Business 3.5

*BUSINESS ETHICS  *ASPECTS INCLUDED 

Examples of unethical behvaiour: producing large amounts of waste, paying very low prices to suppliers, selling harmful products, poor pay, mistreatment of animals, unethical suppliers. 

Ethical Behaviour likely to lead to : attract more customers, provides USP, can charge premium prices, repeat purchase, good brand image > promotion through word of mouth > save on advertising costs. Less likely to experience pressure group issues. Higher sales. Can improve employee motivation > increase in productivity > reduction in cost per unit.

IF ALL BUSINESSES BECOME ETHICAL THESE ADS DISSAPEAR.

However you must consider your target market and whether the + outweigh the - 

Negatives : Increases costs,  ARE THE COMPETITION ETHICAL?? 

However being unethical can lead to a poor brand image > pressure groups > worsen reputation > less customers / boycot products. 

Possible Trade Offs with ethical behaviour. TRADE OFFS = when something is given up in order to gain/achieve something else. Possible trade off between profit and ethical behaviour. 

Ethical Actions : Decrease profit, (paying higher wages, recycling and using ethical suppliers is likely to increase costs.)  BUT it's appealing to customers, and staff. Could balance costs.

PRESSURE GROUPS 

May release information, protest, lobby, boycott, refuse to work with businesses e.g. Greenpeace, PETA. THIS CAN COST BUSINESSES A LOT OF £ & EFFORT TO REBUILD THEIR BRAND.

They focus on issues, they can cause bad publicity for businesses that act unethically which can damage their reputation. 

SUPPLY CHAIN 

Business activity can have long term and short term effects on the environment. Some businesses may have a positive effect by recycling. * THE EFFECTS

Businesses must manage their effects in order to have success in the long term. Their environmental impact is usually linked to their growth, as businesses expand they will usually have a larger impact on the environment. 

Businesses can reduce their environmental impact by : Using renewable energy.  Replenishing natural resources.  Using bio-degradeable packaging.  Reducing food miles.  

As consumers are becoming increasingly aware of the impacts on thhe environment, there is an oppurtunity for businesses to differentiate their products to meet customer needs. 

* DEVELOPED COUNTRIES   * DEVELOPING COUNTRIES 

International Trade - where businesses operate globally and have lots of businesses around the world.

Advantages : increased market size, increased revenue, extending PLC of products

Disadvantages: Additional transport costs in order to transport and distribute goods, must follow laws in the countries they operate in. 

It occurs when businesses and consumers buy good and services from other countries. 

* IMPORTS  * EXPORTS 

Imports examples : UK consumer buys spanish oranges, British citizen stays in a hotel in Florida

Exports exmaples : Spanish business buys UK ipads

Factors influencing IT:

• How developed each country is e.g. income, wage, quality & technology of products
• Government regulations on imports and exports inc import protection, quotas and export subsidies

Developing Countries:

• Lower costs of production
• products cheaper when brought abroad and then sold in the UK
• import of cheap natural resources possible for UK businesses
• increased demand from foreign markets as countries develop
• may be a threat to UK businesses: i.e. UK buys cheap imports, UK businesses may suffer

In developing countries, the consumers wouldn't be able to import much but the country as a whole could export many things. When wages are lower in developing countries the consumers in developed countries benefit from low priced imports. Most developing countries specialise in low quailty manufactured goods. Developed countries tend to specialise in high quality services. 

Governments can encourage IT by supporting exports or can restrict imports in order to protect their home markets.

* PROTECTIONIST POLICIES  * TARIFFS   * QUOTAS 

Export Subsidy - reduces price of exports and will encourage exporting firms THEY ARE NOT A FORM OF IMPORT PROTECTION!!!

Problems Govs face as a result of cheap imports: usually low quality, competition between cheap imports and UK businesses, Gov gets less tax from businesses because they are struggling, money is also levaing the UK, unemployment arises (don' pay tax) and the Gov have to then give out more benefits. 

How can Govs protect businesses from cheap foreign imports?

- Tariffs  - Protectionist policies 

Within EU = no tariffs, quotas becuase EU is a single common market. Regulations are placed by Govs and the EU, these can increase costs for businesses but aim to protect different stakeholders. 

Following EU regulations can make a business less competitive. Taxes also affect business costs, (NICs, VAT, Corporation and Income Tax.)

They govern the way businesses in the UK operate, trade and deal with customers. Gov intervention aims to encourage competition, help businesses run efficiently and protect consumers and employees. 

Businesses will often take measures to avoid Gov intervention. e.g. moving to a country where corporation tax is lower (Ireland) producing products in a country with lower minimum wage, selling products in countries with relaxed health and safety laws. 

Taxes can affect consumers & businesses, if taxes are high consumers spend less and businesses profits and dividends fall. If taxes are low, consumers spend more and business's profits and dividends rise. 

Gov and EU regulations inc:

• Accounting Regulations
• Trade Descriptions Act
• Health and Safety Laws - how long employees can work for, temp in workplace, amount of ventilation in workplace. These are designed to stop workers falling ill/ having accidents due to working conditions. + fewer accidents   - costly, can hinder productivity 
• *The Minimum Wage - Trade Unions ( group of workers trying to improve working conditions) will lobby the Gov trying to increase this. An increase in this means an increase in costs. It may discourage a business from employing more workers. May lead to businesses relocating overseas where the MW is lower. So whilst the MW may be good for motivational productivity, it may actually cause unemployment. + small businesses can compete with big businesses who may force down wage rates. - reduction in profit because of higher labour costs 
• Maternity and Paternity Rights - the business is disrupted by this, (more significant in smaller businesses) recruiting a temporary worker to fill the post can be time consuming and £. + better relationships with employess, work/life balance.