Ethics 4.4.2

Question 1

Ethics

Answer 1

Having moral principals that govern how a company does business. A moral principal is one that knows right from wrong.

Question 2

Stakeholder Conflicts

Answer 2

Suppliers: charge high prices for their goods and to keep costs of production low.
Government: wants to tax payments and lawful, ethical businesses.
Managers: want promotion and bonuses on high profits.
Customers: want low prices, high quality, availability and ethical products.

Question 3

Management vs Workers

Answer 3

Management focused on output/reducing costs than on worker safety or creating a positive working environment. Workers want safety/positive working environments.

Question 4

Management vs Owners

Answer 4

The owners (shareholder) want management to maximise the business’ profits and for example be less interested in the mental wellbeing of the employees. Management will often sacrifice some profit in the interest of looking after worker’s health and mental wellbeing.

Question 5

Company Profits vs Resource Depletion

Answer 5

The owners aim to maximise output so as to generate increasing levels of profit. Higher output requires more rapid usage of natural resources and generates more environmental damage.

Question 6

MNC Objectives vs Stakeholders Objectives

Answer 6

Owners want high profits
…but high profits mean keeping wages low which means that workers may not be paid a living wage
…means keeping costs as low as possible so working conditions may suffer
…can mean that labour laws may not be respected
…may mean that work might be subcontracted out to third parties that use child labour or forced labour.

Question 7

Shareholder Objectives vs Ethical Objectives

Answer 7

Shareholder objectives: high profits, high dividends, growth, return on their investment and a positive corporate image.
Ethical corporate objectives: low emissions, safe waste disposal, paying fair wage rates to employees in other countries and sourcing sustainable raw materials.

Question 8

Emissions

Answer 8

The production of gas or radiation as a part of the production process. Often released from factories/products made by MNCs e.g. 100 companies are responsible for 71% of global emissions.

Question 9

Positives and Negatives of reducing Emissions

Answer 9

Positives: increase the positive image of their company, increase customer loyalty, give them competitive advantage and possibly allow the business to charge higher prices.
Negatives: expensive to reduce emissions and there is a question if customers really care that much.

Question 10

Waste Management

Answer 10

Many developed countries have regulations on how a business should dispose of their waste but lower economically developed countries have less.
MNCs can dispose of waste in LEDCs at a cheaper cost, allowing them to maintain their high profits e.g. in India and other developing nations, there is a stakeholder conflict with those who live near these toxic dumps.

Question 11

Supply chain Considerations

Answer 11

Consists with all of the suppliers involved in the manufacturing of a product/service.
A supply chain is a system of businesses, people, activities, information and resources involved in moving a product or service from supplier to customer.
Many garment factories/labour intensive production processes outsource to slums, refugee camps and unlicensed back street businesses with poor working conditions. Labour is intentionally exploited by MNCs. Victims of labour exploitation are forced to work nothing to low wages or wage kept by their owner, migrants are a common target, they may owe their travel costs to their recruiters.
MNCs are under increasing pressure from governments, customers and institutions to not involve in exploitative labour practices.

Question 12

Force Labour Indicators

Answer 12

Threats or actual harm to the worker, restriction of movement or confinement to the work place, debt bondages, withholding wages/excessive wage reduction, retention of identity documents.

Question 13

Marketing Considerations

Answer 13

-Misleading labelling: labelling must comply with regulations of the country. By UK law, labels must not mislead customers on: size, price, contents, what it might do and safety information.
-Inappropriate promotional activities: should not be offensive/illegal.