Relationship between Ethics and Business

Relationship between Ethics and Business
Despite the high competition in the current business environment, the
business managers have a primary duty of maintaining a strong code of
ethics, which is important for preservation of the going concern and
long-term growth of the company. However, this can only be accomplished
by the management teams that have the capacity to establish the
relationship that exists between business and ethics and take actions
that captivate the relations. Companies that observe the corporate code
of conduct (also known as ethical companies) earn reputation growth in
the long-run. This is because the code of ethics helps ethical companies
to show their dedication to serve the best interest of the society,
employees, customers, and the business itself (Goessl, 2007). The
purpose of this paper is to demonstrate the relationship existing
between ethics and business. Unethical behavior in business is triggered
by the desire for short-term benefits while observing a code of ethics
guarantees long-term prosperity.
An established code of corporate ethics is necessary for any successful
business. Ethical practices within a business begin with management
setting standards of expected practices and giving an example to their
junior staff. The established code of ethics demonstrates the
company’s commitment to its philosophy and missions. According to
Goessl (2007) ethical practices enhance employee motivation and
reputation of the business enterprise, which are the most valuable
assets of the company with long-term growth strategy. In addition,
ethical practices reinforce the good relationship between the business
and its customers. This is because the accurate reliance on fair
treatment, knowledge, and expertise of the company by customers further
its reputation, thus attracting more customers. This implies that
ethically sound business decisions are in the best interest of the
business enterprise. In the case of a competition between self interest
and company decisions, doing what is ethical is a win-win situation
irrespective of the outcome (Cohen, 2007).
The stiff competition prevailing in the modern business environment
exerts pressure on business managers who fight to practice ethics and
maximize shareholder wealth. This pressure often results in unethical
decisions that eventually become entrenched into organizational culture
after duration of practice. This results from the desire for instant
gratification that is revealed through high financial gains in the
short-run. The established trend of unethical practices in corporate
culture, which results in short-term benefit natures unsound moral
philosophies that may be characterized by rushed products, false
representation of products, and unsubstantial firing of employees
(Goessl, 2007). Although ethical practice results from internal
decisions, companies do business with external stakeholders who include
the customers and the outside players subject the company to external
regulation should the business fail to regulate itself from within. This
means that the society will eschew an immoral or unethical business, an
act that will limit its profitability and growth.
The Generous Motors is one of the companies that has faced the
consequences of failure to acknowledge the relationship between ethics
and business. General Motors was once the industrial heart of the
General Motor town and was later referred to as the General Motors as a
result of what was perceived as the generosity of providing jobs and
business opportunities to residents of the town. The company experienced
rapid growth before the nineties, but there are two issues that cropped
in and resulted its current sorry situation, bankruptcy. First, the
company gave ethics the second position after profitability, which
resulted in the management’s focus on profit instead of sensitivity to
the needs of customers such as quality products. Secondly, workers union
bargained for extraordinary high wages and benefits and the management
succumbed to union demands to protect the soaring profits (Tytler,
2009). Workers became careless can complacent because the top management
has facilitated the growth of the culture of stakeholder serving their
own interest and providing customers with substandard products. The
company lost customers including those living in the General Motor town.
There are two issues of the relationship between ethics and business
that the General Motors overlooked. First, the company was a competing
situation between long-term and short-term benefits. General Motors
enjoyed high profits as a result of mass production of poor quality
products, which lead to external regulation by customers who have been
shifting to other motor companies. Secondly, there was a competition
between individual versus community, which implies that the company
should lay down some structures to empower the surrounding community
(Institute for Global Ethics, 2013). In the case of the General Motors,
the surrounding community lost trust with the company and its products
and this has resulted in the decline in the economic growth of the town
and the surrounding community.
In conclusion, unethical behavior in business is triggered by the desire
for short-term benefits while observing a code of ethics guarantees
long-term prosperity. A well established code of ethics has a direct
relationship with the long-term success of a business enterprise.
Although unethical practices may result in short-term returns (such as
high profits), the company may face external regulations, which include
the loss of customers who realize that the company has a loose code of
ethics. Despite the stiff competition in the current global market,
business enterprises are obliged to observe ethics to avoid losing the
long-term profitability and growth at the expense of short-term
benefits. This is because companies often find themselves in a
conflicting situation of long-term versus short-term or competition
between individual versus community.
References
Cohen, S. (2007). Good ethics is good business. Kensington: University
of New South Wales.
Goessl, L. (2007). Understanding the relationship between business and
ethics. Andover, MA: Helium Publishing.
Institute for Global Ethics (2013). Ethical fitness: Choosing between
right vs. right. Rockport: Institute for Global Ethics. Retrieved
November 4, 2013, from HYPERLINK
“http://www.globalethics.org/news/Ethical-Fitness—Choosing-between-Rig
ht-vs-Right/97/”
http://www.globalethics.org/news/Ethical-Fitness—Choosing-between-Righ
t-vs-Right/97/
Tytler, C. (2009, February 1). The relationship between ethics and
business. Yahoo Finance. Retrieved November 4, 2013, from HYPERLINK
“http://voices.yahoo.com/the-relationship-between-ethics-2600685.html?ca
t=3″
http://voices.yahoo.com/the-relationship-between-ethics-2600685.html?cat
=3
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