Business Ethics

What we will learn today

• Background of business organisations

• Define and discuss what business ethics

means

• Draw a mind map, diagram or list of the

ethical issues faced in business
 Business Organisations
(Background)
• Sole Proprietorship (1 owner)

• Partnerships (2 – 50 owners)

• Limited liability companies or corporations

(Less than fifty owners)

• Pubic companies or corporations (More than

fifty owners)
The ultimate aim of any businesses is to
maximize profits.
 What is meant by ethics?
An ethic is a moral principle or set of moral values held by
an individual or a group.

Ethical behaviour is behaviour which is considered to be

right and moral.

Business ethics are the values and principles which

operate in the world of business. They form the moral
framework of business as an organisation.
Business ethics help firms decide what
actions are right or wrong in certain
circumstances.
E.g. Should a firm relocate to a country
paying lower level of wages?
Should a firm release a life-saving drug
after limited testing?
Should advertising aimed at children be
restrained?
Should a firm sell expired goods?
 Comparing Working Conditions

Bangladesh The UK

Wage per month: £12 £813

Wage per week: £3 £203
Wage per hour: 33p £5.35
Hours per week: 90hrs 38hrs
What ethical issues are faced by
business?
• Should firms use child labour?

• Is animal testing needed in products and ingredients?

• What wages should firms pay to poor countries?

• To what extent should firms seek to be environmentally

friendly?

• Should firms get involved in certain activities?

e.g making weapons
 Who cares about business
ethics?
• Customers
• Managers/Owners/Shareholders
• Pressure Groups/Activists
• Workforce
• The Community
• Trading Partners
 Why be ethical?

•Create good image and good press

•To act within the law
•Because the owners want to be
•It is one of their unique selling points
•To attract customers/employees/investors
•To be socially responsible
 The ethical obligations of a
business are to:
• Provide safe products
• Create jobs with safe working conditions,
equal treatment, and fair pay.
• Protect the environment
• Contribute to the standard of living in
society
 Social Responsibility

• A conflict of interest is when a business

is tempted to put profits before social
welfare.
 Responsibility to Customers
• Government agencies that protects
consumers from dangerous or falsely
advertised products.
• Fair competition between businesses is
healthy for the marketplace, but some
companies don’t always play reasonably.
i.e colluding.
• Some companies use unethical means to
eliminate competition.
 Two sides to every story
• Companies often find it difficult to please all of its
stakeholders, as they have different interests.

• Being ethical depends on an individual view of what is

right and wrong. What might be considered
good behaviour to one individual, may
seem bad to another.

• Ultimately companies aim to make a profit and

sometimes this can conflict with acting in a responsible way.

• Larger, global companies can often find it difficult to regulate

their activities in other countries.
 The worst offenders
The Fraser 2006 rating on ethical reputation (1st being regarded
as least ethical), based on interviews with 1,300 adults:

1)McDonald's
2)Nike
3)Shell
4)Adidas
5)Barclays
6)Coca-Cola
7)BP
8)Camelot (National Lottery)
9)American Express
 True or False?
Is the following statement true or false?

“Ethics has to do with whether my feelings are

right or wrong.”

True – but we must realise that

sometimes our feelings can
cloud are judgement and make it
difficult to see both sides.
 True or False?
Is the following statement true or false?

“Ethics has to do with my religious beliefs.”

True – it can be linked to religious

beliefs, but remember it is much
more than this.
 True or False?
Is the following statement true or false?

“Being ethical is doing what the law always

requires.”

True – people and business have

to follow law, but remember that
some laws may be unethical.
 True or False?
Is the following statement true or false?

“Ethics consists of the standards of behaviour

our society expects.”

True – but remember that

society is sometimes
unpredictable and cruel.
 TUTORIAL QUESTIONS
• Discuss what is Sole proprietorship and
partnership?
• Explain/Discuss the ethical obligations of a
business.
• Discuss what is a monopoly business and
what are some of the unethical behavior you
think they might practice during the course of
their operation.