All subjects · Business · WBS14 Global business

International business ethics: stakeholder conflicts and the environment

Edexcel IAL Business · WBS14 Global business

Business ethics are the moral principles that guide decisions: doing what is right, not just what is legal or profitable. Global businesses face ethical choices on a large scale. This lesson covers stakeholder conflicts and environmental considerations.

Practise this in the app: instant marking and a fix for every mistake. Free, no email needed to start.

Practise this lesson

Stakeholder conflicts

Stakeholders have different objectives, which often conflict in global business:

Shareholders want high profits and dividends; workers in supplier countries want fair pay and safe conditions.
Consumers want low prices; pressure groups want sustainable, ethical production that may cost more.
Host governments want jobs, tax and investment; local communities want a clean environment.
Home-country workers may lose jobs when production is offshored.

Ethical decisions often mean trading profit now for reputation and long-term success. Businesses manage conflict by prioritising stakeholders (power and interest), consulting, publishing CSR reports and setting codes of conduct.

Environmental considerations

Emissions: greenhouse gases and air pollution from production and global transport. Waste disposal: packaging, hazardous waste, electronic waste, plastics, sometimes exported to countries with weaker rules. Sustainability: meeting present needs without compromising future generations' ability to meet theirs, through renewable energy, recycling and the circular economy, sustainable sourcing, and reducing water use.

The June 2024 series paper asked about the benefits of sustainability for a global dairy business with reusable packaging and a target of zero carbon footprint in its home-country milk production by 2035. The October 2024 series paper asked how important environmental considerations are for a manufacturer (12 marks).

Is ethical behaviour worth it?

Benefits: stronger brand image and customer loyalty; ability to charge premium prices; easier recruitment and retention; lower risk of fines, boycotts and legal action; access to investors who screen for environmental, social and governance (ESG) factors; cost savings from using less energy and materials.

Costs: higher production costs, lower short-term profits, competitive disadvantage against less ethical rivals, and the cost of monitoring. The October 2023 series examiner report noted that the strongest answers questioned whether all consumers actually care about ethics.

Worked example

A firm can cut emissions by 30% by investing $5 m in new equipment, saving $0.8 m a year in energy costs. Calculate the simple payback period.

Payback = investment / annual saving
5 / 0.8 = 6.25 years

Answer: 6.25 years, before counting any reputational benefits.

Key idea: Stakeholder conflicts: profit versus pay, low prices versus sustainability, jobs versus environment. Environmental issues: emissions, waste disposal and sustainability. Ethics cost money in the short run but can build brand, loyalty and long-term profit.

Check yourself

Which is an example of stakeholder conflict in a global business?
- Customers and shareholders share the aim of the business surviving
- Managers and workers share the aim of safe working conditions
- Suppliers and the business share the aim of regular orders
- Shareholders want higher profits while supplier workers want higher pay
Show answer
Shareholders want higher profits while supplier workers want higher pay. Higher pay raises costs and reduces profit, so these objectives conflict.
A green energy project costs $2.4 m and saves $320,000 a year. Calculate the payback period in years.
Show answer
7.5 years. 2,400,000 / 320,000 = 7.5 years.
A firm's emissions fall from 48,000 tonnes to 39,360 tonnes of CO2. Calculate the percentage reduction.
Show answer
18 %. 8,640 / 48,000 x 100 = 18%.
Sustainability in business means
- meeting present needs without compromising the ability of future generations to meet theirs
- keeping profits the same every year
- selling only in the home country
- using as many resources as possible while prices are low
Show answer
meeting present needs without compromising the ability of future generations to meet theirs. Sustainability is about the long-term use of resources and the environment.
Explain one benefit to a global business of acting ethically on the environment.
Show answer
It improves the brand's reputation with environmentally concerned consumers, increasing loyalty and allowing premium prices, which can raise long-term sales and profit.. Ethical behaviour can be a source of competitive advantage.
Explain one reason a business might not prioritise environmental considerations.
Show answer
Reducing emissions and waste raises costs, which can lower short-term profits or force higher prices, putting it at a disadvantage against cheaper, less ethical competitors, especially if customers are price sensitive.. The trade-off between cost and ethics is the core of evaluation.
Exporting hazardous waste to a country with weaker regulations is an ethical issue mainly because
- it raises the firm's disposal costs
- it is always illegal everywhere
- it shifts environmental and health harm onto people with less protection
- it reduces the firm's exports
Show answer
it shifts environmental and health harm onto people with less protection. The firm saves money while others bear the harm.

Practise with instant feedback

Sources

Last updated 8 November 2026. Spotted a mistake? Tell us.