|Definition: Ethics are the moral principles that should underpin decision making. A decision made on ethics might reject the most |
|profitable solution in favour of one of greater benefit to society as well as the firm. |
It is important at this stage to distinguish between an ethical decision and a lawful decision. It may be legal for a public house to sell alcohol products to people over the drink drive limit. But is it ethical to do so if you know that they intend to drive?
|Activity: Give two examples of legal actions but which you feel at the same time are unethical. |
A sceptic however might argue however that the founder Anita Roddick merely saw a gap in the market and successfully established a unique selling point in order to increase consumer loyalty, sales and ultimately profit.
Advantages of ethical behaviour
â€¢ Marketing opportunities. As mentioned above if a company can successfully promote an ethical image then it will have established a unique selling point which can subsequently be used to attract like minded individuals as potential future customers.
â€¢ Positive effects on the workforce. Ethical companies often benefit from better qualified and more motivated employees who are proud of the company that they work for. In 1997 a survey found that 75% of Body Shop staff were proud of the company that they worked for.
Disadvantages of ethical behaviour
â€¢ Reduced profitability
Businesses may be forced to turn down profitable business due to their ethical stance. E.g. a firm may not deal with a company involved in the fur trade.
â€¢ Conflict with existing policies
When a firmâ€™s overall profitability comes into conflict with its ethical policy, problems may result.
â€¢ Increasing costs
An ethical firm may, for example, be forced to turn down cheaper supplies from a firm which tests its products on animals. A firm may also have to change a number of its business practices to become more ethical. For example, it may have to change protection given to consumers buying its products.
Should businesses be expected to act ethically?
There is considerable debate:
Some argue that businesses do have a responsibility to act ethically because they do not operate in isolation. They are part of society and as such have an impact on the lives and communities in which they are based. This means that profit making should not be the only criterion when making decisions. Other factors they should consider might include?
However, others argue that businesses should not be expected to act ethically. Free market economists would take such a stance arguing that the primary responsibility of a business is to produce goods and services in the most efficient way, and to make a profit for shareholders. They should pursue...