Ethics (Edexcel A Level Business)

• 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 profits and, for example, be less interested in the mental well-being of the employees

• The management work daily with the employees and will often sacrifice some profit in the interest of looking after their workers health and mental well-being

•  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 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 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 child labour working in their factories in Bangladesh

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

  • E.g. working 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 their products and services do not involve exploited labour 

• Labelling must comply with the regulation 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

  • Size

  • Content of the product 

  • Features 

  • Functionality

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

  • This severely damaged their brand

• Promotional activities should not be offensive or illegal

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