⚖️ Ethics in Growing Businesses
Theme 2 ethics focuses on how larger, growing businesses manage ethical responsibilities across their operations — particularly in global supply chains.
Larger businesses face more complex ethical challenges than startups: global supply chains (are suppliers treating workers fairly?), marketing to vulnerable consumers, employment practices (fair pay, diversity), and environmental impact at scale. Ethical failures at scale can cause catastrophic reputational damage.
🌍 Supply Chain Ethics
Global supply chains create ethical challenges — a business may behave ethically itself but use suppliers that do not.
🏭 Common Supply Chain Ethical Issues
- Child labour in factories producing goods for Western brands
- Unsafe working conditions (e.g. Rana Plaza factory collapse, Bangladesh 2013)
- Poverty wages — paying far below a living wage
- Environmental dumping — suppliers polluting local water or land
📋 How Businesses Manage Supply Chain Ethics
- Supplier codes of conduct — minimum ethical standards suppliers must meet
- Auditing and factory inspections
- Fairtrade certification for agricultural goods
- Publishing full supply chain transparency reports
- Refusing to use suppliers who violate ethical standards
📣 Ethical Marketing
Large businesses must ensure their marketing is honest and does not exploit vulnerable consumers.
📋 Key Marketing Ethics Issues
- Misleading advertising — claiming benefits the product doesn't have
- Targeting children — advertising junk food to under-12s is restricted in the UK
- Greenwashing — falsely claiming environmental credentials
- Pricing manipulation — hidden charges, drip pricing
- Data exploitation — using personal data without proper consent
⚖️ Regulation
- Advertising Standards Authority (ASA) — regulates UK advertising
- Competition and Markets Authority (CMA) — investigates misleading pricing
- ICO (Information Commissioner's Office) — regulates data use (GDPR)
👷 Employment Ethics
How a business treats its workers is a core ethical issue — and increasingly scrutinised by consumers, media and regulators.
✅ Ethical Employment Practices
- Paying a Living Wage (above legal minimum)
- Safe working conditions
- Equal opportunities and diversity policies
- Genuine flexibility and work-life balance
- Career development and training investment
- Transparent, fair pay structures
❌ Unethical Employment Practices
- Zero-hours contracts with no job security
- Wage theft — not paying for all hours worked
- Discrimination in hiring or promotion
- Unsafe conditions to save costs
- Monitoring or surveillance to extreme degrees
🏢 Ethics in Large Business
👗 Boohoo — Supply Chain Scandal (2020)
- In 2020 it was revealed that Boohoo's UK suppliers were paying workers £3.50/hour — well below the minimum wage — in unsafe factories in Leicester
- The story went viral on social media — Boohoo's share price fell 45% in days
- Major retailers including Next and ASOS suspended Boohoo products
- Boohoo commissioned an independent review and pledged major reform of its supply chain
⚠️ A single supply chain failure cost Boohoo almost half its market value in days.
🛒 Marks & Spencer — Plan A (Ethical Leadership)
- M&S launched "Plan A" in 2007 — 100 commitments to improve sustainability and ethics across its operations
- Committed to carbon neutral operations, sustainable sourcing, fair wages across supply chain, reducing packaging
- Result: strong ethical brand reputation, attracting ethically conscious middle-market consumers
- Plan A became a competitive advantage — not just a cost
💡 Ethical investment, done properly, can become a brand's strongest competitive differentiator.
🧩 Match Game
Terms
Definitions
🎯 Quiz
✍️ Exam Tips
⚠️ Common Mistakes
- Only discussing environmental ethics — employment and supply chain ethics are equally important for Theme 2
- Not linking ethics to business consequences (reputational damage, share price, customer loyalty)
- Forgetting that ethical failures can be MORE expensive than ethical behaviour in the long run
📝 Model Answer
"Discuss the impact of unethical supply chain practices on a large clothing retailer." (6 marks)
"Unethical supply chain practices — such as using factories that pay poverty wages or employ child labour — can have severe consequences. In the short term, if exposed by media or social media, the retailer faces immediate reputational damage, with customers boycotting its products and share prices potentially collapsing (as seen with Boohoo in 2020). Retailers and suppliers may refuse to stock the brand. The business also faces potential legal action under modern slavery and labour laws.
However, addressing supply chain ethics has costs — ethical factories charge more, auditing is expensive, and switching suppliers takes time. A business may argue that consumers' actual purchasing behaviour doesn't always match their stated ethical preferences.
On balance, the financial and reputational risk of supply chain scandals in the social media age far outweighs the cost of ethical sourcing — particularly for large businesses whose reputation is a major asset."
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