The Role Of Ethics In Business Management
In simple terms, ethics is a set of moral principles that guide individuals to make decisions that are considered appropriate. However, determining what is right is only sometimes clear-cut. This is because people come from different backgrounds and cultures, which can lead to varying interpretations of what is ethical. This can make it challenging to understand ethics as everyone’s perspective on what is considered ethical can differ significantly.
The concept of ethics should not be seen as a rigid set of regulations that must be strictly adhered to but rather as a framework that directs individuals towards acting with honesty and integrity. It comprises principles such as impartiality, accountability, truthfulness, and impartiality. The significance of ethics is exemplified by the fact that certain actions once regarded as ethical standards have now been codified into laws. For instance, stealing is considered unethical and is prohibited by law as it violates human rights and justice.
The application of ethics in our everyday life and business management practices differs slightly. The implementation of ethics in our daily life and business management practices have some differences. Ethical standards in the business world go beyond avoiding dishonesty and theft. They assist organizations in behaving responsibly towards all stakeholders, including the environment. Ethical principles also aid in the decision-making process, allowing managers and employees to have an ethical framework when faced with moral dilemmas. While ethical business practices may not generate immediate short-term profits for a company, they can provide substantial benefits in the long run. Therefore, prosperous businesses strive to behave ethically, even if it involves incurring short-term costs.
When someone is only concerned with their benefits, they cannot practice ethics properly. Many industries are under ethical pressure as businesses prioritize profit over ethical behaviour, leading to compromises. This behaviour is because ethical behaviour can increase costs. To overcome these problems, all stakeholders in the industry must work together and compromise for the good of everyone.
Role of Ethics in Business Management
The key to ethical business practices lies in the ability of the business to adhere to legal requirements and industry standards while also pursuing its own goals and objectives transparently. Businesses must consider the needs and expectations of all stakeholders, including employees, suppliers, customers, the general public, and the environment, as they are crucial for success. However, stakeholders often have competing interests, and resolving conflicts requires finding common ground through compromise. In cases where there is a disagreement between the business and society or the environment, it is necessary to find a fair balance. Only by finding a middle ground that satisfies both parties can businesses truly act ethically.
For businesses to thrive, it is necessary for the society and environment in which they operate also to develop. Corporate social responsibility (CSR) refers to aligning corporate behaviour with the values and expectations of society. According to Milton Friedman, the sole obligation of a business is to maximize its profits in an open and truthful manner, and this constitutes its social responsibility. However, consumers are becoming more aware of social responsibility, and a company’s attitude towards society can influence consumer purchasing decisions. Adopting CSR practices can help businesses to become more productive, competitive, and sustainable, setting them apart from businesses that do not prioritize social responsibility.
Toxicity towards environmental issues is increasingly becoming a concern for the public. The focus on well-being has caused more consumers to prefer organic food for economic and health reasons. As people become more conscious of environmental concerns, they tend to favor items that are ecologically sound and beneficial for the planet. Such products are commonly known as “green” and are deemed secure and beneficial. In order to accomplish long-lasting progress, which implies satisfying the present requirements without jeopardizing the ability of future generations to do the same, businesses must adopt environmentally conscious policies. This approach is crucial to maintain the environment’s resources and provide the resources needed for our daily lives.
There are various benefits for businesses that adopt eco-friendly practices. First and foremost, they must comply with environmental laws covering issues such as waste disposal, recycling, reforestation, and using limited resources. Waste production, transportation, treatment, and disposal companies are subject to waste regulations. Additionally, if a company uses substances that harm the ozone layer, it will be subject to laws limiting or prohibiting such substances. The Producer Responsibility Obligations (packaging waste) Regulations also affect companies that generate, import, or export packaging waste to the public. By adopting eco-friendly practices, companies can improve their reputation with various stakeholders, not just the community. Moreover, businesses can reduce their costs by decreasing the amount of waste they produce and the resources and energy they consume.
One of the major ethical concerns in business is the abuse of power by multinational companies. Such companies often search for opportunities and operate in developing countries, leading to debates and arguments. Multinational companies usually bring in skilled employees from their home country and employ low-wage workers to reduce costs. Additionally, they might extract resources from the host country and leave once they have reaped the maximum benefits, whereas they should focus on helping the host country develop by creating jobs with fair wages and lowering unemployment. Nike, for example, has faced a lawsuit for employing child labour to produce footballs, severely impacting its public image and brand. However, it is challenging to determine if a business is acting ethically or not since using child labour may reduce costs and satisfy stakeholders by increasing profits and lowering prices. The only ones who are negatively impacted are the children working as labourers.
Misleading consumers with false or inaccurate information about products or services is a significant issue. Even though modern technology has provided consumers with more ways to obtain information about the market, some businesses still provide untrue or misleading information that needs to be more accurate to attract consumers to buy their products. This false information can cause harm to consumers both physically and mentally, which can negatively impact businesses by damaging their reputation and leading to a decrease in profits. Additionally, this practice is against public law and can result in legal action being taken against businesses.
The rise of the black market is also a significant concern. This refers to an unofficial market that emerges when prices for inelastic goods increase or when the goods are prohibited. The black market generates profits by setting prices above the equilibrium price. Such activities are illegal and disrupt the economic balance. The legal markets selling those goods will be severely affected as their profits decline.
How businesses should act ethically has different perspectives. Consumers believe that businesses must ensure the safety of their products by conducting product testing before launching them in the market while also providing quality products and services at the right price level, offering after-sales services, and investing profits into research and development. From the employees’ perspective, it is ethical for businesses to treat them with respect and provide appropriate compensation. For suppliers, businesses should offer fair pricing for their goods. In terms of society, businesses can support the community by providing necessary training, funding or sponsoring charities and non-profit organizations and participating in volunteer campaigns. It is also important for businesses to create ethics awareness training programs for employees and the community. Maintaining a good relationship with stakeholders is crucial for businesses as they are valuable assets that can impact their business.
Being ethical in business management can yield several benefits, including a better public image, stronger relationships with stakeholders, enhanced reputation, and a wider customer base, ultimately leading to increased profitability. This, in turn, can create economies of scale and cost reductions, further boosting the business’s profits. Additionally, an ethical workplace environment can lead to employee growth and motivation, with workers taking pride in their work due to the company’s ethical practices, resulting in a more prosperous business.
However, the primary objective of most businesses is to maximize their profit, which may lead to situations where they cannot compromise with their stakeholders or the environment. The extent to which a business responds to its stakeholders in a manner that satisfies everyone while legally achieving its goals without harming third parties determines whether the business is acting ethically or not. It is almost impossible for a business to be completely ethical since it is challenging to satisfy all stakeholders involved in the business equally. Although businesses may benefit in the long term from ethical behaviour, it does not mean they should always sacrifice their primary interest, increasing their profit, to satisfy all stakeholders. Ethical behaviour involves fairness and equality; however, if the business always prioritizes stakeholders over its interests, it would not be fair for the business itself.
Author Bio: Mark Edmonds is an expert in business management and an academic writer at Academic Assignments. With a strong background in the field, Mark provides top-quality assignment help to students, helping them excel in their studies. He has a passion for ethics in business management and believes that incorporating ethical principles into business practices is essential for success. His dedication to providing excellent academic assistance has earned him a reputation as one of the industry’s best management assignment help providers.