2.1.4 Ethics, the environment and business

ethics

weighing up decisions / actions on the basis of what is morally right and not for personal gain

business ethics

• high ethical standards

• good consumer image → attracts customers / stand out from competitors (USP → premium price)

• high sales and profits

furthermore

• high ethical standards

• makes attractive to some investors

• more likely to raise funds/sell shares to ‘ethical investors’

• means expansion / growth

examples of ethical behaviour by a business

• treating workers & supplies fairly

• being honest with customers

• ethical sourcing of materials

• investing in community

• meeting gov requirements and legislation

• caring for environment & operating sustainably

• disposing waste materials appropriately

• providing cruelty free products

impact on a business if they charge consumers very high prices
+ consumers have no choice of product

• consumers don’t buy products as not given much choice

• business make more profit as consumers have no choice

• consumers not able to afford prices → only have to live of bare necessities

impacts if the business pays low wages & provides poor/unsafe working conditions

• may not attract workers in order to keep business running

• may have a bad reputation so may not attract any new investors

• workers will not be working their best & will produce low quality products

impacts if the business gets cheap prices from their suppliers but they’re unsure if the suppliers behaves ethically

• more customers so they’re able to compete → increases sales rev

• consumers will buy more products as cheaper

• could be a problem is suppliers are exposed

impacts if the business has ignored local community by polluting the local area

• may gain a bad rep → people won’t buy from them

• ruined environment

Advantages of ethics

• sales might increase due to good publicity

• improved brand reputation

• employees like working for the business easier to recruit and retain staff

• meet owners objectives

disadvantages of ethics

• costs may increase and profits decrease

• publicly may not persuade consumers to buy

• quality/appearance of products may not be as good

tradeoff

a compromise between one thing and another

The impacts of a business deciding to be ethical

if a business chooses to prioritise ethics

costs increase

which means less profit

pressure groups

• an organisation founded to achieve a specific objective

• the focus may be issues such as animal rights, workers’ rights , the environment and world poverty

• their aim is likely to change the behaviour of business and/ or government

• eg. Mclibel case

how can pressure groups change/influence behaviour?

• customer boycotts

• protests

• lobbying → send frequent letters, calls + emails to business

how pressure groups develop

• pressure group starts as a campaign against the business

• consumers have new info about the product and now don’t trust the brand

• revenues fall, sales fall, profits fall

• business changes the way it trades - to be more ethical

fair trade

• producers and retailers being ethical in the way they purchase goods and raw materials from developing countries

• they pay a higher price so the workers in the developing countries can receive higher wages and experience a better standard of living

sustainability

the avoidance of the depletion of natural resources in the order to maintain an ecological balance (the balance between all creatures in nature)

impact of sustainability

• business and consumers both have a responsibility that any growth achieved is sustainable but there will be costs

• eg renewable energy will more expensive, recycling will increase costs and choosing more environmentally friendly production methods will mean higher prices

What options do the government have to enforce environmental considerations?

• legislation

• tax

• quotas limit on amount of pollution (if you go over you pay a fine)

• subsidies

• agreements (eg COP26-30)

Pressure groups impact on product

• may be objections to products produced by workers that have been exploited/animal tested products

• products could be made more ethically ,based on environmental friendly processes

• supply chain might be changed to insure no issues with suppliers

Pressure groups impact on product (avoid if comes up on exam)

• if too high a price is charged for basic /essential goods may be pressure group protests

• there has also been successful pressure group campaigns to reduce price charged by campaigns to reduce the price of some medicinal drugs

• eg Treatment action campaign used peaceful protests and reduced price of anti-Aids drugs this resulted in changes to government policies

Pressure groups impact on promotion (easiest)

• pressure groups may object to persuade promotional campaigns

• bulk offer promotions by businesses are seen by some pressure groups as encouraging waste

• there’s also been protests against adverts for addictive products or payday loan companies

• eg. inappropriate ads at 9:00 due to kids

• eg anti - smoking campaign → no packaging for cigarettes no ads

• eg greenpeace → uses professional advertising campaigns against governments and businesses that are not in favour/protecting the environment/preventing climate change

Pressure groups impact on place ( a bit harder)

• with the growth of e-sales there has been widespread closure of retails and financial outlets like shops,banks and post offices

• there have been various local and national pressure

• eg local pressure group campaign to keep post office open

Explain one drawback a business could face as a result of pressure group activity (3)

• increased costs

• a pressure group may be campaigning for a business to act more ethically for example a fair wage for workers will increase costs

• the business may result in having a decreased amount of profit

Explain one advantage of a business being environmentally responsible (3)

• good reputation

• the business is able to attract more customers as they stand out from competitors/gives them a competitive advantage

• the business will have more sales revenue increasing profit

• furthermore the business will be able to charge premium prices