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Like people, businesses must make ethical choices on a day-to-day basis. A business will need to make a decision on if it thinks something is the right thing to do or not. Businesses will want to show that they are ethically responsible for their decisions and that they can make a profit whilst having a positive influence on the environment and the people around them. Leaders in a business must constantly think about how they operate in order to do the best thing for the company while ensuring that they act ethically.
Production and supply
When producing goods and supplying these to a consumer, a business needs to ensure that it acts in a way that promotes equal rights and fair trade. If a business decides to pay lower prices for goods it might be that it is not giving a fair wage to the people who manufacture its products. Waste is also something that a company needs to consider as high amounts of wasted materials will impact upon the environment, so the production and supply of goods needs to recycle where possible. When a company purchases goods from a supplier it will want to do so at the lowest possible price in order to maximise profitability. Despite this, many businesses will pay more than is necessary through the Fair Trade scheme. This will ensure that those working in developing countries are paid a fair wage from companies in richer countries such as the UK.
Workers
Companies will treat their workers in different ways. Some may pay as little as possible and give the legal minimum when it comes to holidays, working rights and opportunities. This is not a good way to operate and the best companies see their staff as their greatest asset. Because of this, businesses will constantly invest in their own workforce through training and development as well as giving the right rewards for hard work. Doing this will ensure workers are happy in their positions and ensure that the company is making a difference to people’s lives.
Customers and local communities
When offering goods or services to consumers, a business needs to ensure that it has a positive impact on the people that spend money with it and those that are in the local vicinity. Customers will need to be offered a product or service that is at a fair price with good quality. Doing this will ensure the business can attract ongoing trade and have happy customers that will return to shop with it. The business is then seen to be supporting the local community as employees and customers tend to live in the surrounding areas.
Possible trade-offs between ethics and profit
The majority of businesses would agree that there is a trade-off between ethics and profit in a company. Acting in an ethical manner will raise costs for the business and lead to less profit. However, businesses feel that they have a duty to act in this way to ensure the environment is cared for. Acting ethically will also lead to sustainable relationships with suppliers, workers and customers which will establish the business in a market and bring long-term success. Many large companies now advertise their working practices and use this as a marketing tool. Businesses such as the Co-operative Bank and Marks & Spencer actually refuse to work with certain companies due to the ethical considerations of the two being incompatible (for example, the Co-op will not work with businesses that manufacture weapons). Many companies also refuse to enter new markets despite the fact that they could make money. This is seen when a business does not try to sell products in countries such as Burma due to poor human rights that are supported by the government. Recently, trade in Burma increased as the pressure from international companies grew and the government started to change its policies.
Pressure groups
Making a decision regarding ethics and business is something that customers also face. It might be that products can be found from certain places that are cheaper than others. However, it is likely that these businesses do not have the same ethics and therefore will not be giving a fair deal to workers or suppliers. In these situations, pressure groups often form that try to force a business to change its attitude and priorities. By exposing poor ethical standards to the public, pressure groups such as the RSPCA, Oxfam or WWF can raise bad publicity for a company which impacts sales. As an example, the owner of Sports Direct, Mike Ashley, was found to pay less than the minimum wage to workers and the company was accused of poor working practices for its staff in 2016. This created so much pressure on the company (as customers boycotted its products) that Sports Direct had to change its approach and pay more money for workers.
The impact of pressure groups on a business can be very high. Bad publicity will create a negative view of a company which can be hard to change once it has been created. If a pressure group such as PETA (People for the Ethical Treatment of Animals) finds out that a business harms animals, such as through animal testing, then they will publicise this. Legal action may take place against the company and the negative impact on publicity will cause sales to fall. The reputation and branding of modern companies is so important that many have been driven to bankruptcy because of pressure groups who publicise poor working practices.
