Ethical, Environmental and Legal Factors Flashcards
(25 cards)
Define Business ethics
The moral principles that guide the way a business behaves
What are the types of ethical issues
Environmental – Include emissions, deforestation, water and air pollution and waste disposal.
Animal rights – The care of animals being transported to different markets, animal testing for human products.
Treatment of workers – means the business will need to make choices over level of pay and conditions offered.
Define Corporate social responsibility
Corporate social responsibility, where a business accepts responsibility for its actions and its social, economic and environmental impact on a range of stakeholders.
Describe the relationship with profitability and ethics
The conflict between profitability and ethics is that business practices, decide whether to focus on the profitability of the product or the ethics such as
Profit-driven decisions may prioritise cost savings over environmental sustainability.
Businesses may engage in deceptive marketing practices to manipulate consumer perceptions.
Businesses may make changes to the product to make it more environmentally friendly even if it costs more.
Evaluate ethical approachs
The benefits of an ethical approach may include higher revenues due to positive consumer support, improved brand and brand awareness and recognition, better employee motivation etc.
The drawbacks include higher costs and higher overloads, which will mean lower profit margins, the risk also may include losing its competitive advantage in terms of price leading to possible business failure.
What is thoughts of an ethical approach to staff
Staff – likely to trust business more if it asks them to apply a fair approach to creating, producing and marketing their products, likely to improve staff motivation and enhance business reputation. Benefits also include staff receiving benefits such as rewards (profit sharing), this may not be all positive if this removes pay per commission.
What is thoughts of an ethical approach to Customers
Customers – Perceptions of the business are likely to improve, and they may benefit from better products and longer-term reduction in the costs of purchasing products due to recycling, however customers won’t appreciate increases in the price of the products due to adapting to ethical practices.
What is thoughts of an ethical approach to Shareholders
Shareholders – this will depend on what the shareholder wants from their share of the business. If the shareholders want long-term growth and sustainability, then ethical approach will be positive. If they want short-term gains through large dividends an ethical approach won’t be wanted.
What do legal factors include
Includes employment, health and safety laws and environmental legislation. Legislation tends to act to restrict businesses in their operations and can create extra costs.
Define and evaluate company law
Company law – concerns the legal rights and responsibilities of private and public limited companies. (+) creates a separate legal identity limiting liability (-) Extra costs
Define and evaluate Employment and anti-discrimination law
Employment and anti-discrimination law – aimed to protect staff from discrimination or unfair treatment at the workplace (race, gender, age and religion) (+) staff treated better = more motivation (-) Extra costs.
Define and evaluate Consumer protection
Consumer Protection – aimed at making sure that businesses act fairly towards their customers and consumers, products must be of satisfactory quality and the goods and services must perform the way it was advertised.
(+) customers able to ensure their right to be treated fairly
(-) some businesses may still be able to cut corners reducing the consumer welfare.
Define and evaluate Competition Policy
Competition policy – Designed to ensure fair competition takes place in each industry, governments believe more competition = lower prices and better-quality goods. These laws ensure there is no anti-competitive practices.
(+) consumers will benefit from lower costs and increased choice
(-) May hurt local businesses from large businesses
Define and evaluate Health and safety legislation
Health and safety legislation – Protects the health and safety of employees at work, workers health must not be affected while in work. (+) In the long term less absences and fewer compensation claims, staff will feel more safe and secure (-) adds costs to businesses to make sure staff are safe
Define and evaluate Data protection
Data protection – Protects the privacy of individuals personal information which is usually stored on a computer system in the business. (+) customers data is safe (-) extra costs to make sure data is safe
Define and evaluate Intellectual property
Intellectual property – Gives protection to those who create new or novel products and services, this is done by copyright and protecting brand names through trademarks
(+) protecting business profits from illegal copies
(-) high cost to the business to get its brand protected.
Define and evaluate Minimum wage
Minimum wage – Requires employers to pay employees a minimum hourly wage, regardless of whether they are paid hourly, daily, weekly or monthly.
(+) Staff is guaranteed pay and can’t be exploited (-) some smaller businesses cannot sustain profits due to increased costs.
How does legislation impact business activity
Legislation sets standards for business conduct, product safety, environmental protection, and labour practices.
Compliance with regulations can enhance consumer trust and protect stakeholders’ interests.
Compliance with regulations imposes costs on businesses, including compliance fees and regulatory burdens. Small enterprises may struggle to navigate regulatory requirements
What does environmental factors include
Include sustainability, the businesses impact on its environment, pollution and carbon emissions.
What are the costs of business activity on the environment
Air pollution – introduction into the air of a substance which has harmful or poisonous effects.
Water pollution - the contamination of water bodies, that has a negative impact on their uses
Noise pollution - harmful or annoying levels of noise.
Climate change - Climate change refers to long-term shifts in temperatures and weather patterns
Congestion – overcrowding and clogging
Destruction of the environment – Deforestation
Waste disposal - How businesses deal with waste
How does the government intervene to protect the environment
limits and controls designed to restrict the negative impact of business activity.
A range of green taxes have been designed, not so much to punish businesses, but to encourage them to improve environmental practices.
These are often referred to as green taxes.
Define pressure groups and how do they gain attention
Pressure groups are organisations formed with the objective of influencing government or business policy at local, national or international level.
Lobbying involves meeting with and discussing concerns with decision makers such as government ministers, MPs and senior management in large companies.
Direct action against businesses
To gain as much publicity as possible – the gaining of positive media attention is all-important.
How does education protect the environment from businesses
Education in Wales – promoting recycling in the home, curriculum for Wales emphasises sustainability up to GCSE.
How do businesses respond to environmental issues
Reduce Waste – Many firms aim to reduce the by-product in their processes as much as possible
Sustainable raw materials – Many manufacturers and retailers now create and buy products whose raw materials are sourced from sustainable stock.
Fall in Emissions – There is a legal requirement for businesses to ensure their manufacturing plants emit as little air pollution as possible (switching to air/wind).
