Explain the implications for the business and stakeholders of a business operating ethically.

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For this task I have been asked to write the implications for a certain business and the stake holders of a business which is operating ethically. The business I have chosen to relate to is H&M.

Understand the implications of businesses operating ethically

Every business has a variety of stakeholders for instance H&M will have a number of stakeholders such as store managers, staff, customers and consumers each group will have interests in how the business is run on daily basis. Business owners are the key stakeholders they want and expect good financial performance from their investments in H&M, store managers know that their first priority is to deliver good financial results to keep the H&M owners pleased, their superiors will keep track off progress.


Shareholders are people who are involved in a business such as customers, consumers, suppliers and staffs all these are people are shareholders as they are involved in the business, an H&M shopper is a stakeholder as they are consuming products from


Citizen’s benefit from H&M activity during they provide labour force for business leaders to create wealth. When H&M hires employees they will need to follow certain laws that help workers from being exploited and made to work long hours, then be made redundant when they were no longer needed. H&M would have to provide satisfactory working conditions and that all workers will be kept safe from danger, they must also follow minimum wage. H&M have customers around the world over and H&M also struggle for diversity. People of a large number of nationalities work at H&M and they keep growing with new employees around the world. H&M also struggle for equality. In 2011, 79 percent of H&Ms employees were women. Women held 70 percent of the positions of responsibility within the company, such as store managers and country managers.

Customers, Suppliers and Competitors

In H&M they need to build relationships with their customers, suppliers and competitors as it is very important. H&M would need satisfied customers and suppliers which would come and do business with the firm. Decisions made in H&M could affect their competitors so they would need to make relationships with them. The increased purchasing costs also included other buying related costs connected to H&Ms long-term initiatives aimed at building an even stronger H&M. For example, strengthening H&Ms buying organisation and production offices with new employees and IT investments. H&M are doing this in order to give their customers an even bigger offering in the future.

H&M buys and sells products in a large number of countries. International trade plays an important part for the development of countries as it is a source of economic growth and helps lift people and nations out of poverty. H&M contributes to the creation of more than a million jobs for people around the world, a large number of them in Asia.


H&M’s activity occurs within a community. So it is important that the local population is considered in major business decisions. H&M have national importance and their activities are very significant to members of communities. H&M is a powerful presence in many communities. It can have a considerable impact on traffic, new buildings, employments and established business. Somewhere else, but If H&M is predicted to do good they will get lots of investors trying to buy shares. H&M also attracts great interest around the world and their strong expansion continued in 2011. It grow by 10–15 percent new stores per year and in 2011 they had opened 266 new stores net, 16 more than planned. China, the US, the UK and Germany were the largest expansion markets. They also had opened stores in five new countries: Romania, Croatia and Singapore, as well as – via franchise – Morocco and Jordan. H&Ms Customer response has been incredibly positive everywhere.
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Conflicts of interest between stakeholder groups

H&M today have to balance the aims of a number of stakeholders. This can be difficult because the interests of stakeholder groups can conflict with each other. As some stakeholders, such as shareholders have a financial interest in a business. It is in their interest that the shares in the business increase in value, so that their investments also increase. Other stakeholders in H&M such as environmentalists are people or groups that actively campaign on issues to do with protecting the natural environment.

If H&M would release a new product ...

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