To analyse why a business might choose ethics over profit
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Business Ethics
An ethical dilemma is not a simple choice between right and wrong. In business, this conflict is often between the duty to maximise profit and the duty to act ethically towards stakeholders.
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Profit Vs Ethics
At the heart of most business ethical dilemmas is the tension between two main views of a business's purpose.
The Shareholder View (Profit-focused): The business operates for its owners. Its primary legal and moral duty is to maximise profits for its owners, the shareholders. Any action that reduces profit is seen as a failure of that duty.
The Stakeholder View (Ethics-focused): The business is a social entity with a wider responsibility to all its stakeholders (employees, suppliers, customers, community). A business should aim to make a "fair" profit, but not at the expense of its ethical responsibilities.
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Profit Vs Ethics: Examples
Sourcing from Low-Cost Suppliers: Profit — sourcing from the cheapest factory in a low-wage country maximises margins. Ethics — that factory may have poor working conditions or pay workers unfairly (e.g. the fast fashion industry).
Using Cheaper, Less Sustainable Materials: Profit — plastic packaging is often cheaper. Ethics — investing in environmentally friendly packaging costs more but is more sustainable.
Redundancies to Cut Costs: Profit — making staff redundant quickly cuts costs. Ethics — a business has a moral responsibility to long-serving employees; an ethical stance might be to retrain or redeploy staff instead.
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Why Might a Business Choose Ethics Over Profits?
While prioritising ethics might reduce short-term profit, some argue it can lead to higher long-term profitability.
Enhanced Brand Reputation: A strong ethical reputation can be a powerful USP, attracting customers and justifying a premium price (e.g. Lush, Patagonia).
Attracting & Retaining Talent: The best employees are often drawn to businesses with a strong ethical reputation.
Risk Management: An ethical approach can help a business avoid damaging and costly scandals (e.g. the Boohoo Leicester factory scandal).
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Knowledge Task
A fashion entrepreneur needs to choose a supplier for their t-shirts. Supplier A is based overseas and is much cheaper, allowing a lower price and higher profit — but has a poor environmental record. Supplier B is a UK-based supplier using 100% renewable energy but is 30% more expensive.
Which supplier should they choose? Justify your decision.
9Lesson Overview
Ethical Dilemmas in Decision Making
(Recap — see slide 3)
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Application Task
Research ONE ethical business and produce a case study analysis exploring the extent to which being ethical conflicts with profitability. Choose ONE business from: Patagonia, IKEA, Lush Cosmetics, Microsoft, Innocent Drinks, TOMS.
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Application Task — Research Steps
1) Research the ethical practices of your business: environmental sustainability, treatment of workers, CSR initiatives, ethical sourcing.
2) Research the profitability & financial performance: revenue/profit trends, market share or growth, pricing strategy, competitive position.
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Application Task — Analysis & Evaluation
3) Analyse the Trade-Off: costs of being ethical (e.g. higher wages, sustainable materials and how they may reduce profit); benefits of being ethical (e.g. increased revenue through brand loyalty or premium pricing); the trade-off (assess whether the business prioritises ethics, profit, or a balance of both).
4) Evaluation: provide a balanced judgement on whether there is always a trade-off between ethics and profit, and whether this depends on factors such as industry or consumer attitudes.
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WAGOLL
(Worked example / model answer shown in class — "What A Good One Looks Like")
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STAR Task
The pharmaceutical industry often faces ethical dilemmas. They need to charge high prices for new, life-saving drugs to make a profit and fund expensive R&D — but high prices can mean many patients, or entire countries, cannot afford the medicine.
Research the controversy around drug pricing for diseases like cancer or Hepatitis C. Explain the 'Profit vs. Ethics' dilemma from the pharmaceutical business's perspective, and the counter-argument from patients and society. Should a pharmaceutical business be allowed to maximise profits from a life-saving drug, versus having an ethical duty to make it as affordable as possible?
15Lesson Review
Ethical Dilemmas in Decision Making
(Final recap — see slide 3)
Companion Material — beyond the lesson
Real-World Case Studies
Patagonia — choosing mission over conventional profit distribution
In September 2022, Patagonia founder Yvon Chouinard transferred 100% of the company's ownership into two new entities: the Patagonia Purpose Trust (which holds voting control) and the Holdfast Collective, a non-profit that receives the company's profits to fund environmental causes. Chouinard stated "Earth is now our only shareholder." This is one of the clearest real examples of a business structurally choosing an ethical/environmental mission over maximising returns to individual owners.
Source: verified via search, September 2026 — CNN, AP and Patagonia's own press release.
The fast fashion supply chain dilemma — Boohoo's Leicester factory scandal
In 2020, an investigation found some UK factories supplying fast fashion retailer Boohoo, based in Leicester, were paying workers well below the minimum wage during COVID-19 lockdowns. This became one of the most cited UK examples of the "sourcing from low-cost suppliers" ethical dilemma covered in this lesson — the pursuit of low-cost, fast production directly clashing with fair treatment of workers, and causing real reputational and financial damage to the business.
Source: widely reported UK press coverage of the 2020 Boohoo/Leicester factory investigation, referenced in the original lesson slides.
Exam-Style Practice
Define the term 'stakeholder view' of a business. (2 marks)
Model answer
The stakeholder view holds that a business has a wider responsibility to all its stakeholders — employees, suppliers, customers, and the community — not just to maximise profit for shareholders.
Explain one risk to a business of prioritising profit over ethics when choosing suppliers. (4 marks)
Model answer
Choosing the cheapest supplier regardless of working conditions can lead to a damaging scandal if poor practices are exposed — as happened with the Boohoo Leicester factory investigation — which can cause lasting reputational and financial harm that outweighs the original cost savings.
Analyse why a business might choose to prioritise ethics over profit maximisation, using an example. (9 marks)
Model answer structure
Point: A business may prioritise ethics over short-term profit because doing so can strengthen long-term brand reputation and customer loyalty.
Application: Patagonia's ethical positioning — including its 2022 restructuring to direct company profits towards environmental causes — is central to its brand identity and customer appeal.
Analysis: This shows that prioritising ethics can be a deliberate long-term strategy rather than a simple sacrifice, particularly for a business whose brand and customer base are built around those values — though a business without Patagonia's brand strength may find this approach harder to sustain if it cannot also compete on price.
Key Term Flashcards
Tap a card to flip it.
Ethics
The moral principles that guide how a business behaves.
Shareholder view
The idea that a business's primary duty is to maximise profit for its owners.
Stakeholder view
The idea that a business has responsibilities to all groups affected by it, not just shareholders.
Trade-off
Sacrificing one goal (e.g. profit) to achieve another (e.g. ethical standards).
A*/A Stretch
Synoptic link
Connecting to strategy (3.3): Patagonia's ownership restructure is also a strategic decision, not just an ethical one — strong students should be able to discuss it from both angles: as an ethical statement, and as a legal/strategic mechanism to protect the company's mission from being overruled by future owners with different priorities.
Examiner's eye
A common weaker answer treats "being ethical" as automatically good for profit ("it improves reputation so profit goes up"), without acknowledging genuine trade-offs. A Level 3 evaluative answer accepts that ethics can sometimes genuinely cost a business money in the short term, and reasons about whether that cost is worth it given the specific context — rather than assuming ethics and profit always align.
Try This With AI
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Present me with an ethical dilemma facing a fictional UK retailer choosing between two suppliers. Ask me to argue the case for BOTH the profit-focused and the ethics-focused decision, then ask me to give a final justified recommendation.