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Unit 37 - Understanding Business Ethics - P3 M2

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A well written, detailed assignment which meets the criteria for P3 and M2 - Unit 37 Understanding Business Ethics. BTEC Level 3 Extended Diploma in Business. P3 - Describe the social implications of business ethics facing a selected business in its different areas of activity M2 - Assess the socia...

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  • January 18, 2017
  • 8
  • 2016/2017
  • Essay
  • Ccunningham
  • P3 m2

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Conor Cunningham P3 M2


LEARNER ASSESSMENT SUBMISSION AND DECLARATION
When submitting evidence for assessment, each learner must sign a declaration confirming
that the work is their own.

Learner name: Conor Cunningham Assessor name: F Mooney

Issue date: 18.11.16 Submission date: 02.12.16 Submitted on: 02.12.16

Programme: BTEC Level 3 Extended Diploma In Business

Unit: 37

Assignment reference and title:
Understanding Business Ethics


Task ref. Evidence submitted Page numbers or
description
Task 3 P3 M2


Learner declaration

I certify that the work submitted for this assignment is my own. I have clearly referenced
any sources used in the work. I understand that false declaration is a form of malpractice.

Learner signature: Conor Cunningham Date: 02.12.16


Task 3

You are tasked with creating a series of one page information leaflets which:-

i) Describes the social implications of ethics in the different areas of business activity
to include:- ethics in finance eg bribery, executive pay, insider trading, lobbying;
ethics in human resource management eg discrimination, worker surveillance; ethics
in production eg animal testing, genetically modified food, planned obsolescence;
ethics in sales and marketing eg spamming, shills, product placement, green
washing; ethics in intellectual property eg software piracy, counterfeiting, peer-to-
peer file sharing (P3)

ii) Assesses the social implications of ethics in the different areas of activity to
include global implications eg environment; corporate implications eg legal and
regulatory compliance, policies and practices; individual implications (individual,
consumer) (M2)

This provides evidence for P3 and M2

,Conor Cunningham P3 M2


Ethics in Finance

When organisations are dealing with financial aspects of business
such as dealings and payments, there is potential for many
different forms of unethical behaviour.

Bribery is a form of corruption and is the use of financial muscle to gain unfair advantage
over others. This includes paying sums of money to win contracts or taking ‘back handers’
which involves allocating contracts unfairly. In September 2014, there were claims against
Tesco that their directors attempted to cover up millions of pounds of profits. This leads to
more unethical practices as it is falsifying accounts and not paying proper taxes. Changing
financial figures is also an unethical issue in relation to finance and in 2016 Tesco executives
were found to have changed profit figures which are hugely unethical practices in business.
This corruption is unethical and has many different social implications. These include a loss
of trust in the stock market as investors will not be willing to buy shares in the company.
This could mean that Tesco could no longer operate as a Public Limited Company and stores
would have to operate as sole traders and/or partnerships. This also has implications on
employees as they may no longer have the same job security as they would have if their
company was a PLC. It also has implications on consumers who may have to pay higher
prices as Tesco are not able to make use of economies of scale and have to put their prices
up. Tesco could also lose consumers due to this as consumers seek products and services
elsewhere for lower prices.

Another unethical practice in relation to finance is executive pay. This involves companies
such as Tesco paying high salaries and bonuses to executives known as ‘fat cat salaries’. This
is unethical as executives are taking more money out of the business than they are entitled
to and other employees within the company are not being paid for the hard work they do.
In the first six months of 2014, Tesco chief executive Dave Lewis received £4.13million for
just six months work within the company. This has global implications such as shareholders
selling their shares in the company as they believe they are not receiving the dividend they
should be. This unethical behaviour also has other implications such as an increase in strikes
and industrial action as employees are unhappy with the inequity in pay.

Insider training refers to the illegal use of inside information in dealing on the stock
exchange. This is unethical as the directors of the company who have a lot of inside
knowledge would make capital gains. In a sense this is also stealing from the business as
they are taking more than they are entitled to and this has implications. Tesco must draw up
clear policies and procedures on finance and make sure that they adhere to laws, rules and
regulations and that all employees are aware of them. Insider training also has implications
on the consumer as well as investors as they lose trust in the company as they feel the
employees are not being honest with them as stakeholders. This shows how this kind of
unethical behaviour can be detrimental to the success of Tesco.

Lobbying is also an unethical practice. This is using wealth to put pressure on governments
and government ministers to introduce new laws and procedures favourable to the
company. An entrepreneur who sold a site near Istanbul to Tesco, which is set to become its
biggest store in the country, allegedly bribed a politician to push through the planning

, Conor Cunningham P3 M2


application on the site more swiftly. The supermarket paid Mehmet Karasu £6.9 million for
the site and he is accused of then offering £533,663 to a member of Turkey’s AKP party in
order to have permission for the development agreed within less than a year. Although
Tesco were not guilty in this situation, it has corporate implications as it reflects poorly on
the company to be involved in such a scandal. This also has global implications such as
societies and citizens turning against the company as well as pressure groups such as
Tescopoly protesting. Consumers and employees also may feel disappointment and/or
embarrassment in the company and may wish to leave being a stakeholder completely.
Lobbying also results in a loss of confidence in governments if they are taking bribes from
powerful people and businesses.

Ethics in Human Resource Management

Human Resource Management is crucial in the success of every business and treating this
area ethically is vital.

An unethical practice in business with regards to human resource management is the
discrimination of employees. This may be on the grounds of sex, age, sexuality, disability or
political opinion in the selection for promotion. In November 2014, a former Tesco
employee was awarded £10,000 after he was disciplined for failing to show up to work. The
employee was from Poland felt that he had been discriminated against due to his nationality
as other Irish employees had not been treated in the same fashion. This discrimination
overlaps with other unethical issues such as unfair treatment of staff and inequality of staff.
This has implications on employees as they are not happy as well as global implications such
as pressure groups taking action against the company. Discrimination also had corporate
implications on Tesco as they must adhere to UK and EU rules and regulations and must
draw up clear policies and procedures on human resource activities such as an equality
policy. If they fail to do this, it negatively impacts their corporate image and reflects poorly
on the company.

It may be argued that worker surveillance is an unethical practice carried out by businesses.
This involves placing cameras on employees as they are watched when they carry out their
working duties. There is the argument that this invades the privacy of people and is
completely unethical to implement into the workplace. Tesco have cameras in all stores and
this has implications on employees as they may not like being
watched at all times. It also has implications on consumers as
they may also feel uncomfortable being watched by cameras
whilst carrying out their shopping. Worker surveillance also has
implications on Tesco as they should be aware of how they
monitor their staff and how footage is managed in accordance
with the Data Protection Act.

Tesco have also been accused of other unethical practices which have implications on many
different stakeholders. This includes abuse of employees such as child labour, sexual
harassment and unequal pay for staff. It is illegal and unethical for Tesco to pay their
employees anything below the national living wage. In October 2016, Tesco were found to
be involved in a law suit for the cutting of staff wages on night shifts and weekends. This has

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