Lesson 3: Ethical Issues

Business associates and competitors

Businesses work with other businesses to obtain services and supplies to produce their products or services.


These business associates sometimes are suppliers, contractors or subcontractors, or consultants. Recently, more debate has occurred over how extensively a business should investigate the ethical practices of its suppliers before doing business with them. The business must decide what societal price it is willing to pay for the cost of doing business.

Should a manufacturing company purchase supplies from an organization that pollutes the environment to obtain those resources?
Should a clothing company purchase supplies from a factory that employs child labour?




Competition is another area of ethical concern.


Businesses must consider how far they are willing to go to beat the competition. Most people understand that, to survive, businesses must compete effectively to be profitable and remain feasible, but a company must determine what is ethical and what is not ethical in its dealings with its competition.


Can you think of unethical dealings in which a business might engage to beat the competition?


Click answer below after you have thought about this question.

Falsified records, promoting rumours, illegal access to trade secrets, and illegal take-overs are some ethical concerns related to interactions with competitors.

Why are social responsibility and ethics important?


To survive today, a business must conduct itself in a socially responsible manner. Although it is primarily an economic institution, a business must take social, political, and ethical considerations into account. How individual managers deal with these social and ethical issues depends largely on the firm's management philosophy.