3.4.4. Business Ethics Flashcards
(38 cards)
define corporate social responsibility
a business assessing and taking responsibility for its effects on the environment and its impact on social welfare. it involves the idea a business bear a responsibility that stretches beyond their shareholders
define ethical codes of practice
statements about how employees in a business should behave in a particular circumstance where ethical issues arise
define ethics
in the context of business ethics, consideration of the rights and wrongs of a decision at an often-strategic level, in accordance with the law and a business’s code of conduct in relationship to corporate social responsibility.
define living wage
an hourly rate of pay based on the basic cost of living, set independently of government and updated annually.
define national minimum wage
the minimum pay per hour all workers are entitled to by law
define remuneration
the reward for work in the form of pay, wages, salary including allowances and benefits like company cars and health insurance
define sanctions
restrictions imposed on trade or investment with the aim of influencing a policy change in another country
define trade embargoes
often included in sanctions, where commercial shipments are banned in and out of a particular country or where an embargo is placed on a particular product
how can ethics affect a business?
affects decision making as some decisions are affected by law e.g. its illegal to dump waste by the roadside
-business has a code of conduct which employees operate in respect of ethical business decisions, though employees on a personal level have differences of opinion
what are ethics of strategic decisions?
those that affect how a business operates in the long term, these are part of their corporate strategy and are the responsibility of senior management
-affects direction of business
what are some ethical issues which can affect a business?
the environment, animal rights, workers in developing countries, corruption, new technologies, product availability and trading issues
explain codes of practice
lay down how employees in the business should respond in situations where ethical issues arise
-differ from business
what are codes of practice statements about?
environmental responsibility, dealing with customers and suppliers in a fair and honest manner, competing fairly, the workforce and responding fairly to their needs
what are ethical objectives?
derived from ethical codes of practice
can be explicit
carefully thought out
-unwritten and part of corporate culture & aim to deal fairly with customers
what are the consequences of not following ethical objectives?
get bad publicity and a bad reputation
how do businesses respond to concerns about CSR?
by auditing relevant activities -> made available in a corporate responsibility report
what does auditing for csr involve?
inspecting evidence against established standards
-auditors can say the evidence presented is true and fair
who are the accounting audit standards set by?
Accounting standards Board
Is it true social and environmental audits are voluntary and have no rules about how audits should take place?
yes as companies are free to choose what standards they should be measured against and who the auditors will be
-most dont do social and environmental audits
what do social and environmental audits involve?
Employment indicators e.g. if pensions are included
Human rights indicators e.g. does the business persuades its employees to join trade unions
the communities in which the business operates in e.g. how does it affect communities
environment e.g. the amount of energy used by the business
How does pay and rewards affect a business?
if employees with similar skill sets are not paid equally, but pay those more skilled a higher rate
-attract employees by using high rates
-reward and motivate staff as aim is more profit
-maximise productivity levels
what is the impact on profitability when choosing to behave ethically?
raises costs e.g. higher wages, costs of materials
reduce revenues e.g. selling to emerging economies at low prices
what are some of the benefits that following the ethical stance produces?
Can be used in marketing to positively impact the businesses reputation/ brand image e.g. the body shop
businesses can be seen as behaving ethically and as a result are less likely to face serious penalties
factors which can affect a business when making decisions and choosing to be morally right
have a responsibility to stakeholders and to employees to pay them well
businesses which treat employees well, retain staff well -> reduced recruitment costs
can increase chance of being profitable
