how businesses may respond to ethical issues
6.4.1 Ethical Issues 🚨
What is an Ethical Issue?
An ethical issue arises when a business decision may affect the well‑being of people, the environment or society. Think of it as a moral “crossroads” where the company must choose the path that does the least harm and the most good.
- Impact on employees (fair wages, safe conditions)
- Impact on customers (product safety, truthful advertising)
- Impact on the environment (pollution, waste)
- Impact on society (fair trade, community support)
Why Ethics Matter in Business 🏢
Ethics are the invisible glue that keeps a company trustworthy. When a business behaves ethically:
- Customers feel safe buying products.
- Employees stay loyal and productive.
- Regulators and the public view the company positively.
- Long‑term profits are more sustainable.
📌 Analogy: Think of ethics as the “fuel” that keeps a car running smoothly. Without it, the car stalls and eventually breaks down.
How Businesses Respond to Ethical Issues
Companies use a range of strategies to tackle ethical dilemmas. Below is a quick guide.
| Response Type | Description | Example |
|---|---|---|
| Policy Development | Create written guidelines that all staff must follow. | A company’s “Code of Conduct” on fair trade. |
| Training & Awareness | Educate employees about ethical practices. | Workshops on safe handling of chemicals. |
| Stakeholder Consultation | Seek input from employees, customers, suppliers. | Surveys on product safety concerns. |
| Corporate Social Responsibility (CSR) | Engage in community projects and environmental initiatives. | Tree‑planting campaigns, local charity partnerships. |
| Transparency & Reporting | Publish annual sustainability reports. | Annual ESG (Environmental, Social, Governance) report. |
| Whistleblowing Systems | Allow staff to report unethical behaviour anonymously. | Hotline for reporting safety violations. |
Case Study: The “GreenTech” Dilemma 🌱
GreenTech, a small electronics firm, discovered that a cheaper supplier used child labour in its factories. The company faced a tough decision: keep the low cost or switch to a more expensive, ethical supplier.
- They conducted a stakeholder consultation and found customers were willing to pay a small premium for ethical products.
- GreenTech implemented a policy development that banned suppliers with unethical practices.
- They launched a CSR campaign highlighting their commitment to fair trade.
- Result: sales rose by 12% and brand loyalty increased.
📌 Exam Tip: When answering questions, mention at least two response types and give a real‑world example.
Exam Tips for 6.4.1 Ethical Issues
- Use the PEEL structure (Point, Evidence, Explanation, Link) to answer essay questions.
- Remember the five response types (policy, training, consultation, CSR, transparency, whistleblowing).
- Give specific examples (e.g., “Nike’s Fair Labor Association” or “Patagonia’s Worn Wear program”).
- Highlight the benefits of ethical behaviour: trust, brand value, risk reduction.
- Use emoji or colour coding in your notes to remember key points quickly.
Revision
Log in to practice.