4.4.2 Ethics

What are business ethics?

Ethics refers to the moral principles and values that guide a business’s behaviour — doing what is right, fair, and honest, even if it reduces profit.

Why might businesses act unethically?

Often to increase profit, reduce costs, or gain a competitive edge, despite potential reputational risks.

Give an example of a stakeholder conflict between management and workers.

Management may prioritise cost-cutting, while workers want safe and comfortable working conditions.

How can owners and managers have conflicting interests?

Owners may want to maximise profit, while managers may prioritise employee wellbeing even if it reduces profit.

Why is there a conflict between profits and resource depletion?

High output boosts profit but uses natural resources faster, harming the environment.

Why are MNCs criticised for working conditions in LEDCs? (less economically developed countries)

They may pay low wages, ignore safety, or use child labour to cut costs and maximise profit.

Give an example of unethical pay or labour practices.

• Apple’s suppliers in China paid workers $1.85/hour (2015)

• Nike paid 14 cents/day in some factories

• Starbucks used child labour in Guatemala

What are 2 current environmental issues caused by MNCs?

1. Poor waste management (especially in LEDCs)

2. High emissions contributing to global warming

Give an example of MNCs involved in environmental harm.

• Coca-Cola, Pepsi, Nestlé, Unilever dispose of massive plastic waste

• Shell has caused oil pollution in Nigeria

Why are MNCs under pressure for ethical supply chains?

They’re expected to ensure their suppliers do not use child labour or exploit workers. Consumers and NGOs hold them accountable.

Give an example of child labour in a supply chain scandal.

Primark was linked to child labour in Bangladesh, causing public backlash and protests.

What are 2 key ethical marketing concerns?

• Misleading labelling (e.g. false claims)

• Inappropriate promotions (e.g. offensive adverts)

Give an example of misleading marketing.

Volkswagen falsely advertised “clean diesel” cars — paid $34 billion in fines.

Give an example of inappropriate promotion.

Nivea's “White is purity” campaign was accused of promoting racism and was pulled after backlash.