Ethics (Edexcel A Level Business): Revision Note

• Management may be more focused on output or reducing costs than on worker safety or creating a positive working environment

• Workers want to be safe and have a comfortable environment in which to work

• The owners (shareholders) want management to maximise the business's profits and, for example, be less interested in the mental wellbeing of the employees

• Management works daily with the employees and will often sacrifice some profit in the interest of looking after workers' health and mental wellbeing

• The owners (shareholders) aim to maximise output so as to generate increasing levels of profit

• Higher output requires more rapid usage of natural resources and generates more environmental damage

• Many developed countries have regulations about how businesses should dispose of their waste 

• LEDCs usually have less regulation and enforcement on waste management

  • There is usually poor waste management infrastructure

• MNCs can also dispose of waste in LEDCs at a cheaper cost, which allows them to maintain their high profits

• Four major MNCs (Coca-Cola, Pepsi, Nestle and Unilever) dispose of half a million metric tonnes of plastic across six developing countries (Tearfund, 2020)

• Emissions are often released from factories or from products made by MNCs 

  • E.g. the Carbon Majors database report found that just 100 companies are responsible for 71% of the global emissions that cause global warming 

• The emissions MNCs produce have a negative impact on local communities, causing health issues such as asthma, cancer and skin irritations

Child labour 

Exploitation of labour 

• Some MNCs have manufacturing facilities in countries where child labour is common

  • Usually in areas where children are working to generate income for the family

• MNCs using child labour in their supply chain face backlash, which can damage their brand and affect sales

  • E.g. there were protests outside the Primark Oxford Street store after a documentary revealed that child labour was used in its factories in Bangladesh

• Exploitation of labour can take the form of low wages and poor working conditions

  • E.g. workers having to work long hours and with poor ventilation

• MNCs are under increasing pressure from governments, customers and institutions, such as the International Labour Organisation, to take action to ensure that their products and services do not involve exploitative labour practices

• Labelling must comply with the regulations of the country

  • The information must be correct and not include any false information aimed at generating higher sales 

• Examples of misleading information include false information about a product's:

  • Size

  • Content

  • Features 

  • Functionality

• E.g. Volkswagen was found to falsely promote "clean diesel" vehicles and had to pay approximately $34bn in fines

  • This severely damaged the brand

• Promotional activities should not be offensive or illegal

  • E.g. Nivea had to pull its "White is purity" campaign for its deodorant in the Middle East, as the public believed it was promoting white supremacy