Chaoter 9: Ethics and Sustainability

Question 1

What factors determine whether an action is right or wrong? (4)

Answer 1

1. The consequences (do the ends justify the means).
2. The motivation behind the action.
3. Guiding principles (treat others as you would like to be treated).
4. Key values (such as the importance of human rights).

Question 2

What are the fundamental principles? (5)

Answer 2

1. Objectivity= being unbiased.
2. Integrity= being honest.
3. Confidentiality= not disclosing private information.
4. Professional behaviour= complying with the law.
5. Professional competence and due care= possessing the relevant skills.

Question 3

Why is business ethics important for individuals? (3)

Answer 3

1. Consumer and employee expectations have evolved over the years.
2. Consumers may choose to purchase ethical items eg fair trade even if they’re more expensive.
3. Employees won’t blindly except orders that they believe are unethical.

Question 4

Why are business ethics important for the organisation? (4)

Answer 4

1. Good ethics should be seen as a driver for profitability rather than as a burden.
2. An ethical framework is part of good corporate governance and suggests a well run business.
3. Investors are reassured about the company’s approach to risk management.
4. Employees will be motivated knowing the work in an environment of good ethical corporate behaviour.

Question 5

What are the main ethical dilemmas you could face? (4)

Answer 5

1. Creative accounting.
2. Director’s pay= may come under scrutiny if the company is underperforming, might not be justified.
3. Bribes= used to benefit an individual at the expense of the organisation.
4. Insider trading= using private information to personally benefit.

Question 6

Why is creative accounting used (1)?

What is an example of creative accounting? (1)

How might it affect the business? (1)

Answer 6

To boost or suppress reported profits.

Eg suppressing undesirable transactions, understating provisions or recording transactions in the wrong period.

It could affect the performance and position shown by the financial statements influencing the stakeholder’s understanding of the company.

Question 7

What ethical dilemmas might production face? (3)

Answer 7

1. Whether they should produce something at all eg guns, tobacco etc.
2. Whether they should be concerned with the effects on the environment during its processes.
3. Whether they should test on animals.

Question 8

What ethical dilemmas might sales and marketing face? (3)

Answer 8

1. Whether they should engage in price fixing or other anti competitive behaviour.
2. Whether they should use targeted advertising at children.
3. Whether they should advertise by junk or spam emails.

Question 9

What ethical dilemmas might HR face? (3)

Answer 9

1. Employees should not be favoured or discriminated against because of gender, religion, race, age etc.
2. Employment contracts must be a fair power balance between employee and employer.
3. The office must be a safe and healthy place in which to work.

Question 10

What are a company’s internal policies? (2)

Answer 10

1. A brand generalisation eg corporate ethics statement.
2. Or a specific set of rules eg corporate ethics code.

Question 11

What might a standard code of ethics contain guidelines on? (3)

What does an ethics/ compliance officer do? (2)

Answer 11

Honesty, integrity and customer focus.

1. They monitor application of the policies.
2. They are also there to discuss ethical dilemmas with employees.

Question 12

Why would companies want to be ethical? (7)

Answer 12

1. To protect the public interest.
2. To avoid fines eg pollution.
3. Improve reputation.
4. To attract customers.
5. Good ethics can result in a more effective workforce.
6. It can help save costs eg energy saving.
7. Ethics can reduce risks.

Question 13

Why might companies want to avoid ethics? (3)

Answer 13

1. Increased costs of sourcing materials from ethical sources.
2. They loose profit by not dealing with unethical customers/ suppliers.
3. It could waste management’s time.

Question 14

What ethical issues might HR face?

Answer 14

1. Employee discrimination based on gender, age, religion, race, disability etc.
2. The contract of employment must be a fair balance of power between employee and employer.
3. The workplace must be a safe and healthy place to work in.

Question 15

What are the types of internal principles employees must follow?

Answer 15

1. Broad general ethical policies eg a corporate ethics statement.
2. A specific set of rules eg a corporate ethics code.

Question 16

How can companies help employee deal with ethical problems? (2)

Answer 16

1. By having an ethics/ compliance officer to monitor policy application and answer ethical questions.
2. By using an internal complaints procedure to enable unethical behaviour to be reported.

Question 17

What values can organisations focus on to make ethical breaches less likely? (6)

Answer 17

1. Honesty= employees are encouraged to be honest even at the detriment of the company eg not overstating the quality of goods.
2. Openness= information should be freely provided to shareholders.
3. Transparency= it’s easy for shareholders to review company activities.
4. Trust= the company works in the best interest of the shareholders and is trusting in its dealings with others.
5. Empowerment= giving employees and shareholders more ability to make their own decisions to improve their image and motivation.
6. Respect= everyone is treated with dignity regardless of their age, gender, ethnicity, religion etc.

Question 18

What are the definitions of sustainability? (3)

Answer 18

1. Sustainable development meets the needs of the present without compromising the ability of future generations to meet their own needs.
2. A sustainable business offers products/ services that fulfil society’s needs whilst placing an equal emphasis on people, profits and the environment.
3. Sustainable trading is a system that doesn’t harm the environment or deteriorate social conditions while promoting economic growth.

Question 19

Businesses must exist so that they cause no effect to the environment that can’t be offset.

How does this translate to the business’s inputs and outputs? (2)

Answer 19

1. Inputs (resources) mosh only be consumed at a rate at which they can be reproduced, offset or not irreplaceably depleted.
2. Outputs (eg waste, products) must not pollute the environment at a rate greater than can be cleared/ offset.

Question 20

How can business’s help offset the damage they cause? (3)

Answer 20

1. Recycling is a way to reduce the net impact on the environment.
2. Some companies will make recyclable products/ packaging.
3. Logging companies may plant a tree for every one they fell.

Question 21

What practices negatively affect sustainability? (3)

Answer 21

1. Environmental= deforestation, fossil fuels etc.
2. Social= social injustice eg exploiting labour in developing countries for cheap manufacturing.
3. Economic= strategies for short term gain eg cutting staff costs increase profit, bribes, underpaying taxes etc.

Question 22

What are the main examples of sustainability in the office? (4)

Answer 22

1. Going paperless.
2. Energy usage for lights, machines and heating.
3. Using recycled office furniture.
4. The business’ carbon footprint eg CO2 produced.