3.4.4 Ethics

Question 1

what are ethics

Answer 1

principles which govern what behaviours are morally acceptable

Question 2

there is often a trade-off between ethics and profit

Answer 2

• being ethical will increase costs for a business therefore sacrificing profit
• however, sometimes customers are willing to pay more for ethical products
• some employees may be more motivated to work for an ethical company

Question 3

there is a big ethical debate about the relative pay that employees receive

Answer 3

• senior managers getting paid large sums whereas other employees get the minimum wage
• it could be argued that the skill set required demands a high salary to get the best recruits

Question 4

what is corporate social responsibility

Answer 4

• this is more than just acting ethically it is going above what is required by law to help the wider society
• often involves reducing environmental impacts, supporting charities and the local community and treating the workforce ethically

Question 5

the public is made aware of how a business is meeting their CSR’s

Answer 5

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Question 6

what are the advantages of CSR

Answer 6

• improves brand loyalty and attracts new customers through good publicity
• attract more talented people to work for them
• staff morale improves

Question 7

what are the disadvantages of CSR

Answer 7

• extra costs that shareholders may see as a misuse of funds and pull their investment
• higher costs may cause higher prices for customers which may reduce demand
• small businesses will not be able to invest as much in CSR and may put them at an unfair advantage