Definition of terms
This is a complex economic operation concerning those functions that govern the production, distribution, and sale of goods and services for the benefit of the buyer and the profit of the seller (Collins,1994).
These are the principles of human conduct, sometimes called morals, and are concerned with questions such as ‘when is the act right and wrong and what is the nature or determining the standard of good and bad’ (Beauchamp, 2004).
Save your time!
We can take care of your essay
- Proper editing and formatting
- Free revision, title page, and bibliography
- Flexible prices and money-back guarantee
It can be regarded as the study of business situations, activities, and decisions where issues of right and wrong are addressed (Shaw, 2004).
Means the bringing together of two contradictory concepts. To say that business is an oxymoron suggests that there are not, or cannot be ethics in business; that business is in some way unethical. (Lueck, 2008).
Long back, it was thought by classical economists like Milton Friedman that the “primary and only responsibility of business is to make money” while abiding by the law. Which is to say, engages in an open and free competition without deception or fraud. He argues that a corporation is an artificial person and therefore cannot be socially responsible, only people have responsibilities. Socially responsibility concerns the proprietors and corporate executives. He goes on to specify the traditional view of a managerial role, Friedman says, that a manager has a direct responsibility to his employers to conduct business in their desires which is to maximize their return on investment (Friedman,1962).
He argues that if social responsibility is exercised, it is acting against the shareholders, owners of the business”. Hence, he argues that a manager pursuing social responsibility violates the relationship between shareholders and the company. After all, it is the shareholders who own the company and they have hired the manager to do a specific job. Friedman goes ton to argue that businesses should focus on what they do and leave ethics to individuals. Hence e Friedman’s view is akin to social Darwinism, applying the survival of the fittest principle to the market to ensure the best of all possible outcomes (Friedman, 1970).
However, Friedman’s theory only benefits the business in the short run. This is seen in the case of Enron which was one of the largest energy producers in the world. When it was discovered that Enron had been using unethical and illegal accounting practices. These accounting practices enabled executives to grossly overstate the value of Enron. After getting caught, the company was forced to declare bankruptcy. It all happened because of a lack of ethical leadership. (Anderson, 2013).
Therefore Maxwell explains the reasons businesses and individuals tend to make decisions that can be unethical is that, they tend to take the easy path towards their objective regardless of its moral aspect, that people have the idea that being ethical limits the options in what concerns winning over the competitors and tend to consider actions according to the circumstances and not according to what is moral and ethical like in the case of Enron concentrated on maximizing the profits without thinking about the processes they were adopting (Maxwell, 2003).
Today many businesses are involved in social action. Society’s expectations are changing and the trend seems to be toward greater social responsiveness. Ethics has found its way back into the agenda of organizational leaders. Companies nowadays are expected to budget their financial plans taking into account the social commitment and social responsibility initiatives to be taken in the next few years. Hence corporate social responsibility is one of the ethical aspects of business ethics (Paine, 2003).
According to Raj’s view ba business is an economic entity and it has a right and needs to make profits, but it must also discharge its obligation to the society where it exists and operates. Hence manager’s role is corrected today as compared to the traditional view of Friedman. Collins notes that the way to correct that view is to strengthen the manager’s understanding of ethical aspects of utilitarianism which would instruct managers to do those things that will enable the greatest good and deontology would instruct managers to respect individuals by recognizing their rights and contributing to their just treatment, building trust and creating of value would make management activity more worthy of people’s commitment (Collins,2003).
More so, commentators such as Freeman, argue that businesses should also benefit other stakeholders. Stakeholders are people and groups with whom the business has a relationship. This includes shareholders but extends out to include employees, their families, the community within which the business operates, customers, and suppliers.
Hence business and ethics are not contradictory. Businesses can act ethically because good ethical behavior is the best long-term strategy. Business involves reputation and relationships, unethically behavior usually backfires in the long term. If a business takes advantage of its employees, customers, and suppliers will often find a way to retaliate. ( Beauchamp, 2014).
It is required as a main factor in making business in the long run and therefore bears the following benefits of good ethics in an organization;
Business ethics offer companies a competitive advantage.
Consumers learn to trust ethical brands and remain loyal to them, even during difficult periods. For example in 1982, Johnson & Johnson spent over a hundred million dollars recalling Tylenol, its best-selling product, after someone tampered with bottles of the painkiller. The company followed its credo, a set of ethical organizational values, and the result was a boost in consumer confidence, despite the contamination scare. Hence society benefits from business ethics because ethical companies recognize their social responsibilities. ( Anderson, 2013).
Investor loyalty
Nowadays, investors are concerned about ethics, social responsibility, and the reputation of the company in which they invest. No one wants to associate themselves with a company that has unethical practices. Investors are very much aware that an ethical environment in an organization provides efficiency, productivity, and profits.
Attracting and retaining good employees
Talented individuals at all levels of an organization want to be compensated fairly for their work and dedication. People aspire to join organizations with high ethical values. Ethical organizations create a trustworthy environment, making employees willing to rely on it. Thus companies’ policies cultivate teamwork, promote productivity, and support employee growth.
Better for society
When a company cares about its behavior, impact, and environmental footprint, it is also better for society overall. For example, a print company might care about sourcing their materials sustainably and producing their products in an environmentally friendly way. This benefits the society. Being kinder to the environment ultimately benefits society because it means consumers can live in a world that is at its best rather than at its worst for suffering. It also means consumers can start to become more aware of business ethics and choose companies that uphold strong morals to help ethical practices continue. This boosts the benefits even more.
Reputation
This is a vital aassetof a company and it is also one of the most difficult tasks to rebuild once it is lost. Potential investors and shareholders are likely to be attracted to companies that adhere to their moral guidelines and promises they have made. This keeps the company’s share price high. Employees also feel comfortable and want to stay in the business for the long term when working with a company that has strong business ethics. This increases the productivity and reduces the labor turnover. When an employee does his work with integrity and honesty and by following the guidelines, it will eventually benefit the company.
Customer satisfaction
This is vital as it provides marketers and business and business owners with a metric that can use to manage and improve their businesses. The company should evoke trust and respect among customers for enduring success. This can only be achieved through good ethical practices.
Cultivate strong teamwork and productivity
Ongoing attention and dialogue regarding values in the workplace builds openness, integrity, and community. This is critical to building strong teams in the workplace. Employees feel a strong alignment between their values and those of the organization. They react with strong motivation and performance. Usually, an organization finds a surprising disparity between its preferred values and the values reflected by behaviors in the workplace.
It helps avoid criminal acts of omission and can lower fines
Ethics programs tend to detect ethical issues and violations early so they can be reported or addressed. In some cases, when an organization is aware of an actual or potential violation and does not report it to the appropriate authorities, this can be considered a criminal act. Business dealings with certain government agencies such as the defense department and the federal sentencing guidelines specify major penalties for various types of major ethics violations. However, the guidelines potentially lower fines if an organization has to make an effort to operate ethically.
Avoid legal problems
Business ethics prevents a company from being tempted to cut corners in pursuit of profits by not fully adhering to environmental regulations or labor laws or using defective materials and products. The penalties for being caught can have a great impact including legal fees and fines by governmental agencies. This leads to negative publicity which can damage the company’s image in the long run. Hence business ethics is vital.
In conclusion, when it comes to business, it is essential to understand that short-term success is not what will keep any business alive, instead, it is the long term that will determine whether a company or an organization deserves to keep on. Business ethics are a drive towards continuous achievement and success. This is shown in successful companies such as Nike, Dell, and Starbucks. Business involves reputation and relationships, unethical behavior usually backfires in the long run as it tarnishes the image of the business. Most people prefer justice and fairness, they are more likely to want to do business with a company that does good than one that does not. Hence, in the end, it is unethical behavior that becomes costly. Therefore “business ethics is not an oxymoron.”( Anderson, 2013).
References
- Shaw, William. (2004). Business Ethics. Belmont, CA: Thomson- Wadsworth.
- Beauchamp, T.2014. Case Studies in Business, society, and ethics, Pearson Prentice Hall, Upper Saddle River, New Jersey.
- Collins, W(1994) .” Is business ethics an oxymoron”. Business Horizon.
- Friedman, M.(1962). Capitalism and Freedom. Chicago: University of Chicago Press.
- Friedman, M (1970). The sSocialResponsibility of Business is to Increase Its Profits’, The New York Times Magazine, September 13, pp.33,122-125
- Anderson, E (2013). What happens when leaders only care about money? Forbes. Retrieved from http://time.com/3103856/10-scientific-steps-to-a-successful-career/
- Lueck, S. (2008). After 12 year Quest, Domenici’s Mental-Health Bill Succeeds’, Wall Street Journal.
- Maxwell, C (2003). There is no such thing as “Business” Ethics: There’s Only One Rule For Making Decisions. New York, NY: Warner Business Books.
Stuck on your essay?
