Theme 3 - Ethical issues

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  • Created by: becky.65
  • Created on: 17-02-18 11:10
What are stakeholders?
All those people who have an interest in a particular business
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How can MNCs maximise profits in host countries?
They can cut costs and do things that would not be acceptable within the legal system of the home country such as contracting suppliers with low prices and having low wages
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How are stakeholders protected in the home country?
By Corporate Social Responsibility
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What does profit maximisation risk?
The businesses reputation
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What is the alternative approach to profit maximisation?
To treat employees as assets and customers' welfare as paramount; ethical decision making
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What is ethical decision making?
Following codes of practice that embody moral values. The objective is to do the right thing and take into consideration the interests of everyone affected by the decision
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What does an ethical business strive to do?
Use moral values as a basis for a consistent approach based on what is right regardless of commercial considerations
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What is the difference between CSR and ethical decision making?
CSR may go no further than observing the law in the country of operation; ethical decision making recognises the law may not protect all stakeholders and therefore the business sets its own standards
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Should MNCs improve pay and conditions?
There is a trade-off between standards of pay and conditions and employee morale and productivity. This has to be weighed against increased costs. Working for MNCs will usually mean that pay and working conditions are better than in local businesses
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Should MNCs protect the environment?
There is a trade-off between controlling pollution and keeping costs down and regulations in emerging economies are much weaker which is damaging to the environment and some activites are unsustainable
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How can offshoring lead to the exploitation of labour?
Businesses that offshore will have little control over the working conditions of local suppliers, but the contractors may be paid very little for their output, making it hard to improve conditions
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What does the exploitation of labour mean?
Paying employees less than the value of what they produce; it tends to happen where there are more workers than jobs available
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How is child labour still found in many poor countries?
It is difficult to enforce no child labour contracts and many businesses turn a blind eye in hope they are not found out
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How can ethical behaviour increase profits?
It can enhance company reputations and create a competitive advantage, increasing profitability in the long run
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How is it becoming increasingly difficult for big businesses to claim ethical behaviour but actually be unethical?
A number of ethical rankings have been produced
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Other cards in this set

Card 2

Front

How can MNCs maximise profits in host countries?

Back

They can cut costs and do things that would not be acceptable within the legal system of the home country such as contracting suppliers with low prices and having low wages

Card 3

Front

How are stakeholders protected in the home country?

Back

Preview of the front of card 3

Card 4

Front

What does profit maximisation risk?

Back

Preview of the front of card 4

Card 5

Front

What is the alternative approach to profit maximisation?

Back

Preview of the front of card 5
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