Ethical factors

• What is ethics?

  The standard of morally right and wrong conduct in business
• An ethical business

  Considers the needs of all stakeholders

  Sets objectives and considers strategy

  Considers the social responsibilities
• Employees 


  Seen as valuable assets to the business

  They take care of their health and safety, working conditions and wage
• Suppliers

  Must be treated fairly

  This means sticking to contract agreements, no renegotiation, paying on time and not pressuring suppliers
• Customers

  -They want a quality product or service at a fair price.

  -Businesses that act unethically fail to fulfill this moral commitment to customers.
• Environmental ethics

  Environmental pressure groups have become increasingly effective in influencing business decision makers.
• Animal welfare 


  Some businesses claim to be ethical

  Grocers look down the supply chain to ensure that businesses were telling the truth

  Eg. Free range products
• What is corporate social responsibility (CSR)?

  CSR is the concept that businesses have a responsibility that goes beyond making profit for their shareholders.

  Businesses need to monitor and take responsibility for the impact on both social welfare and environment.
• Social and environmental audits (SEAs) 


  -How well do we ensure human rights

  -Do we use suppliers who use child labour?

  -Do we discriminate when recruiting?
• Ethics and profitability


  • Cost are likely to rise (paying a 'living wage', providing sport facilities)
  • Revenue are likely to fall (less advertisement during seasonal sales)

  However,

  • Acting ethically can improve public relations (E.g horse meat scandal)
  • Some customers are attracted to those businesses that adapt an ethical approach (using Fair-trade products)