The Wider World Affecting Work Unit 3.5

Topic Overview You will cover :- Ethics in business – what are ethics and the moral issues Environmental issues – environmental issues, pollution, traffic and the effect’ Economic issues affecting trade – exchange rates and the like, The impact of Government and the EU

The Ethical Business Businesses, like people, have to make ethical decisions. They have to decide if an activity or a decision is morally right or wrong. Ethics are becoming more important for businesses today, many businesses want to show that they are ethically responsible on a range of issues from production to suppliers, workers, customers, competitors, products, the environment and local communities.

Production Every business has to make decisions about ‘how to produce’ its goods or service. One choice is about the amount waste that is produced and what it does with the waste. Financially it should choose the cheapest production method, but this may not be the most environmentally friendly option

Suppliers A business has to make ethical choices about how it treats its suppliers and what it will buy from its suppliers. Financially, to maximise profit, a business should pay its suppliers the lowest possible price, however, these profits may not be “fair”. For example suppliers in developing countries will be paid less for their goods by rich countries such as the UK. Some business take part in the Fair Trade scheme Businesses may look at suppliers ‘animal welfare’ or the pesticides used for growing products.

Workers Different workers treat their workers in different ways, some pay as little as possible and only give them the minimum legal requirements in the workplace, Other businesses have a different attitude to their employees, seeing them as important stakeholders in the business to whom they have a moral responsibility, a duty to look after them properly! Reducing accidents in the workplace, career development or realising the employees work potential.

Customers Businesses need customers to survive, if there are no customers there will be no sales! Different businesses have different attitudes to customers, some listen to customers and give them what they want. Some businesses will not sell to some customers on ethical grounds eg Co-op Bank will not offer any services to arms manufacturers, and some businesses will not supply/export to countries like Burma that do not give their people basic rights!

Competitors Businesses have to decide how they can ‘win’ customers from their competition. Some businesses have difficult ethical decisions to make. Some businesses have given bribes to secure contracts with other governments, even though this is illegal for UK businesses! Is it right for a childrens’ charity to receive a donation from a large cigarette manufacturer?

The Product A business has to decide what products to sell. For example M&S decided not to sell GM (genetically modified) foods as it decided that this was best for the environment. 85% of all the clothes sold at M&S can be washed at low temperatures, reducing the impact on the environment. Should shops sell replica guns? Chewing gum and fastfood producers be responsible for cleaning up the waste from their products or should adult magazines be on sale where children also shop? These are the ethical and moral decisions!

The Environment All businesses have an impact on the environment, some businesses like coal mining and companies operating landfill sites (waste) have a major impact on the local environment Oil, gas and coal fired power stations making electricity are major contributors to global warming. Businesses have to decide weather to put the environment as a major objective. Businesses can cut energy use and reduce the waste that they produce to help lessen the impact on the environment. Marks & Spenser have a clothes recycling initiative and source food suppliers from local companies.

Local Communities Many companies have little to do with their local communities apart from providing jobs and services. Some businesses, however, contribute to local charities others design and landscape local areas of new buildings with the local area in mind. M&S gave £250,000 to the Tsunami appeal in Sri Lanka in 2005.

Possible Trade-Offs Most businesses would argue that there is a trade off between ethics and profit – acting ethically costs money. Buying Fair Trade products can be more costly. Some businesses use their ethical issues to raise sales, and openly advertise the fact, it helps bring customers and, therefore, more profit. The ethics and values may also be a motivator for their staff.

Pressure Groups Pressure groups are organisations that support causes such as worker’s rights, the environment, animal welfare, and world poverty. Examples are Trade Unions, Greenpeace, the RSPCA and Oxfam. Pressure groups try to get businesses to change what they are doing, trade unions want higher wages, Greenpeace want a cleaner environment, RSPCA less cruelty to animals and Oxfam campaign for better working conditions.

Pressure Groups Very few businesses are directly affected by pressure groups! When they are they need to make a decision about what to do:- Ignore the issue and hope the issue goes away. Businesses can work against the pressure group, like Wallmart (Who??? – the company who owns ASDA) has a policy of not working with trade unions in the US.

Pressure Groups Businesses can work with pressure groups, eg M&S work with Oxfam on clothes recycling and the Fair Trade foundations. Some pressure groups put forward their views illegally! Do you remember the arrests in the most recent Greenpeace protest in Russia and people were arreested?

Any Questions? Do you have any questions about this topic?

Test Yourselves A pressure group campaigns to get supermarkets to reduce the amount of packaging they use. This pressure group is most likely to be A a trade union B the government C customers of the supermarket Da charity with environmental aims

Test Yourselves A company comes under pressure to reduce the amount of waste it produces. It is most likely to refuse to do this if Athis would reduce its profits Bcustomers also refuse to reduce their waste Cthe government brings in new laws about waste Dtrade unions support waste reduction

Test Yourselves Which one of the following is most likely to be an ethical issue for a company selling cosmetics on the high street? Whether or not to Aopen a new shop Bincrease the size of its overdraft Cbuy products which have been tested on animals Duse red packaging rather than green packaging for a product

Over to you:- Complete the review questions.

TASK Create a revision guide for this topic. A mindmap, A storyboard A picture, A list, Revision questions