External influences

• Ethical Policy


  Sets out the actions that a business will take to ensure that its decisions and actions are ethical
• Business Ethics


  Involve a business doing what is morally right for its stakeholders
• Why do businesses have strong ethical policies?

  • Ideology of owners ➔ beliefs/mission statements/aims
  • Consumer pressures, as they become more aware of environmental issues and to do business with those who share their ideas ➔ this is all important for the image of business, marketing/commercial reasons ➔ aiming to promote sales and profit, can make more profit by being ethical
  • Meeting government targets e.g. CO2 emissions/litter/waste ➔ avoids fines/reduces costs
  • Avoids bad publicity ➔ loss of customers
  • Concern for employees with need for safe working environment/fair pay and treatment ➔ improves worker morale/motivation ➔ improves company performance e.g. sales, customer satisfaction etc.
  • Concern for producers e.g. fair trade ➔ improves reputation ➔ boost sales/number of customers
  • Attracts workers ➔ improves quality of staff
• Ways in which a business can be deemed as acting unethically

  • Not behaving in a morally correct manner ➔ unfair ➔ not being fair trade, unfair treatment of workers, non-recyclable, environment effects, waste
  • Exploiting the small businesses/taking advantage of the business/workers/customers
  • Forcing businesses to close/go bankrupt ➔ creating unemployment ➔ creating poverty
  • Making it hard for smaller business to break-even/survive ➔ big businesses paying lower prices so the smaller business can't cover costs
• Animal Rights


  Refers to the idea that animals should be treated humanely and protected from exploitation and abuse
• Social Responsibility


  An approach to managing business in which the interests of all groups in society are taken into account when making decisions
• Ways to Operate Ethically


  • Using fair trade goods ➔ producers get a higher price
  • Using biodegradable/recyclable packaging ➔ which will eventually rot away
  • Recycling schemes/reducing waste ➔ bins near their shops/signage
  • Food miles ➔ distance food travels from farm to consumer
  • Giving food away to charities ➔ food banks or charitable donations
  • Marketing ➔ advertising/sponsorships
  • Treatment of workers ➔ wages/conditions
  • Animal welfare ➔ the way animals are treated
  • Less packaging ➔ less to throw away
  • Reducing CO2 emissions/carbon offsetting ➔ not polluting the environment
• There is no right way to do a wrong thing
• Core Values


  • Trust
  • Quality
  • Ethics
  • Vision
• Protests Resulting from Unethical Behaviour could mean

  • Customers with ethical principles could be put off from purchasing from the business ➔ sales revenue may fall
  • Competition may benefit as customers switch from non-ethical business to ethical business ➔ sales may increase for businesses not involved
  • Businesses may be forced to behave in a more ethical manner ➔ this could see costs rise ➔ possible increased prices if the costs are passed on to the customer
  • Poor reputation ➔ could lose customers/market share
  • Suppliers difficult to obtain ➔ less stock ➔ loss of sales revenue/profit
• Advantages of having ethical policies

  • Benefit from improved worker morale ➔ concern for employees, with need for safe working environment / fair pay and treatment ➔ less absenteeism / lower labour turnover
  • Showing concern for producers, in third world countries / fair trade ➔ important for the image of the business / marketing or commercial reasons ➔ leading to increased sales with those that share concerns
  • Consumer pressures ➔ as they become more aware of ethical issues ➔ more likely to recommend business ➔ all important for the image of business ➔ leads to increased sales
  • Pressure groups ➔ less likely to give unfavourable attention to businesses who follow ethical principles
  • Premium prices for ethical products ➔ increased revenue
  • Matches beliefs of owners ➔ who have a concern for interests of suppliers / workers / customers ➔ want to make sure they do right thing
• Disadvantages of having ethical policies

  • Business costs of being ethical e.g. distribution of unsold food, increased price of fair trade goods ➔ impact negatively on profit margins
  • Difficulties in being ethical ➔ e.g. food miles / transportation costs ➔ can they be sustained?
  • Staff issues such as training / supervision may be required ➔ leading to increased costs
  • Problems re customers ➔ bad publicity ➔ when errors made ➔ not selling to some for ethical reasons
  • Price of fair trade goods ➔ cost e.g. carbon replacement ➔ growing trees
  • Packaging issues ➔ cost/alternatives/hygiene
• Consumer Laws


  Laws that have been introduced to prevent businesses from treating their customers unfairly
• Ways businesses can treat customers unfairly


  • Selling goods and services that are not as described
  • Selling unsafe products
  • Selling poor quality products or at unfair prices
  • Selling consumer information to other businesses without permission
• Legal responsibilities a business has to its customers

  • Ensure customer environment is safe
  • Ensure condition of goods is fit for sale/purpose/as described
  • Provide redress for customers
  • Ensure accurate description of goods/services
  • Ensure accurate weights/measures
• Consumer Protection Act 1987


  Prevents firms from selling dangerous products to consumers and makes businesses liable for any illness or injury caused by their products
• Unfair Trading Regulations 2008

  Makes it illegal to give consumers incorrect information on packaging and labels, and outlines aggressive selling tactics
• Consumer Credit Act 1974

  Stops businesses charging very high interest rates on consumer loans and gives consumers a right to change their minds about a loan
• Data Protection Act 1998

  Controls the use of consumers' information, requires businesses to store it securely, and prevents it being sold without consent
• Computer Misuse Act 1990


  Prevents people accessing information stored on computers that they have no right to read
• Consumer Rights Act 2015


  Provides consumers with clear rights and protection when buying goods and services, including on product quality, returns, repairs and delivery
• Areas covered by the Consumer Rights Act 2015


  • Product quality
  • Returning goods
  • Repairs and replacements
  • Delivery rights
• Key terms


  • Repair or refund
  • Consumer protection
  • Competition
  • Rights
  • Education
  • Fair
  • Relationship
  • Regulation
  • Fraud
  • Act
  • Organisation
  • Safety
  • Business
  • Complaints
  • Interests
  • Law
  • Trade
  • Government
  • Marketplace
  • Prevent
• Food and Drugs Act 1984


  Lists what can and cannot be added to food products, and makes it illegal to make or sell food in unclean buildings
• Food Safety Act 1990


  Makes it illegal to sell food to consumers that is unsafe and may cause illness, covering farmers, restaurants and shops
• Intellectual Property


  Property which cannot be seen or touched but is the result of the creativity of an individual or group, including business names, inventions, product designs, and creative works
• Examples of Intellectual Property

  • Businesses' names or brand names
  • Inventions
  • Product designs
  • Books, paintings and music
• Labelling of Food Regulations 1970

  States that packaged food must contain the ingredients listed on the label
• Copyright


  The rights that writers and artists have over their works
• Trademarks


  A logo or symbol that distinguishes the products or brands of one business from those of others
• Advertising Standards Authority (ASA)

  A self-regulated organisation that regulates the content of advertisements, sales promotions and direct marketing to ensure they comply with advertising standards
• Weights and Measures Act 1986

  States that weights and measures must be stated on packets or containers, and that the measure must be correct
• Patents


  Give the holder the right to be the only user or producer of a new invention for a stated period of time
• Nutrition information label


  • Energy 2218kJ/533kcal, Fat 34.5g, Saturates 16.1g, Sugars 2.3g, Salt 1.25g
• Most ads are legal, decent, honest and truthful, but in 2017 the ASA removed 7,099 that weren't
• The Economy


  Made up of millions of individual consumers, many thousands of businesses and governments. All take decisions on what to buy and produce.
• Unemployment Rate


  The number of people who are unemployed as a percentage of those working or looking for work.
• Employment Rate


  The percentage of people of working age who are in employment.
• GIG Economy


  Refers to businesses that use mainly temporary workers who do not receive benefits such as guaranteed hours of work or holiday or sick pay.
• Consumer Spending


  Refers to the value of goods and services bought by consumers over a time period, usually a month or year.