Business Ethicsis ideas about what is morally correct or not, applied in a business situation.
What should be the minimum wage?
How much waste is each company allowed to produce?
Should business pay a fair price to their suppliers?
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Profit or Ethics
Trade off = something is given up in order to gain or achieve something else.
There is a trade off between profit and ethics.
Some businesses think...
acting ethically will lower profits. Paying higher wages, recycling and using only ethical product is likely to rise costs and lower profits
Some business think....
Acting ethically can be appealing for customers and can motivate employees. This can lead to higher productivity and more sales which will balance the costs
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Pressure Groups
Pressure groups are organisations that try to get business to change what they are doing.
Pressure groups mainly focus on issues such as:
Animal rights
Workers rights
Environment
World Poverty
Pressure groups can cause bad publicity which can damage their reputation.
Pressure groups methods include... Lobbying, Protests, Working/Not Working with Businesses and Boycotting Products.
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Environmental Effects
Most businesses have an effect on the effect in both short term and long term.
The impact on the environment is closely linked to its growth. As businesses expand they will normally have a bigger impact on the environment.
Short Term Effects
Traffic Congestion, through transport and deliveries
Air, Noise and water pollution, through manufacturing and industry
Long Term Effects
Climate Change
Depletion of Land, Food and Natural Resources
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Business Oppurtunities
As consumers are becoming more environmentally aware, there is an oppurtunity for business to change their products to meet customer needs and make them more environmentally friendly.
E.g. Hybrid cars instead of your normall diesel cars
Ways of reducing the impact on the environment:
Recycling
Renewable Energy
Bio-degradable packaging
Reduction in Air/Food miles
Plant trees when you use them
Solar Power
Wind Power
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International Trade
Factors influencing trade:
How developed each country is (income, wages, quality and technology of products)
Goverment regulations on imports and exports (Quotas, Export Subsidies)
Developing countries and UK businesses
Many UK Business are looking abroad for materials or moving there whole business there. This is because:
Lower costs of production
Products cheaper when bought from abbroad and sold in UK
Cheap resources
Cheaper Wages
Developing countries may be a threat to UK businesses. e.g. if the UK buys cheap imports, then UK may suffer because of poorer quality etc.
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Policies affecting international trade
Goverments can encourage international trade by supporting exports. They can restrict imports in order to protect their home markets.
Tariffs - Put tax on imports making them more expensive
Quotas - Putting a physical limit on the number of imports you are allowed
Export subsidy - Reduce the price of exports and encourage exporting firms
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Government and the EU
The UK government and the EU laws govern the way businesses in the UK operate, trade and deal with customers. The goverment aims to encourage competition, help businesses run efficiently and protect consumers and employees.
EU Regulations
Accounting Regulations
Trade Description Act
Health and Safety Laws
Minimum Wage
Maternity and Paternity rights
Businesses will often take measures to avoid these laws:
Move business to a country where corporation tax is lower (e.g. Ireland)
Producing products in countries with low minimum wages
Selling goods in countries with relaxed laws on health and safety
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Regulations
Regulations have both pros and cons for businesses.
Short term impact of the goverment regulations on businesses is increasing of costs.
However in the long term it should make them more competitive and ethical.
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Minimum Wage
Benefits
Small businesses are able to compete with big businesses who might force down wage rates
Increased productivity
Increased Customer Service
Drawbacks
Higher costs of labour
Higher prices to charge customers
Less poeple buy
Less Sales
Less Profits
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Paternity and Maternity
Benefits
Better relationships with employees and work life balance
Increase Job Security
Increase Motivation
Drawbacks
Working days lost while employee on maternity
Less producitvity
Less products
Less Sales
Less Profits
Have to hire people who dont know the business code
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Health and Safety Regulations
Benefits
Fewer work related accidents and injuries
People feel safer
More productive
Drawbacks
Costs of health and safety regulations can hinder productivity
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