BTEC Diploma Business Unit 37 Understanding business ethics

So exactly what do we mean by business ethics? If you have watched the Spiderman movies you will have heard Peter Parker say that with great power comes great responsibility and in the 2007 movie we are told that we are defined by the choices we make. We have choices, businesses have choices, and these choices always have consequences. Each set of consequences requires evaluation in advance so that the likely impacts can be assessed. Simple stuff, really. Business ethics is about reflecting on the extent to which businesses operate within a system of morals; e.g. knowing and acting according to what you believe is good, and taking others into consideration. There are benefits and drawbacks of businesses operating ethically and certain business practices may be considered acceptable or unacceptable from the standpoint of particular stakeholders. For example, if a business stops making products that are harmful to the environment, what are the implications for the employees who may lose their jobs? This then affects the shareholders when they do not receive a return on their investments. It also affects the supply chain as supplier businesses are affected.

Issues under the umbrella of business ethics are categorised as: Corporate social responsibility Environmental sustainability

Corporate social responsibility covers issues such as business practices, human rights, working conditions, trading fairly

CSR is about how companies manage the business processes to produce an overall positive impact on society. (Mallen Baker, Founding Director, Business Respect).

"Corporate Social Responsibility is the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large" The World Business Council for Sustainable Development "Making Good Business Sense" by Lord Holme and Richard Watts

Examples of CSR activities Issues relating to advertising in terms of legality, decency and truthfulness are part of business ethics for example, Benettons controversial advertising campaigns, and the implications of advertising using or aimed at children fast food advertising on the television has been banned in the UK. Reducing costs and increasing revenues by moving production operations to lessdeveloped countries where wages are lower. Seeking lower wages is not of itself unethical but paying lower than subsistence wages and providing bad working conditions are seen as unethical. the use of genetically modified foods testing pharmaceuticals on animals promoting alcohol to young people businesses operate sustainable activities such as replanting trees, providing seed for crops, helping out with clean water projects and so on. Environmental sustainability Different types of businesses face their own particular environmental issues. For example, factory processes may use large amounts of energy or involve hazardous substances, while office-based businesses are more concerned with reducing energy and water waste. Transport businesses may use large amounts of fuel and create significant vehicle emissions. Businesses have a legal responsibility for the impact they have on the environment and there are laws and regulations to abide by. Who is affected? Unethical behaviour in business doesnt just affect the developing world of LDCs (lesser developed countries and MDCs (more developed countries). Nor is it always about one country taking advantage of another. Unethical behaviour can happen in business and amongst workers within the industrialised world of developed countries (UK, Europe, USA). Nor is it just big organisations who exploit their power. Multi-National Corporations (MNCs) are powerful because of their sheer size but it doesnt mean that they are the least ethical of businesses. MNCs are companies which operate in many different countries beyond the one where they are registered. An MNC sells its products and services globally and often has offices and staff in several countries. Its products are often made step-by-step across several continents. The world has a rapidly growing number of MNCs, which are becoming increasingly powerful.