Business Ethics assessment support

1. Understanding Business
Ethics
5 December 2014

2. Assessment:
Case studies in Business Ethics
• Explain the ethical issues a business needs to consider in its
operational activities (p1)
• Explain the implications for the business and stakeholders of a
business operating ethically. (p2)
• Describe the social implications of business ethics facing a
selected business in its different areas of activity (P3)

3. Stakeholders
• All business have a number of stakeholder groups,
each with different interests in what the business
does.
• Business should be managed with the interests of all
stakeholders in mind.
• It has become fashionable thing for business to try to
be the friend of all stakeholders.

4. Shareholders
• Shares in UK businesses might be held by private
individuals or institutions.
• If a business in performing well then the share value
will rise, as will the value of the business.
• It is important for a business to make the correct
decisions so that the shares keep their value and look
after their shareholders.

5. Employees
• Provide labour force
• Satisfactory working conditions
• It is illegal to employ children
• Minimum wage

6. Customers
• If you have a favourite takeaway near you it becomes
quite an important issue if the business is suddenly
sold.
• If you are a regular customer of any business, it can be
assumed that you are satisfied with the service
received.
• You are naturally a stakeholder because the business is
serving your needs and you hope that you can
continue to be satisfied.

7. Suppliers and Competitors
• The existence of some businesses can be affected by
the success or performance of another.
• If one significant firm fails or takes dramatic
decisions about strategy, there can be a whole
network of other related firms, especially suppliers,
which are affected.
• The decisions of one can have a major impact on the
others, even if they are competitors.

8. Citizens
• Business activity occurs within a community.
• So it is important that the local population is
considered in major business decisions.
• Many firms adopt a specific company mission to do
‘good work’ in the community (such as Proctor &
Gamble).
• This is in part why public relations is such a key feature
of business.

9. Conflicts
• Businesses today have to balance the aims of
a number of stakeholders.
• This is sometimes difficult because the
interests of stakeholder groups can conflict
with each other.
• Shareholders vs. Environmentalists

10. Social Implications (P3)
• Social implications refer to those actions of
business that have an effect on society as a
whole. These issues relate to a number of
areas of activity.

11. Social Implications (P3)
• The areas of activity we will look at are:
• Ethics in finance
• Ethics in human resource management
• Ethics in production
• Ethics in sales and marketing
• Ethics in intellectual property

12. Ethics in Finance
In financial dealing and payments, there is
scope for several kinds of unethical behaviour.
Regulations and voluntary codes try to make
sure that ethical practices are observed.
Bribery - This is a form of corruption. It is the
straightforward use of financial muscle to gain
unfair advantage over others.

13. Ethics in Finance
Executive pay - Should top executives be paid
rises that are unrelated to effort?
Companies in the US now have to include
in their annual reports a single figure for the total
pay of their executives.
This tells shareholders exactly what their top
executives are earning.

14. Ethics in Finance
Insider trading - This refers to illegal use
of privileged information in dealing on a stock
exchange.
Detected in the UK by the Securities and
Investment Board (SIB)

15. Ethics in Finance
Lobbying - This means to approach an MP or
minister with requests for actions or
information.
The intention is to persuade politicians to
adopt a particular cause or issue to benefit it.
 It can be a source of corruption.

16. Ethics in Finance

17. Ethics in Human Resource
Management
• The law is used to ensure that when jobs are
advertised, there is no discrimination.
• People are entitled to feel that job selections
are made on the basis of merit rather than on
the basis of race, nationality, gender or other
unfair grounds.
• This is why human resources professionals are
trained to avoid discrimination of all kinds.

18. Ethics in Human Resource
Management
• Worker surveillance can be an important
question in some organisations.
• The question is, to what extent is it reasonable
for a member of staff to be watched, to have
their emails checked, to have calls listened in
to?
• There are important questions of privacy
involved. How safe will staff feel if their
management 'snoops' on them?

19. Ethics in Production
• The production of goods can lead to ethical
problems for business, e.g. animal testing -
British law requires that any new drug must
be tested on at least two different species of
live mammal.
• The Animals Act 1986 insists that no
animal experiments should be conducted if
there is a realistic alternative.

20. Ethics in Production
• Planned Obsolescence - Businesses try to
convince people, partly through advertising
and promotions, that they need products.
• There is nothing unethical in this. However, it
is not in the interests of business to produce
goods that last forever.
• Planned obsolescence is the deliberate
development of products that will need
replacing after a time (e.g. Microsoft, Iphone)

21. Planned Obsolescence

22. Ethics in Sales and Marketing
Sometimes businesses employ unethical means
to try and generate sales. They can do this in a
number of ways:
• Spoofing
• Spamming
• Raising their own status
• Greenwashing

23. Ethics in Intellectual Property
• Intellectual property (IP) law allows people to
own their creative work in the same way that
they can own physical property.
• The owner of intellectual property can control
and be rewarded for its use.
• This encourages further innovation and
creativity to the benefit of everyone.

24. Ethics in Intellectual Property
The four main types of IP are:
• Patents for inventions
• Trade marks for brand identity
• Designs for product appearance
• Copyright for material

25. Ethics in Intellectual Property
This means that those individuals or business
organisations that have invested their time,
resources and talents to create something useful
or enjoyable for others, have rights to protect it
from being stolen.
• This applies to computer software as well as
to music records.

26. Downloading music

27. Have you ever seen this?

28. Apple videos

29. Apple vs Samsung

30. Just Checking
• Explain the ethical issues a business needs to consider in its
operational activities (p1)
• Explain the implications for the business and stakeholders of a
business operating ethically. (p2)
• Describe the social implications of business ethics facing a
selected business in its different areas of activity (P3)
• Apply to your assessed work