Business Ethics | The Impact of Ethics on Business
Summary
TLDRThis video explores the concept of business ethics, emphasizing the importance of moral conduct beyond legal obligations. It highlights the significance of fair treatment towards employees, suppliers, customers, and the environment. The video suggests practical steps businesses can take to enhance ethics, such as offering fair wages, employee benefits, ethical sourcing, and fair trade practices. It also discusses the impact of tax payments on a company's ethical reputation and challenges the notion that ethics must compromise profits, arguing that ethical businesses can gain customer loyalty and premium pricing.
Takeaways
- đ Business ethics involves operating beyond legal requirements and doing what is morally right.
- đŒ Ethical businesses should treat employees, suppliers, customers, and the environment fairly.
- đ° Implementing ethical policies might come at the cost of short-term profits.
- đ·ââïž Businesses can be more ethical by providing safe workplaces and fair wages to employees.
- đœïž Companies like Google offer extensive benefits to enhance employee satisfaction and productivity.
- đ Treating suppliers well includes paying fair prices and making timely payments.
- â Fair trade practices ensure suppliers are paid fairly for their products, like in the coffee industry.
- đ± Ethical sourcing involves using materials that are not produced through worker exploitation and have minimal environmental impact.
- đŒ Lush Cosmetics is an example of a company with a strong ethical buying policy.
- đ” Paying fair taxes is crucial for a company's ethical reputation, as tax avoidance can lead to negative public opinion.
- â»ïž Despite the potential for increased costs, ethical practices can lead to long-term financial benefits through improved brand image and customer loyalty.
Q & A
What is the primary focus of business ethics?
-Business ethics focuses on going beyond legal requirements and doing what is morally right, ensuring fair operations towards employees, suppliers, customers, and the environment.
How can a business demonstrate ethical treatment of its employees?
-A business can demonstrate ethical treatment by providing a safe workplace, paying a fair wage above minimum standards, offering financial incentives like bonuses or share schemes, and creating a supportive work environment with benefits such as free food, healthcare, and flexible hours.
What are some examples of employee benefits provided by Google to enhance ethical business practices?
-Google provides employee benefits such as free food, free medical and dental care, gyms, student loan repayment assistance, flexible working hours, and excellent communal spaces to create a positive work environment.
Why is it important for businesses to treat their suppliers ethically?
-Treating suppliers ethically is important because it ensures fair prices and timely payments, supports fair trade practices, and helps in building long-term, mutually beneficial relationships, which are crucial for business sustainability.
What does the fair-trade logo signify in the context of business ethics?
-The fair-trade logo signifies that the business has paid the producers a fair price for their goods, adhering to ethical standards that include fair wages, safe working conditions, and no child labor.
How does Lush demonstrate ethical sourcing in its business operations?
-Lush demonstrates ethical sourcing by having a strict ethical buying policy that ensures suppliers have good workers' rights, safe working conditions, no animal testing, and that materials are produced in an environmentally sustainable way.
Why is paying the fair share of taxes considered an ethical business practice?
-Paying the fair share of taxes is an ethical business practice because it contributes to the community and the country's economy, supports public services, and maintains transparency and accountability, which are essential for a company's reputation.
What was the consequence for Starbucks when they paid no corporation tax in the UK in 2011?
-Starbucks faced a public boycott and negative press coverage, which eventually led to them paying 20 million pounds to HMRC to rectify the situation and restore their reputation.
How can an ethical business approach potentially benefit a company financially?
-An ethical business approach can benefit a company financially by allowing it to charge premium prices for products, improving public opinion, enhancing brand image, and increasing customer loyalty due to alignment with customers' values.
What is the counterargument to the idea that being ethical comes at the expense of profits?
-The counterargument is that while ethical practices may increase costs, they can also lead to financial benefits through premium pricing, improved reputation, and customer loyalty, which can outweigh the initial costs.
Why is it crucial for businesses to adopt ethical practices in today's climate?
-In today's climate, where consumers are more aware and active on social media, it is crucial for businesses to adopt ethical practices to avoid negative exposure and maintain a positive public image, as unethical actions can quickly damage a company's reputation and financial performance.
Outlines
đ Ethical Business Practices and Their Impact
This paragraph discusses the concept of business ethics, emphasizing the importance of moral conduct beyond legal requirements. It highlights that ethical businesses should treat their employees, suppliers, customers, and the environment fairly. The paragraph suggests that while ethical practices might seem counterintuitive due to potential profit sacrifices, they are crucial. It lists various ways businesses can act ethically, such as providing safe workplaces, fair wages, financial incentives, and comprehensive benefits to employees. Google is cited as an example of a company that excels in employee satisfaction through its generous benefits package. The paragraph also touches on fair trade practices, ethical sourcing of materials, and paying suppliers fairly, using the coffee industry and Lush as examples. It concludes by discussing the importance of paying taxes ethically, mentioning Starbucks' tax controversy as a cautionary tale.
đč Balancing Ethics and Profits in Business
The second paragraph argues against the notion that ethics and profits are mutually exclusive. It posits that businesses can recover the costs of ethical practices by charging premium prices due to their ethical credentials. The paragraph outlines the financial benefits of being an ethical business, such as improved public opinion, a better brand image, and increased customer loyalty. It emphasizes the current consumer climate where ethical business practices are not just beneficial but necessary to avoid negative press and social media backlash. The paragraph concludes by encouraging viewers to engage with the content and subscribe for more business-related videos.
Mindmap
Keywords
đĄBusiness ethics
đĄEmployee treatment
đĄFair wage
đĄFinancial incentives
đĄSupplier treatment
đĄFair trade
đĄEthically sourced materials
đĄTax payments
đĄEthical vs. Profits
đĄPublic opinion and brand image
Highlights
Business ethics involves going beyond legal requirements to act morally right.
Ethical businesses operate fairly towards employees, suppliers, customers, and the environment.
Implementing ethical policies might come at the expense of profits.
Treating employees well is a key step towards ethical business practices.
Paying a fair wage that allows employees to live comfortably is crucial.
Financial incentives like bonuses and share schemes can benefit employees.
Google is an example of a company with high employee satisfaction.
Google offers extensive benefits like free food, medical care, and flexible working hours.
Fair trade prices ensure suppliers are paid fairly for their products.
The coffee industry is a popular sector for fair trade products.
Lush has an ethical buying policy that ensures fair treatment of suppliers.
Ethical sourcing of materials is important for businesses to be seen as ethical.
Paying fair share of taxes is vital for a business's ethical reputation.
Starbucks faced backlash for not paying corporation tax in the UK in 2011.
Ethical practices can lead to increased costs but also premium pricing and improved public opinion.
Ethical businesses can gain customer loyalty and a better brand image.
Acting unethically can lead to negative press and social media exposure.
Transcripts
Business ethics is about going beyond what is legally required by law and is about doing
what is morally right.
Being an ethical business means operating in a way that is fair to its employees, suppliers,
customers, and the environment.
This approach can sometimes be counterintuitive for a business as implementing ethical policies
can sometimes come at the expense of profits.
But what changes can a business make to be more ethical?
Well, the first thing a business can do to be more ethical is treat their employees well.
This can be done through providing an employee with a safe place to work and by paying them
a fair wage.
This does not mean just paying the minimum wage but is about paying them a fair wage
that properly reimburses them for the work they do and that allows them to live a comfortable
life.
Companies can also provide other financial incentives that benefit employees when the
business performs well.
Such as bonuses or a share scheme where employees receive shares in the company they work for.
By owning shares in the company the employee directly benefits from share price increases
and dividend payments when the business operating successfully.
One business that always tops the charts for employee satisfaction is Google.
Not only do Google pay their employees well but they have a whole host of employee benefits
that help create an excellent working environment for employees.
Some of the benefits include free food, free medical and dental care, gyms, money towards
student loan payments, flexible working hours and excellent communal spaces where employees
can relax and socialise.
Google does not have to provide these things by law but they do so in an attempt to be
more ethical and treat employees well in the hopes of them being happier and more productive
at work.
The second step to being more ethical is treating suppliers well.
Paying fair prices and making payments on time are ways a business can act ethically
towards their suppliers.
Fair trade prices have been established to ensure suppliers are paid a fair price for
the materials they produce and sell.
A popular industry that has fair trade products is the coffee industry.
If a product has the fair-trade logo on the packaging this indicates that among other
things the business has paid the grower fairly for the coffee they have produced.
The fair-trade logo has become a symbol that a business is acting ethically towards suppliers.
Another way that businesses can move toward being ethical is by only using materials that
are ethically sourced.
Meaning that the materials have not been sourced through the exploitation of workers and that
environmental and social impacts have also been considered.
One excellent example of a business that has a track record of treating their suppliers
well and sourcing goods that are ethically produced and grown is Lush.
Lush has an ethical buying policy that outlines exactly how they treat their suppliers, covering
things such as making sure their suppliers have good workersâ rights, safe working
conditions (including no child labour), that the products they buy are never tested on
animals and that the materials have been produced in an environmentally sustainable way.
By having these policies Lush is taking a stance against suppliers that act unethically
in turn increasing their ethical credentials.
Lush has built a business around treating their suppliers well but mainly around the
ethical sourcing of the materials that go into their products.
Paying their fair share of taxes is another ethical approach to business.
Tax payments can be substantial for major corporations and ensuring these are paid fully
is vital if the business it to be seen as ethical.
This is because many global brands use legal loopholes in the tax law to avoid paying tax
legally.
But remember what is ethical and what is legal are two different things and although tax
avoidance is not illegal it is not looked upon favourably by consumers and governments
and can instantly give a business an unethical reputation through negative press coverage.
Starbucks is an excellent example of this, as they paid 0 corporation tax in the UK in
2011, which resulted in a public boycott of the brand and an eventual payment of 20 million
pounds to HMRC.
Companies paying their fair share of tax is a hot topic and if the correct tax is not
paid it can instantly impact a businessâs reputation.
Many argue that being ethical comes at the expense of profits.
This is because for a business to pay workers well, source ethically produced materials,
pay suppliers fairly and pay their share of tax all means increased costs to the business,
which in turn can have an impact on their profit margins in comparison to businesses
not taking an ethical approach.
However, there is a strong argument that there does not have to be a trade-off between ethics
and profits as many businesses can recoup these increased costs because ethical credentials
allow a business to charge premium price for their products in comparison to their unethical
rivals.
Plus, an ethical business also benefits financially from things such as improved public opinion,
a better brand image and increased customer loyalty due to the business having values
that align with their customers.
In fact in todayâs climate where customers are much more aware of how businesses operate,
it can be financially costly not to take an ethical approach to business as companies
are increasingly exposed in the press and most noticeably on social media when they
act unethically and take advantage of employees, suppliers and the environment.
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