Assess ethical choices in business
Apply fair wages, paying fair prices to suppliers, child-labour concerns and environmental sourcing to business decisions.
Cambridge IGCSE (9–1) Business 0774, 2027–2029 Version 2, Topic 6. Trace each external change through the business and state which effects depend on its market, costs or response. Candidates are not assessed on exchange-rate calculations. Written practice is self-checked and does not certify exam readiness
Before you begin
- No previous study of external influences is assumed. Identify who is affected, which business decision changes and what evidence or condition would affect the outcome.
Work on paper. Try each question before revealing help, and explain why your method works.
Quick readiness check
Which is an ethical issue named in the syllabus?
What you will learn
- Identify syllabus ethical issues
- Explain possible responses
- Balance the advantages and disadvantages of ethical conduct
Ethics involve how a business treats people and the environment
Ethical issues in the syllabus include child labour, paying fair wages to employees, paying fair prices to suppliers and using suppliers that do not damage the environment.
A business may respond with a supplier code, contract terms, audits, worker channels or changes in sourcing. Policies need follow-up: a written promise alone does not prove conditions have changed.
Ethical conduct has benefits and costs to assess
Ethical practices may support reputation, customer trust, employee commitment or more reliable supply relationships. They can also increase costs, require monitoring or reduce the number of suppliers available.
Outcomes depend on the issue, evidence and business response. A firm should check supplier conditions and whether its purchasing prices and deadlines make the policy realistic, instead of assuming a label or campaign guarantees ethical conduct.
Pause and explain
Why may a written supplier code be insufficient by itself?
Worked example
A clothing retailer discovers that a supplier may use underage workers. Explain two actions it could take and one trade-off to manage.
Show the worked solution
- Investigate the evidence through a credible, safe process.
- Set corrective requirements, support remediation or change sourcing if necessary.
- Consider worker welfare, supply continuity and monitoring cost.
Answer The retailer should investigate the allegation and require an appropriate corrective plan with follow-up, or change suppliers if serious harm cannot be remedied. It should protect affected workers and assess supply continuity and monitoring cost; abruptly ending the contract may also harm workers if no transition is planned.
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Choose Easy, Normal or Difficult. Save your answers and open worked review after finishing.
Test this topic →From guided practice to a new situation
Write your answer and reasoning first. Use a hint only if you are stuck. The model solution is for self-checking; your written work is not automatically marked.
A buyer demands very low prices and short delivery times, then learns suppliers may be underpaying workers. Explain how the buyer's own purchasing decisions may matter.
Give me a hint
Supplier practices can be affected by the price and deadlines imposed by the buyer.
Compare my reasoning
- Low prices can limit the supplier's revenue available for wages.
- Short deadlines may create pressure on working conditions.
- Review prices, lead times and supplier evidence together.
The buyer's prices and deadlines can contribute to pressure on suppliers, so it should review purchasing terms alongside working conditions. It can set realistic prices and lead times, monitor wages and agree corrective steps with suppliers.
Look for these in your work
- Buyer influence identified
- Ethical concern linked
- Practical changes suggested
An ethical supplier is more expensive but provides evidence of fair wages and environmental practices. Explain one potential advantage and one cost to the retailer.
Give me a hint
Connect evidence to trust or supply quality, then consider margin and price.
Compare my reasoning
- Verified practices may support trust and reduce some reputational risks.
- Higher input prices may reduce margins or require a price decision.
- Check customer response and compare suppliers on total value.
The retailer may strengthen customer or employee trust and reduce some supply-chain reputational risks. The higher purchase cost can reduce margin or raise prices; it should compare verified practices, product quality and likely customer response.
Look for these in your work
- Advantage linked to evidence
- Cost effect
- Decision factors compared
A supplier fails an environmental audit. Explain why immediate cancellation may not be the only ethical response and what conditions would matter.
Give me a hint
Consider severity, remediation, worker and community effects, and follow-up.
Compare my reasoning
- Determine the severity and immediacy of harm.
- Require a time-bound corrective plan if remediation is credible.
- End the relationship if serious harm continues or evidence remains inadequate.
The buyer should assess the severity of harm and whether a credible, monitored remedy can protect affected people and the environment. A time-bound corrective plan may be appropriate for remediable issues, but ongoing serious harm or refusal to act may require ending the contract and planning a responsible transition.
Look for these in your work
- Harm assessed
- Remediation conditions
- Escalation stated
Common mistakes
- Treating a supplier code as proof of compliance
- Assuming ethical action always increases profit
- Ignoring the effects of abruptly ending a supplier relationship
What can you explain now?
Which is an ethical issue named in the syllabus?
Compare with the explanation
Paying fair prices to suppliers
Supplier pricing is one listed ethical issue.
After trying it yourself, choose your next review. This is your self-assessment.
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Make it stick
Give two ethical issues in business and one way a firm can check whether its response is working.
If you needed the solution, close it and solve the problem again from a blank page. A correct answer is stronger when you can explain the reason for each step.