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Role of Ethics in Global Business Decisions

Business Management and Enterprise (Year 12) - Environments (U3)

Kanwal Singh

Introduction to Ethics

Businesses need to do more than make profits. They should be good global citizens. Their social influence should be used to help improve living standards all around the world.

Business ethics are the moral principles and guidelines that guide a business when making decisions and developing strategies. Good ethics are paramount for a business. They enhance reputation, which leads to an increased customer base; recruitment and acquiring finance also becomes easier. They improve staff morale, which leads to a rise in productivity. They also help the business resolve legal problems and media scrutiny.

Environmental Responsibility

Environmental responsibility involves consideration of both proactive and reactive sustainable actions. Businesses have environmental standards that they legally need to abide by (considered reactive). However, many firms understand that environmental responsibility is more than just a legal duty. It affects the long-term success of their business. As a result, they may proactively implement certain initiatives, whist considering the following:

  • Be conscious about decisions regarding sustainability.

  • Use techniques, such as lean production and recycling, to reduce carbon emissions and be conscious of their environmental impact

  • Consider the costs, both short-term and long-term, when deciding to act sustainably

  • Aim to be proactive, in the interest of the environment and public perception.


Outsourcing is when a business transfers its non-core activities from internal teams to an external specialist party to complete the task. It is often done because the other party is more skilled at doing the task and the internal team isn't able to perform the task as efficiently. When outsourcing, the following should be considered:

  • The loss of the business' own workforce, as their current workers will be made redundant

  • The lack of control over the workers and the standards of the external firm

  • Being able to deal with vendors directly, instead of individual staff members

  • The potential to have lower costs, making them more manageable, as outsourced firms tend to be more cost-effective

Use of Offshore Labour

Offshoring is the practice of basing some of a company’s processes overseas, usually to take advantage of their lower labour costs. It is different from outsourcing, as with offshoring, the company’s staff members are sent overseas. When using offshoring, the following should be considered:

  • Not using sweatshops or factories with poor working conditions, where workers are underpaid

  • Not forcing workers to work long hours without breaks, for no pay, or as punishment for mistakes

  • Maintaining the quality of the products and ensuring consistency with the brand

  • Conducting surprise visits and inspections to the offshore location

  • Working with local unions and communities, along with maintaining good relationships with them

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