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External Influences 4
Business Ethics, Moral and Environmental Issues

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External Influences

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Business Ethics

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Business Ethics
Rules or standards governing the conduct of a business Moral code what is right and what is wrong ! "ighl# sub$ective nature %ension between different sta&eholders
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'ta&eholders

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'ta&eholders
Responsibilities to stakeholder groups: hareholders (enerate )rofits and )a# dividends Custo!ers )rovide good *ualit# )roducts at reasonable )rices+ 'afet#, honest#, decenc# and truthfulness "!ployees health and safet# at wor&, securit#, fair )a# uppliers )a# on time, )a# fair rates for the wor& done, )rovide element of securit#

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'ta&eholders
#ocal Co!!unity )rovide em)lo#ment, safe wor&ing environment, minimise )ollution and negative externalities )rovide external benefits! $o%ern!ent abide b# the law, )a# taxes, abide b# regulations &anage!ent their aims versus those of the organisation as a whole "n%iron!ent limit )ollution, congestion, environmental degradation, develo)ment, etc+

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Moral Behaviour

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Business Ethics
'ensions: ,rofits versus higher wages Ex)ansion versus develo)ment ,roduction versus )ollution 'u))lier benefits versus consumer )rices-lower costs 'urvival of the business versus needs of sta&eholders
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Business Ethics
"(a!ples: ,roduction of children.s to#s /offee industr# Bab# mil& Music industr# Multi0national o)erations Mc1onalds food *ualit#, litter /hocolate industr# 2eweller# diamonds and gold /hemical industr#
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Business Ethics
olutions:
%axation 'elf Regulation 'ubsidies (overnment-E3 regulation 4egislation ,ressure (rou)s Im)rove com)etition and contestabilit# of mar&ets 'ocial and Environmental 5udits
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'ocial and Environmental 5udits

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Environment
)rban blight excessive develo)ment, ina))ro)riate develo)ment, use of greenbelt land *aste land0fill! re0c#cling! burning! "nergy use renewable energ#, non0renewable resources $lobal *ar!ing fact or fiction! +ollution:
6oise 5ir 4and 'ea 7ater

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Externalities
Im)act on a third )art# of a business decision
%hose affected not involved in the decision ,egati%e e(ternalities negative effects of business activit# )ollution, urban develo)ment, etc e+g+ out of town sho))ing centres im)act on cit# centres
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Externalities
+ositi%e "(ternalities:
Benefits to third )arties of business activit# e+g+ new infrastructure as a result of develo)ment, side effects of research and develo)ment, technolog# 8the Internet!9, convenience, im)roved standards of living :ut of town sho))ing centres greater ease of access, ever#thing in one )lace, )leasant environment to sho) in, etc+

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Externalities
:ut of town sho))ing centres;
"ighlights com)lexit# of the interaction of )ositive and negative externalities

(overnment )olicies encourage business activit# that leads to )ositive externalities and discourage those that lead to negative externalities
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