4.4.2 Ethics

Question 1

Ethics:

Answer 1

• morals and principles

- underpin business decision making

Question 2

Ethical behaviour:

Answer 2

-doing what is morally right

Question 3

Stakeholders:

Answer 3

-anyone with an interest in the actions of a business

Question 4

Stakeholder conflict:

Answer 4

• needs may conflict

- actions of one group may weaken the power of another

Question 5

MNMultinational company (MNC)

Answer 5

-company that operates in more than 1 country

Question 6

Needs of each stakeholder:

Answer 6

1. Customer(quality, value for money, service, convenient)
2. Employees (conditions, pay, extra benefits)
3. shareholders (return, transparent communication)
4. Government (tax, legislation, reputation, FDI, employment rate)
5. Community (disruption, jobs, communication)
6. Suppliers (reliable, loyal,on time, positive exposure)
7. Financial institutions/Bank (ability to pay back borrowed)

Question 7

Friedman’s shareholder concept

4 things

Answer 7

1. acting interest of shareholders
2. concern = shareholder wealth
3. MNCs not restricted of how they act
4. not job of MNC to decide what is best for society

Question 8

5 Benefits of behaving ethically:

Answer 8

1. reputation (PR)
2. attract investment (new SOF)
3. brand/business awareness (recognition)
4. proud employees = motivation/recruit
5. revenue = demand positive customer support

Question 9

4 Drawbacks of behaving ethically:

Answer 9

1. increase cost of production = sourcing fair-trade
2. higher overheads = training & communicate ethical policy
3. build false expectations = pressure
4. lose to competitor with better profit margin

Question 10

4 common ethical issues with MNCs

Answer 10

1. pay and working conditions
2. environmental impact
3. supply chain management
4. marketing

Question 11

Pay and working conditions

Answer 11

• fine line between ethical & abiding legislation (more frequent where legislation is not established)
• close = increase profit margin
• working conditions = lack investment move abroad

Question 12

Environmental impact:

Answer 12

2 ethical issues:
1. Emissions: climate change = global, only few countries responsible for producing majority of greenhouse gas emissions: 1. China 2. USA 3. India (contributed 50% of global CO2 emissions)

2. Waste disposal

• other environmental consideration
• UK legislation is strict (public listed companies report greenhouse gas emissions & abide by laws on waste disposal)
• global impact of industrialisation

Question 13

Supply chain considerations

Answer 13

• multinational bus can’t claim to be ethical if ignores unethical practices by suppliers
  e. g. use of child/forced labour, sweatshops, violation of workers basic rights, ignoring health/safety/environmental standards
• ethical bus: concerned with behaviour of all businesses operating in supply chains (supplier, contractor, distributor, sales agent)

Question 14

supply chain

Answer 14

-steps involved in manufacturing and distribution of goods

Question 15

exploitation of labour

Answer 15

• International labour organisation promotes fair/decent work for all workers in society
• pay/ choice/ conditions = achieve social justice
• responsibility of MNCs throughout whole chain

Question 16

Child labour

Answer 16

• exploitation (have no power)
• low wages
• unacceptable conditions
• no education
• slavery
• kidnapping from families
• trafficking

Question 17

Marketing

Answer 17

1. misleading product labelling (in Uk governed my Trade descriptions act)
   - UK legislation includes: size/quantity, price, ingredients, endorsement, health claims, how/where/when made
   - stricter in certain industries
   - often pursued by pressure groups an consumer organisation such as watch dogs
2. inappropriate promotional activities
   - directly promote to children
   - cultural differences (china gift giving)
   - promoting lifestyle going again culture/religious differences