A business should be ethical for a number of reasons
Customers prefer buying from ethical businesses
Legal controls in certain countries enforces ethical practices
Stakeholder pressure
Pressure groups
What are considered unethical practices
Low wages - below minimum wage
Child labour
Migrant exploitation
Health and safety working environment
Animal testing
Pollution
Discrimination
Why are some business unethical
As business are have profit objectives, some businesses may overlook welfare of workers and consumer well-being in order to reduce cost to increase profits.
How does businesses behave unethically to consumers
Some businesses mislead consumers on price and quality of products, while some include hazardous materials in products or faulty components that may not be safe to use.
How does government prevent unethical business practices
They do so by imposing taxes and fines, suspending its business operation or closing the business. Most governments have legal controls in place for businesses to comply. However, in some countries, grants and subsidies are provided to help lower cost to encourage businesses to operate ethically.
Each country have different legal controls. As such, many large businesses may take advantage of certain lapse in policy in certain countries that may enable them to operate unethically.
How does pressure groups promote ethical practices
In countries where ethical practices are not enforced as legal controls, pressure groups play an important role by creating bad publicity for these businesses. They act to persuade customers to boycott their products by exposing evidence of unethical practices.
RELEVANT CONCEPTS
Legal controls
Branding
Pressure Groups
PAST YEAR QUESTIONS
Do you think JNK should become more ethical? Justify your answer (6 marks) May/June 2019/12
Identify and explain two ways in which being ethical might help FTT (6 marks) Oct/Nov 2018/12
Identify two possible ethical issues that SJD might have to respond to (2 marks) May/June 2018/11
Identify and explain two ways an increase in minimum wage could affect a business (4 marks) May/June 2018/12
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