What is meant by a trade-off between ethics and profit?

Acting ethically often raises a business's costs, which can reduce profit. A business must decide how much profit it will give up to act responsibly.

Why might a clothing retailer face a trade-off between ethics and profit?

The retailer could buy from overseas factories that pay fair wages and keep workers safe. Factories like these charge more, so the retailer's costs rise and its profit may fall.

What are the benefits of ethical behaviour for a business?

Ethical behaviour can attract customers and build a strong reputation. Ethical businesses may also find it easier to recruit and keep staff.

What are the drawbacks of ethical behaviour for a business?

Ethical sourcing and higher wages increase costs and can reduce profit. Higher prices may lose customers who care mainly about price.

AQA GCSE Business 8132

Business in the Real World

Topic overview What a business is and why people start one Goods, services, needs, wants and factors of production Business sectors, entrepreneurs and a changing business environment Sole traders, partnerships, limited companies and not-for-profit organisations Business aims and objectives Why business objectives differ and change Stakeholders and their influence on businesses Factors affecting business location Business planning and basic financial terms Expanding a business and economies of scale

Influences on Business

Topic overview E-commerce and digital communication Ethics, the environment and sustainability Interest rates, employment and consumer spending Globalisation and exchange rates Employment, health and safety and consumer law Competition, risk and uncertainty

Business Operations

Topic overview Job, flow and lean production Managing stock: just in time and just in case Suppliers, procurement, logistics and supply chains Quality control, quality assurance and TQM Customer service and the sales process

Human Resources

Topic overview Organisational structures, span of control and delegation Recruitment, selection and contracts of employment Financial and non-financial methods of motivation Induction, on-the-job and off-the-job training

Marketing

Topic overview Identifying and satisfying customer needs Market segmentation Purpose of market research and primary and secondary research Market research methods and interpreting findings Pricing methods and factors affecting price New products, USP, brand image and the Boston Matrix Product life cycle and extension strategies Promotional methods and the promotional mix Channels of distribution, e-commerce and m-commerce The integrated marketing mix

Finance

Topic overview Sources of finance Cash flow and cash flow forecasts Financial calculations and average rate of return Break-even charts and margin of safety Income statements and statements of financial position Profit margins and judging financial performance

Influences on Business

Ethics, the environment and sustainability

3 things to know
Both papers

Overview

Ethical behaviour and its trade-off with profit, traffic, recycling, waste and pollution, the costs and benefits of going green, consumer pressure, global warming and scarce resources.

What you need to know

Answer each one before you reveal it.

Your recallNot started

Key term

What does ethical behaviour mean for a business, and what can it cost?

Key term

What does it mean for a business to behave ethically?

Key term

Give three examples of ways a business can behave ethically.

Questions from this subtopic

Each one with the model answer underneath.

1
What does it mean for a business to behave ethically?
Model answer
An ethical business does what is morally right, not just what is legal. An ethical business treats customers, staff and suppliers fairly and honestly.
2
Give three examples of ways a business can behave ethically.
Model answer
A business can buy Fairtrade products, pay staff a living wage and advertise honestly.
3
What is meant by a trade-off between ethics and profit?
Model answer
Acting ethically often raises a business's costs, which can reduce profit. A business must decide how much profit it will give up to act responsibly.
4
Why might a clothing retailer face a trade-off between ethics and profit?
Model answer
The retailer could buy from overseas factories that pay fair wages and keep workers safe. Factories like these charge more, so the retailer's costs rise and its profit may fall.
5
What are the benefits of ethical behaviour for a business?
Model answer
Ethical behaviour can attract customers and build a strong reputation. Ethical businesses may also find it easier to recruit and keep staff.
6
What are the drawbacks of ethical behaviour for a business?
Model answer
Ethical sourcing and higher wages increase costs and can reduce profit. Higher prices may lose customers who care mainly about price.

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Business in the Real World

Influences on Business

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Human Resources

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The pays a fee and a share of revenue.

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AThe business pays more interest on the money it owes.

BHigher interest charges raise costs and reduce profit.

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Wage means pay based on the number of hours worked.

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