Good ethics is good business (OCR A-Level Religious Studies): Revision Notes
Good ethics is good business
Good ethical decisions will lead to being more profitable so is good business sense.
Doing the right thing will make for good business because**:**
Maximises profits as an ethical business will attract more customers.
Adam Smith wrote about Capitalism in the 18th Century he led the way with his idea of ethical egoism, within this he argues that the sensible business behaves ethically for self-interest.
"It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest." (Wealth of Nations).
Indicating that business is not motivated by selflessness but rather profit. So, business being ethical could lead to good business if it results in profit as this is the only motivating factor for a business.
Businesses ranked on the FTSE Good index, customers will be attracted to businesses on this index as they support ethical ideas such as fair trade or community projects.
Customer support will lead to more profits which will attract more shareholders to enable to business to grow. Staff will reap the rewards of more customers in longer employment and wages showing that good ethics does lead to good business.
Some people will disagree with this idea:
Business decisions are inherently unethical because they are interested in profit.
What people say they want does not always equate what they do want e. g: Fair trade is an ideal that people like to promote but it leads to more expensive goods which people do not always support.
Being ethical can make a business less competitive e.g. paying living wages means less profit, which can lead to goods costing more and so the business attracts fewer customers.
Case studies:
The Body Shop
The Body Shop is an ethically driven company that promotes nature-inspired cosmetics which are never tested on animals.
It changed the expectations people had of business by incorporating the action of social change, especially in human rights, animal welfare, and the environment. The body shop became a successful profit-making company based on its ethical stance and products.
- The Body Shop agreed to a £652 million takeover offer by L''Oreal, the French cosmetics giant.– Which at the time was notorious for unethical cosmetics (use in the weakness)
Run a free bus service for employees to HQ's, they encourage employees to drive electric cars, with hundreds of chargers on-site. Google also invests heavily in solar and wind power, with the ambition of becoming the world's first carbon-neutral company in the foreseeable future. It has made a green pledge:
- It will work to run its operations purely on carbon-free energy by 2030. Being green comes as a great benefit to Google, recycling and turning off the lights lowers costs and has seen an overall drop in power requirements by an average of 50 percent showing good ethics is good business.
- 80-20 project means workers are allowed to work 1 day per week on personal interest projects. The personal interest projects mean that not only do they employ the best-qualified staff (as this is an attractive perk), but they are at the forefront of innovation, as they will often sponsor projects that will be successful, showing good ethics in good business.
Ford
Ford is a world leading automobile company, Henry Ford famously argued that "A business that makes nothing but money is a poor kind of business". Indicating his understanding that a business should be ethical and show CSR for its stakeholders.
However, in 1970 they built a car that they knew was faulty but had also worked out that it would be cheaper to get sued if the car damaged human life than it was to recall their cars, so they continued to sell the Ford Pinto in 1972 Lilly Grey stalled as she entered a merge lane on a California freeway, her Pinto was rear-ended by another car travelling about thirty miles per hour, the Pinto exploded in a ball of fire. The driver died and the 13-year-old victim was disfigured.
Utilitarianism
The Ed Snowden case shows that whistle blowing is not always supported by utilitarianism.
Act utilitarianism is the only approach that allows the flexibility needed to approach business ethics as it allows each situation to be considered, so in the case of Sports Direct and Animal Welfare we should whistle blow but in the case of Ed Snowden, we should not. For this reason, it can be argued to be the best approach.