2.1.4 Ethics and Business

In business, trade offs are made all the time. A trade-off is a compromise between one thing and another. There has to be a trade-off or compromise between making a profit and being ethical so everyone is happy.

The problem for business is that acting ethically can be expensive, which conflicts with what shareholders and owners want – which is to keep costs low so as to maximise profit.

So there is a trade off between acting ethically and profitably.

Pressure groups – organisations set up to try to influence what consumers think about the business and its environment. Their activity can impact on the marketing mix of a business.

There are advantages and disadvantages for a business acting ethically.

Advantages

better reputation = more sales

better worker relationships = more productive workers

possible Government subsidies

attract investors

can charge higher prices

Disadvantages

buying Fair Trade and paying fair wages = higher costs

higher prices might mean reduced sales

high cost of investing in ‘green’ machinery