Ethics in Business
Senior 3 · Entrepreneurship
Ethics in Business
Lesson 3 of 4
25 min
A juice company in Rubavu has a batch of 2,000 bottles that tastes slightly sour. Laboratory tests show it is safe but below the company’s own quality standard. Selling it would protect this month’s profit for the owners. But customers would get a poorer product; workers would be asked to put their names to it; the fruit suppliers might be blamed; and the community would hear about it. Every business decision touches several groups of people, called stakeholders, and business ethics asks how each of them is treated. The company is illustrative.
Definition
Stakeholder: any person or group that affects or is affected by a business’s activities, such as customers, employees, suppliers, owners, the government and the community.
Shareholder: a person who owns shares in a company, and so owns part of it. Owners include shareholders, partners, sole traders and cooperative members.
Social responsibility: a business’s duty to act in the interests of society and the environment, not only of its owners.
| Stakeholder | Ethical practice | Unethical practice to avoid |
|---|---|---|
| Customers | true labels, weights and prices; safe products; repairing, replacing or refunding faulty goods; listening to complaints; protecting customers’ personal data | short weight; false advertising; selling expired or fake goods; hidden charges |
| Suppliers | paying on the agreed date; keeping contracts; choosing suppliers fairly on price and quality; keeping their information confidential | taking or demanding bribes and “commissions”; delaying payment to use their money |
| Government | registering the business; declaring and paying taxes honestly; issuing receipts; giving true information to inspectors; obeying laws and standards | tax evasion; bribing officials; smuggling; selling without required licences |
| Employees | written contracts; fair pay on time; safe working conditions; respecting working hours and leave; no discrimination or harassment; training | unpaid overtime; unsafe machines; favouritism; firing a worker for being pregnant |
| Owners and shareholders | accurate accounts and reports; careful use of the business’s money and property; fair sharing of profit | hiding losses; managers using business assets for themselves |
| Community and environment | avoiding pollution and noise; hiring and buying locally; supporting local projects; respecting local culture | dumping waste; ignoring neighbours’ complaints |
| Competitors | competing on quality, price and service | spreading false rumours; agreeing with rivals to fix prices |
Many ethical duties are also legal duties. A few of the laws behind them:
Tip
Exam technique. For “Explain ethical practices towards employees” (or any stakeholder), give the practice and the reason: “Pay wages on time, because workers depend on them for rent and food and will trust the employer.” Five practices with reasons beat ten without.
Worked example 1: the sour juice
Analyse the company’s options for each stakeholder.
| Stakeholder | Sell the sour batch as normal | Sell it cheaply as “second quality”, or not at all |
|---|---|---|
| Customers | pay full price for a poorer drink; may stop buying | know what they buy; trust kept |
| Owners | profit kept this month, but reputation at risk | a loss this month, brand protected |
| Employees | asked to hide a fault | can be proud of the product |
| Community | rumours about the brand | sees an honest local firm |
Conclusion: the ethical option costs money now, but protects every stakeholder, including the owners in the long run.
Worked example
Worked example 2: who really pays for a bribe? (illustrative figures)
A supplier offers a company’s buyer a secret 5% “commission” on a Frw 2,000,000 order, and adds the same amount to its invoice.
The bribe: , so Frw 100,000 to the buyer.
The invoice: , so the company pays Frw 2,100,000.
Who loses? The owners lose Frw 100,000 of profit; honest suppliers lose the order; customers may pay higher prices; and both the buyer and the supplier break Law N° 54 of 2018 on fighting against corruption.
Warning
Common mistakes. (1) Treating the owners as the only stakeholders who matter: a business that ignores the others loses customers, workers and its licence to operate. (2) Confusing stakeholder with shareholder: shareholders are only one group of stakeholders. (3) Thinking a gift to a buyer is “just a thank you”: a gift given to influence a decision is a bribe.
Practice
Sources and credits
Written by Ganzaa: the juice case, the stakeholder map, the tables, the worked examples and the practice items. The businesses and figures are illustrative (2026).
