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uk

External Influences 4
Business Ethics, Moral and Environmental Issues

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External Influences

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Business Ethics

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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
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Stakeholders

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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

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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.

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Moral Behaviour

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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
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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
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Business Ethics
Solutions:
Taxation Self Regulation Subsidies Government/EU regulation Legislation Pressure Groups Improve competition and contestability of markets Social and Environmental Audits
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Social and Environmental Audits

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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

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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
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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.

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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
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