P1 – Explain the ethical issues a business needs to consider in its operational activities.
Definition Of Business Ethics
Ethics are to do with what is right and what is wrong. Ethics plays an increasingly important role in business. A business is part of society and just as society requires a certain standard of behaviour from individuals; it also expects businesses to abide similar standards. Business ethics is therefore the application of ethical values to business behaviour. It applies to all aspects of business conduct from boardroom strategies and how companies treat their suppliers to sales techniques and accounting practices. Ethics goes beyond the legal requirements for a company and is therefore a matter of choice. Business ethics applies to the conduct both individuals and to the organisation. It is about how a company does its business and how its activities affect all of its stakeholders. Ethical behaviour within a particular business is different from an ethical business. An ethical business sets out from the beginning to work ethically and ethics from a part of its strategic aims.
What Is Business Ethics?
Business ethics is an organisation which works to achieve corporate aims. The aims are dictated by the kind of organisation itself. A public service organisation, for instance, must deliver government services such as social services. A private business seeks profit for the benefits of its owners. Business managers in these organisations are paid to make decisions that will help the business to achieve its aims and objectives. These decisions can be related to staff, financial investment, marketing strategy, products or location. Issues connected to ethics in business arise because some businesses make poor operational or strategic decisions. These decisions can hurt local people, the staff and the customers. Other businesses make mistakes, sometimes, individuals within businesses act incompetently. Operational activities refer to anything a business does in order to achieve its aims. Marks & Spencer, Asda, Tesco and Sainsbury each have retail outlets all over the UK. This is an aspect of these businesses: operating in order to sell. Their operational activities including buying, storing delivering and advertising, Ethical Activities
An ethical business has a board agenda and focuses on making a positive contribution to the community. An ethical bank such as Co- operative Bank, states that it seeks to make the world a better place by taking a different approach to banking. In the case of this type of business, ethics becomes at lease as high a priority as profitability.
Ethical trading and activities is increasingly recognised as an important aspect of business strategy. This applies especially to high profile companies e.g. Tesco and Asda because good business ethics can generate a favourable public image. By contrast, failure to act responsibly can result in bad publicity, which can be extremely damaging to a business. Ethical Trading is essentially directed at employees to ensure that their working and living conditions are safe and decent. Ethical Trading is now an important issue, because there is convincing evidence that substantial abuse does occur. For example, there can be: Very poor working/living conditions
Failure to pay National minimum wage
Failure to comply with Health & Safety legislation
Extremely long hours
Unlawful deductions from wages
In the UK the driving force is the Ethical Trading Initiative (ETI) which is an alliance of companies and trade unions working together to identify and promote Ethical trading. It has two main aims which are: To encourage companies to implement codes of conduct embodying agreed labour standards on human rights in the workplace To develop and encourage the use of best practice, monitoring and independent verification methods. http://www.franklyscarletdesigns.com/scarlet_blog/about/ Primark
Primark is an Irish...
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