Business ethics and social responsibilities
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Business Ethics and Social Responsibilities. Learning Objectives. To analyse the impact of ethical behaviour on business activities To analyse and evaluate business’ social responsibility to stakeholders. Business Ethics.

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Business ethics and social responsibilities

Business Ethics and Social Responsibilities

Learning objectives
Learning Objectives

  • To analyse the impact of ethical behaviour on business activities

  • To analyse and evaluate business’ social responsibility to stakeholders

Business ethics
Business Ethics

Definition: Ethics are the moral principles that should underpin decision making.

Business ethics can provide moral guidelines for conduct of business affairs.

2 influences that shape moral behaviour of businesses:

  • Individuals – have own moral codes, values and beliefs

  • Corporate culture

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?

Ethical code of practice
Ethical code of practice wrong in certain circumstances.

  • A document that sets out the way a business believes its employees should respond to situations that challenge their integrity or social responsibility

  • Introduced to improve the behaviour and image of businesses

  • Advantages: wrong in certain circumstances.

  • Marketing advantages – increasing number of consumer taking into account a firm’s ‘behaviour’ when buying products. Business may develop their behaviour into a USP

  • Improvement in recruitment and retention of staff

  • Improve employees motivation

  • Disadvantages:

  • Increase costs

  • Loss of profits

  • Conflict with existing policies

Social responsibilities
Social Responsibilities wrong in certain circumstances.

The duties a business has to employees, customers and other stakeholders as well as to its shareholders

Shareholders wrong in certain circumstances.



Smile Magazine Ltd




Local community

Meeting social responsibilities
Meeting social responsibilities wrong in certain circumstances.

  • Providing information

  • Working for the community

  • Working for the environment

    Social audit – independent investigation into firm’s activities and its impact on society

Shareholder vs stakeholder
Shareholder VS Stakeholder wrong in certain circumstances.

  • Managers are solely responsible to owners of the organisation

  • Advantages:

  • Avoid conflicting objectives

  • Improves short-term profitability

  • Business attempts to satisfy the needs of all stakeholder groups

  • Advantages:

  • If successful – may enjoy higher long term profits

  • Improve reputation and image

  • Attract investors

Allocation of marks
Allocation of marks Leah to move production to Spain. (8 marks)

  • Analyse the ethical issues surrounding the decision made by Leah to move production to Spain. (8 marks)

    K 2 P 2 A 4

  • To what extent has Smile acted in a socially responsible manner to its employees and one other stakeholder. (15 marks)

    K 3 P 3 A 4 E 5