Stakeholder ethics

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Stakeholder ethics

  1. 1. http://www.bized.co.uk Copyright 2007 – Biz/ed External Influences 4 Business Ethics, Moral and Environmental Issues
  2. 2. http://www.bized.co.uk Copyright 2007 – Biz/ed External Influences
  3. 3. http://www.bized.co.uk Copyright 2007 – Biz/ed Business Ethics
  4. 4. http://www.bized.co.uk 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
  5. 5. http://www.bized.co.uk Copyright 2007 – Biz/ed Stakeholders
  6. 6. http://www.bized.co.uk 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
  7. 7. http://www.bized.co.uk 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.
  8. 8. http://www.bized.co.uk Copyright 2007 – Biz/ed Moral Behaviour
  9. 9. http://www.bized.co.uk 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
  10. 10. http://www.bized.co.uk 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
  11. 11. http://www.bized.co.uk 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
  12. 12. http://www.bized.co.uk Copyright 2007 – Biz/ed Social and Environmental Audits
  13. 13. http://www.bized.co.uk 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
  14. 14. http://www.bized.co.uk 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
  15. 15. http://www.bized.co.uk 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.
  16. 16. http://www.bized.co.uk 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

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