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.
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.
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.
Primark
Primark is an Irish clothing retailer, operating in Austria, Belgium and Germany, Portugal, Spain, Netherlands and the UK. Primark first opened in June 1969 in Dublin. Primark sells clothes at the budget end of the market.
The company sources cheaply, using simple designs and fabrics in the most popular sizes and the company buys stock in bulks. Ethical trading is a key part to Primark. Primark have expanded their ethical trade team significantly on the ground in the countries Primark source from the UK to provide support to their suppliers and they buying teams, ensuring that ethical trading is integrated in their supply chains.
Values Of Businesses
In business a value is a measure of what something is worth. Schools and colleges have a monetary value. Personnel values are not written down because they are a state of mind. Parents and careers might try to ensure children are bought up with good personal values. Personal values affect the way people behave, both at work and in their private life. Primark values:
Primark is a subsidiary company within Associated British Foods (ABF), and as part of the ABF family we share its core values: taking care of our people, being good neighbours, and fostering ethical business relationship. We also share the group’s overriding principles in relation to human rights, employment conditions, business practices and engagement with suppliers and stakeholders.
As an international business with a global supply chain and a growing retail base, we believe that business has a responsibility to act and trade ethically, and that by doing so, it can be a force for good. Primark directly contributes to the employment of more than 700,000 workers across three continents and ensuring that their rights are respected is important to Primark’ growth.
Professional Ethics
Professional ethics can lead to dilemmas in the workplace. An example of this would be the professional duty to whistleblow which conflicts with a sense of loyalty to a company. Professionals are governed by the rules of conduct laid down by their professional institutes. Failing to comply with these can result in professionals losing the right to practice.
Professional ethics relates to how people behave in relation to their chosen careers. Doctors, Lawyers, accountants, engineers and other professionals are expected to behave in certain ways or follow specific codes of conduct. This helps to guard against their action bringing their profession into disrepute. Individual ethical behaviour
Once a business grows beyond a particular individual it becomes a corporation with a legal personality all of its own. However, all corporations consist of individual personalities. No matter what ethical principles a corporation might claim to possess, if individuals within a business take unethical decisions, these may have negative effects.
Corporate governance
The governance of a medium to large business is important. There re are rules about shareholders rights. The specific means by which individual businesses consult and control the various decision makers within the corporation are crucial. When a business corporation is bought into existence someone will have to make decisions. A limited company consists of board directors who are responsible for overarching strategies direction.
Corporate social responsibility
Corporate social responsibility to the extent that a business considers what it does in relation to the wider world. All businesses are expected to think about what they do. The UK government encourages CSR; an example of this is in the following passage from the government’s gateway web ‘the government sees CSR as the business contribution to our sustainable development goals. Essentially, it is about how a business takes account of its economic, social and environmental impacts in the way it operates’.
Environment
There are many examples of environmental issues and can relate them to many businesses, one of them is Ryanair, It has many environmental problems and therefore an ethical issue. The emissions coming from the aircraft that are believed to have a bad effect on the earth’ atmosphere is leading to global warming, which affects everyone. It is now widely felt that most of the global warming that has taken place over the last 50 years has been caused by human activity. The emission of carbon dioxide into the earth’s atmosphere, these are cause by petrol engines, oil burning and coal burning among other industrial activities.
The arctic ice pack has lost approximately 40 per cent of its thickness in the last 40 years. Mountain glaciers all over the world are melting all over the world are melting Plants and animals are changing their range of behaviours in response to climate change. Global see levels have risen three times faster over the last 100 years than over the previous 3,000 years.
Sustainability
While there is no universal agreement on this, the evidence is strong that our planet cannot sustain for too long increasing levels of industrial development – particularly development that uses carbon dioxide which then produces technology. This is a sustainability question and is something that affects all of us.
Human Rights
Human rights revolve around some very important questions, many having to do with discrimination. E.g. it is illegal in the UK to treat people differently on the grounds of race, gender, religion, sexual orientation or disability. These are basic human rights. Other human rights are also built into the legal system. We are entitled to a contract of employment, to work part time, to be able to join a union and to have a hearing against wrongful dismissal.
Corruption
Corruption arises in many forms and can be a major public concern. A person or a business corporation is corrupt if they use influence or unfair means to gain business or personal advantage. Local councils may employ a lot of building companies to carry our construction work in their areas e.g. to build roads, bridges and houses. An example of corporation is if the one of the officers or councillors are related to a builder and that builder was given the job. These are examples of serious corruption.
Trading fairly
Fair trade is where a business is carried on in an open manner, it also when competition takes place on grounds that are equal for all parties. Furthermore, fair trade is where consumers can feel secure that the goods and services they are buying are going to be of satisfactory quality.
Regulatory compliance describes the goal that corporations or public agencies aspire to achieve in their efforts to ensure that personnel are aware of and take steps to comply with relevant laws and regulations. Due to the increasing number of regulations and need for operational transparency. Also, there are several areas of law that businesses must follow. These are designed to protect a business’s consumers, its employees and others in the wider environment.
Consumer Law
When a consumer makes a decision to buy something there is an elements of trust involved. An unethical trader could give a false description of something or overcharge for a product. Businesses are therefore subject to the law. It is illegal to give a false description or to mislead consumers. This body of law is known as consumer protection law. Consumers have rights and businesses must respect these. The well-known acts of parliament in this area are:
- The trade description act 1968
- The sale of good act 1979
- The consumer protection act 1987
These acts give ministers the right to make future regulations that further control what businesses can do. Business practices
the law covers the main ethical issues that can affect many hey stakeholders in a business, including consumers, staff and the neighbourhood, but there is still a potential for actual business practice to fall short of legal requirements. If this was not the case, there would be no need for regulations. Businesses exist to achieve their aims and objectives.
Every business manager has a degree of pressure to meet targets. Managers themselves are employees and have senior management as well as shareholders to consider. These pressures can sometimes result in neglect or malpractice. A business manager may neglect to comply fully with health and safety regulations, because to do so would cause delay. An accident caused as a result of this will have serious consequences for the business.
Working Conditions
When people start working for a business organisation, they are entitled to a set of minimum working conditions, which are not just about wages and salaries. They also cover aspects of work such as hours, holiday’s entitlement, privacy, harassment and discrimination. It is up to employers to create working conditions that are fair. Trade unions have the traditional role of defending worker’s rights against bad employers.
Individual Ethical Responsibilities
Individual as well as businesses have ethical responsibilities. Individual ethics determine THE basic values and standards of behaviour. Management is responsible for staff working in a business. The human resources function tries to employ the right people who will carry out their job roles well. It is up to the HR specialist, as well as line managers across a business, to make sure that staffs follow ethical guidelines of a firm. However, it is up to individuals to follow their own ethical principles at all times. Examples of poor ethical trading in Primark.
One of Primark’s UK suppliers was found to be employing illegal workers and paying staff less than the minimum wage. Primark clothes were being made in India by factories using child labour, they sacked three suppliers in Tirupur that had subcontracted the work to the factories using children after the news came in June last year. Terms and conditions have not been improved in Bangladesh factories supplying Primark for two years. The first report had disparaged the same factories in Bangladesh for having precarious working conditions and ridiculous play. A member of the ethical trading initiative with a supplier charter, Primark appeared to tick all the boxes on preventing poor practice.
Businesses including Primark will need to deal with ethical issues as it will give them bad publicity therefore give Primark a bad name and also they will lose customers. Also if they are losing customers they will be losing profit as not many customers are coming into Primark.
