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ACCA Applied Knowledge · Business and Technology · Sustainable business practices

Carter Ltd is deciding whether to continue buying components from a supplier that it knows uses child labour. The supplier is the cheapest available, and switching would reduce profit. Which approach is most consistent with a business that takes its ethical responsibilities seriously?

Carter Ltd should stop using the supplier or require it to change its practices, even if profit falls. An ethical business takes responsibility for its supply chain and does not justify exploitation by cost savings or by local legality alone.

  1. AContinue buying, because maximising profit is the only duty of a business
  2. BContinue buying, provided the supplier's use of child labour is legal in its own country
  3. CStop using the supplier or require it to change, accepting the lower profitCorrect

Explanation

An ethical business considers the wider impact of its supply chain and does not rely on cost or local legality alone. Options A and B put profit or local law ahead of ethical conduct, so they are inconsistent with a serious ethical stance.

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