Changing business aims and objectives III – Business Ethics

GCSE Business studiesUnit 2

Topic 6

Learning objectives

£ Am I able to recall what an ‘ethical’ business involves.

££ Can I analyse the benefits/drawbacks of a firm acting more ‘ethically’.

£££ Am I able to evaluate the reactions that a firm’s stakeholders will have

What are ethics and what do they

involve for businesses?

Increasingly customers, employees and investors are interested in all the different

aspects of a businesses activities.

They do not just want to know what a business offers at what price. They want to know how

the product was made, what was used in the production process, where it was made and how the suppliers and employees were

treated.

Ethical and environmental considerations

Business ethics refers to what is regarded as right and wrong behaviour. For example we might want to know:

• How products were made (abroad? Staff paid fair wage? Child labour?)

• Whether or not customers were informed about the ingredients of a product?

• Are suppliers paid on time or are they kept waiting?

Ethical and environmental considerations

Environmental considerations include:• Does the company recycle and if so how

much?• What does the company do to conserve

energy?• How does the company control its

emission levels?

Video – Child labour

Consider how you think the issues in the video will effect Nikes sales

http://www.youtube.com/watch?v=dJiOSuG9gZ4

Some companies such as Shell and BP, now produce reports that are available to the general public to show what they do to reduce their impact on the environment

Bigger businesses are more likely to have pressure put on them to behave in an ethical way and to

make sure they protect the environment. This is because they are usually better known than smaller businesses so

people are more interested in their practices. Also the media will pay them more attention

Acting ethically may sometimes increase costs.

These costs must be weighed up against less ethical behaviour. The

business could suffer a loss of demand if employees and customers do not approve of its actions.

Do you remember the fizz & burp drinks co.?

Are you ready for another go in my time machine to see what

the are up to…

2020

The Fizz & burp drinks co. have been successfully exporting their range of soft drinks to the European, Asian and American markets for the past four years.

It has come to the point where the Brentwood plant has reached its maximum capacity, yet demand globally for Fizz & burps products is still growing.

Your task• You have all been set into groups• Each groups will take on the role of a particular

stakeholder of Fizz & burp (see handout)• In ten minutes we are going to have a board

meeting to decide how Fizz & burp is going to react to the increased demand

• You must prepare some suggestions to put forward in the meeting, consider not only your needs but also the ethical implications of your suggestions

Meeting feedback

• What ethical issues were raised?• Were either side holding back any

information which may have swayed the boards decision?

• Did all three groups conduct themselves in an ethical way?

• What came first, profits or ethics?