Ethics

Revise Ethics for Commerce 7100 (O Level) — revision notes, 4 practice questions and instant AI marking.

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Cambridge O Level Commerce 7100

Ethics

The big idea: Ethics asks not “is it legal?” or “is it profitable?” but “is it right?”. Treating suppliers, customers and the environment fairly can cost a business money in the short run and win it trust and loyalty in the long run.

Summary — What This Chapter Covers

Ethics are the moral principles that guide what is right and wrong in how a business behaves.
Fair trade guarantees producers in poorer countries a fair minimum price, decent working conditions and a premium to invest in their community.
Two ethical issues in commerce: misleading advertising and the harmful disposal of products.
Acting ethically can raise costs and prices, but improves reputation, customer loyalty and staff motivation.

1. The Meaning of Ethics

Syllabus 6.2.1 · Papers 1 & 2

Doing what is morally right

Definition · Ethics The moral principles that guide behaviour, deciding what is right and wrong. Business ethics means behaving fairly and honestly towards customers, employees, suppliers, the community and the environment, even when the law does not require it.

Ethical behaviour	Unethical behaviour
Paying suppliers a fair price and on time	Forcing small suppliers to accept prices below their costs
Safe working conditions and fair wages, including in supplier factories abroad	Using suppliers that employ child labour
Honest advertising and clear prices	Misleading advertising and hidden charges
Disposing of waste safely	Dumping waste or harmful products

Benefits of acting ethically	Drawbacks of acting ethically
Good reputation and brand image	Higher costs (fair prices, safe disposal, checking suppliers)
Customer loyalty; some customers pay more for ethical products	Higher prices may make the business less competitive
Attracts and motivates employees	Fewer suppliers to choose from
Attracts investors; avoids boycotts by pressure groups	Some customers doubt ethical claims

Practice Question 1

Define ethics in commerce.

2. The Role of Fair Trade in Commerce

Syllabus 6.2.1 · Papers 1 & 2

A fair deal for producers

Definition · Fair trade A system of trading in which producers, usually farmers and workers in poorer countries, are paid a fair minimum price for their goods and work in decent conditions. Products that meet the standards can carry a fair trade mark.

A minimum price: producers receive at least a set price even when world prices fall, so their income is more stable.
A premium: an extra payment that the producers’ community invests in schools, clean water, health care or better farming.
Standards: no child or forced labour, safe working conditions, care for the environment.
Long-term relationships: buyers trade with the same producers over many years, so farmers can plan and invest.

Benefits	Drawbacks
Producers: a fair, stable income and a better standard of living	Fair trade goods usually cost more, so some customers will not buy them
Retailers and cafés: a good image that attracts ethical customers; can charge a higher price	The business pays more to its suppliers, which may reduce profit
Consumers: confidence that workers were treated fairly	Certification and checking add cost; the range of suppliers is smaller

Practice Question 2

3. Ethical Issues: Misleading Advertising and Harmful Disposal

Syllabus 6.2.1 · Papers 1 & 2

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Ethics

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Also in the full note

Two issues named by the syllabus
Is it right, and is it worth it?

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Ethics

Ethics

Doing what is morally right

A fair deal for producers

Ethics

Past papers that test Ethics

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