Ethical considerations

• Ethical considerations

  Having morals and principles and 'doing the right thing', irrespective of profit
• Ethical business

  Acts in a socially responsible way, doing what is right, even if it is not required to do so by legislation or in order to maximise profit
• Stakeholders

  • Workers
  • Suppliers
  • Customers
• Treating workers ethically

  • Paying a fair wage
  • Providing good working conditions
  • Allowing flexible working
• Treating suppliers ethically

  • Paying fair prices
  • Having reasonable expectations
  • Paying bills on time
• Treating customers ethically

  • Exceeding customers' expectations
  • Only providing what customers want
  • Giving clear and accurate product and service information
• Sourcing supplies ethically

  Ensuring suppliers and their workers are treated fairly, and paid a reasonable price
• Ethically sourced supplies

  More expensive, so buying them is a deliberate business decision as it could make a business less competitive, leading to lower sales and reduced profit margins
• Businesses will usually need to put in place checks to ensure that their suppliers are themselves acting ethically, which will also incur additional costs
• Businesses that behave ethically

  Can benefit from good publicity, which is likely to attract customers and increase sales
• Businesses that do not behave in an ethical way

  More likely to receive bad publicity and get a poor reputation
• Globalisation

  Businesses operating internationally or on a global scale
• Globalisation

  • Involves most of the world's economies working together to enable businesses to produce and trade goods and services
  • The three main elements are imports, exports, and business location
• Imports

  Goods or services which enter a country
• Exports

  Products and services produced by a country and sold to other countries around the world
• Business location

  Globalisation involves businesses buying, selling and producing around the world
• Examples of globalisation

  • Buying materials wherever they are available at the lowest cost
  • Producing where labour is most productive
  • Selling products with a reputation for being from a certain part of the world (e.g. Italian pizza and pasta)
• International trade

  The buying and selling of goods and services between different countries
• Multinational companies (MNCs)


  • Companies that operate in a number of countries around the world
  • Also known as transnational corporations (TNCs)
  • Some of the biggest retail, technology, food, coffee and soft drinks brands operate in many different countries
  • They often adapt their products to suit consumers in the different countries while keeping their brand image recognisable around the world
• Glocalisation


  A fast food chain might sell beef burgers in the UK or the USA but develop a spicy fajita wrap to sell in Mexico
• Changing business locations and multinationals

  1. As businesses grow and increase the scale of their operations, operating overseas in several countries becomes a real possibility

  2. For a food takeaway business, this could mean opening outlets in other countries to access new markets of customers

  3. For an online business, this could mean developing a website in a foreign language and opening distribution centres close in a foreign country
• Advantages of increasing the scale of operations

  • Access to more customers
  • Potential for more sales and profit as selling in several countries increases the market share for the business
  • Potential to grow product range with increased sales
  • Increased brand awareness
• Disadvantages of increasing the scale of operations

  • Increased responsibility
  • More risk - potential for failure as local businesses may find it difficult to compete with larger companies for price and quality and could be forced out of business
• Distribution centre

  A distribution centre stores products in a warehouse or other large building, to be distributed to retailers and wholesalers