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Business ethics

Standards of behaviour or ‘codes of conduct’ that businesses are expected to follow. They guide decision making and govern the operation of a business, including its relationship with its various stakeholders (eg customers, employees, suppliers, shareholders, local communities). They generally result from the business founder’s and / or owners’ set of morals ie beliefs about what is right, good, fair and just, and what is wrong, bad, unfair and unjust, which are, in turn, influenced by the beliefs held within the society as a whole and laws upheld within the country in which the business operates. Ethical issues in business often concern fairness, honesty and integrity, and courteousness ie consideration and respect towards the interests / needs of others likely to be affected by the business’s activities. To some extent, the above behaviours are enforced by law. The law lays down what is illegal, unlawful and prohibited in our society. It is, however, possible that certain actions permitted by law are regarded by some people as ‘wrong’, and that to behave in that way is unethical and contrary to their idea of what is ‘right’. For instance, supplying tobacco products to adults is legal but some people might regard it as ‘wrong’ because of the harm tobacco causes. Similarly, gambling is legal but, again, it offends some people’s sense of what is right and wrong. The testing of products on animals is within the law (although subject to licensing) but, again, some people consider it wrong and unethical. In many cases, an action is both unethical and illegal, for example, supplying illegal drugs, or selling alcohol to minors. Business ethics may, therefore, involve screening out, and refusing to deal with or invest in businesses that have a negative social or environmental impact, (for example, those relating to animal exploitation and experiments, addictive products such as tobacco, alcohol and gambling, pornography, armaments and nuclear weapons), and selecting those that make a positive contribution to society or the environment, (such as, firms that contribute to environmental protection through pollution control, energy conservation and recycling). Acting ethically may have cost implications and may require a business to take action that sacrifices profit. On the other hand it could actually lead to the opposite. Besides helping to ensure the laws upheld within the society are not broken (as the vast majority of laws are based on morals and ethics), and thus, minimise costs associated with breaking laws, customers and other stakeholders will judge a business in terms of its compliance with an ethical code.

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