2.2a Ethics
Ethics and Laws
Ethics: how a person conducts their lives based on what they feel is right or wrong.
Laws: Rules in society which are enforced by penalties, such as fines or prison.
A business may do something which is legal but unethical.
Ethical Behaviour
Treating workers well, paying a decent wage, using sustainable materials, reducing pollution, and advertising fairly are all ethical considerations.
Some companies create their own ethical policies, which go further than legal requirements. For example:
- Limiting the number of hours staff can work
- Guaranteeing minimum wages
- Banning testing on animals
But these can increase a businesses costs.
Pros and Cons of Ethical Policies
Advantages
- Treating staff better can mean they are more motivated and more productive
- Some investors will not invest in unethical companies
- Governments may introduce new laws to force businesses to act ethically
- Poor publicity for unethical practice can harm sales
- Customers may be willing to pay extra for ethical products (e.g. Fairtrade products)
Disadvantages
- Paying fair wages increases costs
- Ethically-sourced materials can be difficult and expensive to find
- Acting ethically can increase your costs and reduce your profit
- If you increase prices, your product may become uncompetitive
Ethical Advertising
UK Law states that all marketing and advertising must be:
- an accurate description of the product or service
- legal
- decent
- truthful
- honest
- socially responsible
Case Study: The Body Shop
The Body Shop was founded by Anita Roddick in 1976 in Brighton. Built on ethical commitments to be environmentally friendly and anti-animal testing before the concept was widely understood. The Body Shop now has over 3000 stores in 66 countries.
The Body Shop has benefitted from ethical practices in the following ways:
- A positive perception, attracting a loyal customer base who prioritise ethical considerations.
- Loyalty from customers who value transparency, fairness, and environmental responsibility.
- Differentiation and a competitive advantage in an increasingly crowded beauty market.
- Attraction and retention of talented staff who share the same ethical principles.
- Partnerships and stakeholder collaboration which amplify the brand's ethical message.
- Innovation which attracts environmentally conscious consumers and helps drive industry-wide change.