Business ethics

Business ethics

1. Key issues

   • Businesses are covered by code of ethics. Which concern both employers and employees. Eg. employees should avoid any conflict such as investing in competing firms and not accepting bribes. Just as employers should treat their workers well, train them etc.
   • Businesses tend to have an environmental policy that aims at sustainability as well
   • But a business may not always behave in an ethical way, e.g it may employ child labour or run sweatshops etc.

2. when a business behaves unethically, an employee may decide to inform the authorities, known as whistleblowing. If someone finds out that their company has worked unethically, do they have the responsibility to blow the whistle? They could lose their job which they may not be compensated for. They risk the business and their friends and co workers could suffer too.

3. Business and consumers

   • The consumers role is important as they could take action against : businesses they consider to be unethical (real fur), business acting irresponsibly, business practises they find unacceptable.
     • consumers are also good because of business practices such as Fairtrade. (consumers are needed to benefit the people)
   • Does being ethical help?
     • yes
       • higher revenue
       • improved brand and business recognition
       • new sources of finance
     • no
       • higher costs
       • higher overheads - e.g training and communication of ethical policy
       • danger of false expectations
   • Case studies
     • Ford Pinto - The wrong engine was used in the car, was more expensive to recall all the cars and less expensive to let people crash and die. They went with the second option
     • Pacific Gas and Electric - california had it's water contaminated with hexavalent chromium. Maximum damages of $400 million
     • Primark child labour - 'outed' on a BBC documentary 2008, Primark then halted all business with those suppliers, cancelling millions of pounds of orders and stated the suppliers had deceived Primark
     • The Body Shop - used natural ingredients and also was an activist for the environment, although some people argue they were a 'sell out' when they were bought by L'oreal as they test on animals and The Body Shop doesn't. People argue whether they do test on animals or not because of the change.
     • Bhopal, India 1984 - gas leak which killed 8,000 deaths in total. The cause has been speculated to be slack management and deferred maintenance

4. Socially responsible - a belief that businesses have a responsibility towards society and the environment as well as their own interests

   • Milton Friedman - argued companies have a duty only to their shareholders (i.e. to increase profit); for it is society to set the other ethical rules.

5. Business and the environment

   • Natural habitat is destroyed as factories are built. Growth leads to energy demands and to the building of more and more power stations. Pollution is rife. 1850s Sheffield it wasn't possible to see the sun.
   • The devastation that occurred in the West is now happening on a greater scale in large scale growing economies. China is the fastest, which includes lots of pollution. 2010 - more than 200 million did not have access to clean drinking water.
   • Scholars argue that the damage is only temporary
   • However, a child in Britain, France or America will consume, waste and pollute more in a lifetime than 50 children in developing nations. The poverty of a nation may cause its government to take 'shortcuts' with respect to the environment.

6. Business and globalisation

   • It's the process of increasing connections between people, companies and countries around the world. A key feature is the growth of huge companies that dominate markets.
   • Rapid developments in IT have enabled these companies to operate across the world much more easily, and now it is possible to buy a McDonald's in Chile, Croatia, France etc.
   • It has brought world wide ethical problems for business. E.g. injustice towards poorer countries : trade is not always fair because of trade barriers ; wages in less developed countries are much lower ; safety standards may not be upheld often with disastrous results such as Bhopal disaster in 1984 which is still having an affect on people today