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Business Ethics

Ethical issues in business may concern:

  • Employer/employee relations.
  • Company/customer relations.
  • Company/shareholder relations.
  • Company/competitor relations.
  • Relations between the company and the wider community.

Ethical problems in business can arise for a number of reasons. Some of these are shown below.

Financial Pressures  

Businesses need to be competitive in the marketplace and some businesses will view ethics as a constraint to profits. In some instances strong ethical principles can reduce profits e.g. labour costs may increase due to the requirement to pay employees a fair wage, or potential contracts may be lost to competing companies with less ethical principles who are engaged in activities such as bribery or the exploitation of a labour force or the environment.


The global diversification of organisations has also brought with it specific ethical dilemmas. Multinational organisations may do business with organisations in countries with different ethics to their own e.g. in countries where there is more widespread bribery, sexual or racial discrimination, and less legal protection e.g. of human rights and the environment. Multinational companies must decide whether to adhere to their own ethical principles or adjust to the ethical principles of the country they are working. On the other hand unethical business practices can prove costly - unethical businesses can potentially loose customers with have higher ethical principles, lose employees with higher ethical principles, lose their business reputation and incur legal costs.

Workforce requirements  

Businesses also face ethical issues resulting from the behaviour of its employees; some of which may have legal implications. For example, in many countries legal action may be brought on the grounds of discrimination where a supervisor or manager discriminates against an employee on the basis of protected characteristics such as age, race and gender. Unethical working conditions may also result in legal action e.g. where a business has failed to comply with safety standards around equipment/clothing etc.

Application of Business Ethics

There are many factors to consider when promoting an ethical business, these include:

  • Ethical businesses should be honest, obey the law, maintain professional standards and refrain from taking bribes or other dishonest forms of inducement.
  • Ethical businesses should treat employees fairly avoiding discrimination.
  • Ethical businesses should respect the community they operate in.
  • Being ethical can be a selling point when marketing a question; but there is a contrary dilemma to be considered:- Is it ethical to use ethics for marketing purposes?

Are you interested in learning more about businesses - how they operate, how they may be set up, or how to run a business?  ACS offer a great range of business courses, all studied by distance learning and all are available for you to start at any time.

If you have any questions or want to know more, get in touch with our highly knowledgeable Business tutors today. They will be happy to answer your questions, and discuss different options to meet your study aims.


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