Copyright 2007 – Biz/ed External Influences 4 Business Ethics, Moral and Environmental Issues
Copyright 2007 – Biz/ed External Influences
Copyright 2007 – Biz/ed Business Ethics
Copyright 2007 – Biz/ed Business Ethics Rules or standards governing the conduct of a business Moral code – what is ‘right’ and what is ‘wrong’? Highly subjective nature Tension between different stakeholders
Copyright 2007 – Biz/ed Stakeholders
Copyright 2007 – Biz/ed Stakeholders Responsibilities to stakeholder groups: Shareholders – Generate profits and pay dividends Customers – provide good quality products at reasonable prices. Safety, honesty, decency and truthfulness Employees – health and safety at work, security, fair pay Suppliers – pay on time, pay fair rates for the work done, provide element of security
Copyright 2007 – Biz/ed Stakeholders Local Community – provide employment, safe working environment, minimise pollution and negative externalities – provide external benefits? Government – abide by the law, pay taxes, abide by regulations Management – their aims versus those of the organisation as a whole Environment – limit pollution, congestion, environmental degradation, development, etc.
Copyright 2007 – Biz/ed Moral Behaviour
Copyright 2007 – Biz/ed Business Ethics Tensions: Profits versus higher wages Expansion versus development Production versus pollution Supplier benefits versus consumer prices/lower costs Survival of the business versus needs of stakeholders
Copyright 2007 – Biz/ed Business Ethics Examples: Production of children's toys Coffee industry Baby milk Music industry Multi-national operations McDonalds – food quality, litter Chocolate industry Jewellery – diamonds and gold Chemical industry
Copyright 2007 – Biz/ed Business Ethics Solutions: –Taxation –Self Regulation –Subsidies –Government/EU regulation –Legislation –Pressure Groups –Improve competition and contestability of markets –Social and Environmental Audits
Copyright 2007 – Biz/ed Social and Environmental Audits
Copyright 2007 – Biz/ed Environment Urban blight – excessive development, inappropriate development, use of greenbelt land Waste – land-fill? re-cycling? burning? Energy use – renewable energy, non-renewable resources Global Warming – fact or fiction? Pollution: –Noise –Air –Land –Sea –Water
Copyright 2007 – Biz/ed Externalities Impact on a third party of a business decision –Those affected not involved in the decision –Negative externalities – negative effects of business activity – pollution, urban development, etc –e.g. out of town shopping centres – impact on city centres
Copyright 2007 – Biz/ed Externalities Positive Externalities: –Benefits to third parties of business activity –e.g. new infrastructure as a result of development, side effects of research and development, technology (the Internet?), convenience, improved standards of living –Out of town shopping centres – greater ease of access, everything in one place, pleasant environment to shop in, etc.
Copyright 2007 – Biz/ed Externalities Out of town shopping centres: –Highlights complexity of the interaction of positive and negative externalities Government policies – encourage business activity that leads to positive externalities and discourage those that lead to negative externalities