Several businesses such as Primark, Lidl and Gap have been accused of being unethical in recent years. Do you think it is essential to take ethics into consideration when making business decisions nowadays? (40 marks)
Ethics are moral principles that govern a person or a group’s behaviour. When applied to business this involves the examination of how people and institutions should behave in the world of commerce. For example, when the actions of a firm may affect others.
One reason why it is essential to take ethics into consideration when making a business decision nowadays is because there is more awareness and interest in how ethically a company conducts its business. This may mean ...view middle of the document...
Negative publicity like this may cause company’s involved on tragedies like this to lose customers, as some customers might see that cheaper clothing shouldn’t be more important than a person’s life. However, this may not be the case with all consumers as it is a consumers nature to want to pay as little as possible, and so even though they may agree that the deaths of many workers is terrible, they will not stop shopping at places at Primark, as they simply make the cheapest items.
Another reason it is essential for businesses to take ethics into consideration when making decisions is the benefits it may have for the business. A business behaving ethically will be looked upon more fondly. This could in turn mean that the business gains more customers and more investors etc. More customers will increase revenue and in turn profits and this is fundamentally the aim of a business. This is demonstrated well by The Body Shop. The Body Shop is well known for trading ethically, supporting fair trade and are involved in many campaigns, for example Against Animal Testing and Stop Sex Trafficking. These business practices are welcomed by consumers and is cited for one of their main reasons for success.
On the other hand however, running a business ethically, i.e. making sure workers aren’t exploited, being paid a good wage, not working 13 hour shifts, making sure factories are up to standard etc will increase costs. Increased costs are never welcomed by any business, and so acting ethically may in fact have an adverse effect on the business in terms of profit. If this is the case, then the company may experience huge pressure from shareholders to decrease costs, and in turn may lose themselves investors.
Alternatively, a businesses main aim is to be profitable. Ethical behaviour in many cases can threaten this goal. The reason large retailers go abroad for production is to reduce costs. These emerging markets such as China and India provide these large western companies with cheap materials and cheap labour and therefore are helping to reduce costs. Acting ethically i.e making sure the workers are being paid a suitable wage, for example more than £2 a day for 13 hour shifts (which has been seen happening with many retailers including Primark, Gap and Lidl), putting Health and Safety precautions in place, sending company representatives over to these countries to check that these guidelines are being met etc, will all cost the business involved money. This...