Business Ethics + Applied Theories

  • Created by: Chloe
  • Created on: 07-01-15 11:52

It examines how people and institutions should behave in the world of commerce, e.g appropriate limits on self-interest or profits for firms. Companies may oubich codes of conduct for the corporation or for the individuals within them which may include responsibilities towards the environment and the developing world.

Key Issues in Business Ethics

Many of the issues are covered by codes of ethics which concerns both employers and their employees, e.g Employees should avoid any conflicts of interests such bas investing in competing firms or accepting bribes. Businesses also tend to have an environmental policy in place that aims for sustainability.

However, this does not mean that businesses always behave in an ethical way by:

  • Using child labour and forced labour
  • Having their production in sweatshops or in other hazerdous environments
  • Allowing the violation of basic rights of workers
  • Ignoring health, safelty and environmental standards

Employers and Employees

When a business behaves unethically, an employee may decide to inform the authorities - aka whistleblowing. By informing the authorities of foul-play they are risking their jobs, may harm the business and there is a possibility that their co-workers will suffer.

Business and Consumers

Consumers may take action against:

  • Businesses they consider to be unethical in some way (e.g. animal furs)
  • Businesses acting irresponsibly
  • Businesses that use business practices they find unnaceptable

However, consumer action can also be positive - it caused the global introduction of Fairtrade.

                             Advantages                                               Disadvantages

Higher Revenues - demand from positive                      Higher Costs - e.g. sourcing from Fairtrade suppliers

               consumer support                                                          rather than lowest price    


  1. The Co-operative Bank:

Launched their Ethical Policy in 1992 which allows cusotmers to have their say on issues that matter to them. This has caused them to have withheld on over £1.2 Billion that would have been funded into businesses before they were branded as being unethical.

      2. Primark:

Their use of child labour was 'outed' in a BBC documentary in 2008. They then halted all business with those suppliers, cencelling orders worth millions of pounds and stating that the suppliers had deliberately decieved them. They have since implemented a new Ethical Code of Conduct


A stakeholder is any individual or group who has a stake in the success or failure of a company. This includes internal stakeholders (managers, employees and shareholders) and external stakeholders (the local community, customers, suppliers, local authorities ect). Any business is accountable to its shareholders but it also ethically responsible for a number of different stakeholders.

A businesses responsibilities include:

  • Shareholders - The business needs to generate profits and pay dividends
  • Customers - They must provide good quality products at reasonable prices. Plus consider safety, honesty and decency in their business
  • Suppliers - Pay on time, pay fair rates for the work done and provide an element of security
  • Employees - Ensure health and safety at work, securtity and fair pay
  • Local Community - Provide employment, a safe working environment, minimalise pollution and provide external benefits
  • Government - They need to abide by the…


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