
Creating an ethical work environment is crucial for attracting and retaining talent, fostering employee engagement, and promoting a positive and productive workplace culture. It involves establishing clear ethical guidelines, promoting open communication, and providing opportunities for ethical decision-making.
Ethical Considerations in Business Activities
Ethical considerations can impact a wide range of business activities, including advertising, personal selling, contracts, pricing, and supplier relationships.
Advertising and Marketing
Ethical considerations in advertising include issues such as misleading or deceptive claims, targeting vulnerable consumers, and using harmful stereotypes. Businesses must ensure that their advertising campaigns are truthful, fair, and responsible.
Personal Selling
Ethical considerations in personal selling include issues such as high-pressure sales tactics, misleading product information, and unfair competition. Salespeople should be trained to conduct themselves ethically and to prioritize customer needs over personal gain.
Contracts and Agreements
Businesses must ensure that all contracts and agreements are fair, transparent, and legally binding. This includes ensuring clarity on terms and conditions, avoiding unfair clauses, and adhering to legal requirements.
Pricing Strategies
Ethical considerations in pricing include issues such as predatory pricing, price gouging, and unfair competition. Businesses should strive to set fair prices, avoid exploiting customers, and ensure that their pricing practices are transparent and justifiable.
Supplier Relationships
Ethical considerations in supplier relationships include issues such as fair payment terms, respect for supplier rights, and responsible sourcing. Businesses should strive to build strong relationships with suppliers based on mutual trust, transparency, and ethical principles.
Benefits of Ethical Business Practices
Adopting ethical business practices can lead to numerous benefits, including:
Attracting Ethical Customers
Consumers are increasingly conscious of the ethical behavior of companies. Businesses that are known for their ethical practices are more likely to attract and retain customers who share their values.
Positive Brand Reputation
Ethical behavior can enhance a business's brand reputation, leading to greater trust, loyalty, and customer advocacy. This can translate into increased sales, market share, and profitability in the long run.
Improved Employee Morale
Employees who work for companies that prioritize ethical behavior are more likely to be motivated, engaged, and loyal. This can lead to higher productivity, reduced turnover, and a stronger company culture.
Social Impact and Sustainability
Ethical businesses are more likely to engage in socially responsible activities, such as environmental protection, community development, and charitable giving. This can contribute to a more sustainable and equitable society.
Conclusion
Ethics plays a crucial role in shaping the activities of a business, influencing everything from internal practices and external relationships to brand reputation and long-term sustainability. By embracing ethical principles, businesses can build trust, attract and retain customers, foster a positive work environment, and contribute to a more responsible and sustainable society.
Tips for Writing the Essay
Here are some tips to help you write a successful A-level Business Studies essay on this topic:
* Research Thoroughly: Gather information about ethical business practices, relevant theories, and real-world examples. * Structure Your Essay Clearly: Use a clear and logical structure, with specific headings and subheadings to guide the reader. * Support Your Arguments with Evidence: Use relevant examples, statistics, and case studies to support your claims. * Consider Different Perspectives: Acknowledge different viewpoints on ethical issues and explore the potential conflicts and trade-offs. * Analyze and Evaluate: Don't just describe ethical concepts; analyze how they impact business decisions and outcomes. * Write in a Concise and Clear Style: Use precise language and avoid unnecessary jargon. * Proofread Carefully: Ensure that your essay is free of grammatical and spelling errors.By following these tips, you can write a well-structured and insightful essay on the influence of ethics on business activities.
Extracts from Mark Schemes
Explain ways ethics might affect the activities of a business.
Answers could include:
- A business is likely to assess all of its objectives to ensure they are compliant with its ethical code.
- It may lead to the sacrifice of a measure of profit to accept social responsibility.
- A business will be concerned that all the practices of its suppliers are ethical, e.g. use of child and forced labour – production in sweatshops, violation of worker rights, health and safety standards.
- A business may be subject to influence of external stakeholders, e.g. pressure groups, consumer activism.
- Ethical and unethical behaviour can also relate to internal stakeholders e.g. ethical considerations by employees will affect the working environment and hence motivation and productivity.
- Common business areas where objectives are tested by ethics include – advertising, personal selling, contracts, pricing and suppliers.
- Attracts ethical customers.
- Leads to socially responsible activities.