Ethics are a set of moral principles which are recognized in respect to a particular class of human actions or a particular group, for instance the medical ethics, legal ethics, teaching ethics, business ethics that brings together people of the same profession. These principles deal with values relating to human conduct with respect to concepts such as being good or bad, decent or shameful, right or wrong etc. These values gulled members of a group to act In a manner that is consistent with the values and standards as established. Business ethics are those virtues that business people apply when making business decisions.
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They are the standards expected within the business world, even if they are not written down and which business people ought to adopt. For instance business people are expected to afflict least suffering to their customers, being fair in their dealings and nurturing an enduring virtuous corporate character in totality. Business ethics are important because they keep business people to operate within a moral and legal pedestal which not only leaves them satisfied internally but also Increases sales because most people Like dealing or doing business with honest businessmen.
Good business ethics should be embraced by all businessmen because engaging in unethical practices, which may Include breaking the law, may lead to heavy fines or lack of trust by members of the public. Some of the business ethics Include the following: ; Being trustful by recognizing that customer is the “king”. Customers want to do business with companies they trust and which they perceive to be showing them respect. When a business entity is trusted, it creates a loyal clientele. ; Business people should be ready to meet the obligations of their customers and business ratters regardless of anything else.
Business people should offer their end of the bargain at all cost because this is the only way to strengthen customer and business partner’s loyalty. ; Engaging in fair trading practices like guaranteeing a safe workplace for employees, fair pricing for products that will at least cover the cost of production, and treating customers well among others will guarantee a high business turnover. ; Every businessman wakes up every day with the Intent to make profit. When a business operates within ethical realms, there will always be clear indications for growth.
Equally, a business needs to make profit so as to meet its ethical obligations to the company, its employees, the authorities and customers. ; In essence, being ethical as a business person builds the image of reliability and establishes reputation with customers, the two things that are very important to a business. Monte, 2011 ,2008) In the short-run, being unethical may give temporary gains, but the unethical actions will always catch up and ruin those gains. In the long run, honesty is the best policy. Being ethical and honest actually costs less than being unethical.
Bad ethics increases costs In at least three ways: Increased transactional costs, increased costs directly to the company, and the costs of bad press. The Serbians-Solely Act Is a good example of the Increased transactional costs of unethical behavior. Because of the dishonesty of a few firms, namely Arthur Andersen and Enron, the government enacted new laws that increased the amount even stricter controls on their processes and have even more documentation and audits than before. These increased transactional costs came about because of unethical behavior and cause a deadweight loss to public companies.
Unethical behavior causes other, more direct, costs to the company. Once a culture of bending the rules for efficiency’s sake is in place, it is not a far stretch to other unethical behaviors, for the individual employee’s sake and to the damage of the company. An employee may decide to clock in a bit early, or clock out a bit late, just because he or she deserves it. This theft of time costs the company money and cuts down on effectiveness. Or perhaps an employee decides to fudge the numbers to make a report look better. The dishonesty will eventually catch up and the company would suffer for it.
Unethical behavior for the sake of productivity would easily transfer over to other unethical behaviors with detrimental results. Bad ethics can cause a firm to lose reputation, which translates into lost revenue. There are many examples of companies losing the trust of the public and thus being hurt financially. Jack in the Box suffered from bad press in the early ‘ass when four children died from E. Coli after eating their meat. (Ender. Org, 1993) The bad press nearly led to the bankruptcy of the company. The news media is very powerful. They will find instances of unethical behavior if they are to be found.
If a company were to be placed in a bad light by the media, even if the accusations turned out to be false, sales would suffer dramatically. Bad press resulting from unethical behavior spells disaster for companies. As recently as a decade ago, many companies viewed business ethics only in terms of administrative compliance with legal standards and adherence to internal rules and regulations. Today the situation is different. Attention to business ethics is on the rise across the world and many companies realize that in order to succeed, they must earn the respect and confidence of their customers.
Like never before, corporations are being asked, encouraged and prodded to improve their business practices to emphasize legal and ethical behavior. Companies, professional firms and individuals alike are being held increasingly accountable for their actions, as demand grows for higher standards of corporate social responsibility. Observing the existing laws and regulations is of high importance; however, it is not the only responsibility that companies will have to consider.
Starting up a company is equaled to making a commitment to a large number of people, including shareholders, employees and consumers. All of the mentioned above groups of people will be affected by the company’s operation, thus, it is important to develop such a policy, which would allow meeting all commitments. Undoubtedly, the main purpose of any business is profit minimization, thus, businesses take all possible measures to maximize their profit and profit of its shareholders; however, it is not always good for company’s employees and clients.
If there is no violation of state laws, it does not necessarily mean that there is no violation of the principles of ethics or social responsibility. When the company is focused on minimization of its hardcore wealth, it pays very little attention to its social performance, which is the configuration of the principles of social responsibility, processes of social responsiveness, and policies, programs, and observable outcomes as they relate to regarding as the same concepts. However, the social responsibility movement is but one aspect of the overall discipline of business ethics.
The social responsibility movement arose particularly during the sass with increased public consciousness about the role of business in helping to cultivate and maintain highly ethical practices in society and particularly in the natural environment. It is all about caring enough to make a difference. Even if you are part of a company, each of the employees has their own part in contributing to the company social responsibility. It does not work if only one half contributes and the other half does not. It does not work that way.
This is the reason why orientations are held at the start of the employee’s career to a company. The company already instills its vision, mission and what the company works for. It becomes their way of life. You can no longer find a company that does not have any company social responsibility. It is their way of giving back to the community. Plus, it is also a good way to promote the company. The people hear about what the company does to the people who are in need and they get curious enough and probably even buy the products or cater to the services of the company.
Thus, it is their way of making a difference and yet the difference also affects them in a positive way. It is a great advertising tool that does not cost much. There are several principles of social responsibility, which include community, diversity, environment, ethics, financial responsibility, human rights and safety. If a company is only interested in profits, it may decrease the quality of working notations of its employees in order to economize, to eliminate all social programs, which are not obligatory according to the law, but desirable according to the principles of social responsibility.
In this case a company will fail to address cultural diversity; it will pollute the environment unless it is not prohibited according to the law; or neglect safety regulations. Management of the company will only concentrate on increasing the performance of the employees, offering the latter very little benefits. In order to make businesses be more socially responsible, government may issue new laws and regulations. Of course, it won’t be as effective as when a company itself understands the importance of developing certain social programs, creating better working conditions for the employees, taking care about the environment and etc.
They are responsible for producing safe products, because they can be purchased by any member of the society. A business is not obliged to take care of the society in a whole, however, it is reason that a firm committed to corporate social responsibility has principles and processes in place to minimize its negative impacts and maximize its positive impacts on selected stakeholder issues. In this case, stakeholders include tot only partners and supplies, but employees and customers are also included.
Management following these business social responsibilities benefit in three main ways- increased productivity, a good and trusted image and less intervention from the government. Being business social responsible doesn’t mean being a kind of non- governmental organization but applying and maintaining simple ethics that won’t cost you but will definitely benefit the community and the environment in the long run, needless to mention even your business.
A profitable business is indeed business social responsible, will also help you to cope with the new laws and extractions, this will enhance your business performance. It also helps firms build a reputation of a responsible business and when you are once termed as trusted, business actually grows by leaps and bounds. No wonders, consumers will always prefer a trusted brand, Just as a management prefers responsible suppliers. Even the upcoming green customers’ prefer to deal with companies who are environmental friendly and are environment conscious as well, for example Ben & Jersey’s ice cream.
The question-whether a firm is doing something additional for the environment or towards the community comes pretty late. Moreover, reduction in emissions or wastes also cuts the firm’s own bills. Other benefits like maintenance of employees of high standards, motivated or quality labor, positive relationships and environments follow. The employer can motivate its employees for an environmental friendly usage. Even the minutest acts like switching off lights, fans, not let water running off without any use can help a business firm grow both economically and socially.
The managements can also hold seminars or work with the local communities to make them more aware about the business social responsibility and its various advantages. This wont only build a good reputation but even get the company awards and more business. Last but not the least, firms should always keep a measure of the effectiveness of the social responsibility played by them and sidewise keep a check on the profits as well, which will give way for future endeavors.
The bottom-line of business social responsibility is the healthy and trusted relationship between the management, the employer, the employees, the suppliers and the customers and nonetheless the environment. In conclusion, since the goal of the public corporation is to maximize shareholder wealth, management should take NY action necessary to achieve this goal so long as no law is violated in the context of business ethics and social responsibility.