Effects Of Poor Business Ethics

POOR BUSINESS ETHICS

First of all according to Ferrell (2012) business ethics are the principles and the standards that determine acceptable conduct in business organisations. Similarly Pride, Hughes, Kapoor (2012) define business ethics as “the application of moral standards to business situations.” When a business has good business ethics, it has a good reputation because it considers its moral obligation to the world. In turn this helps it gain wide business opportunities.

Benefits of having business ethics (Ferrell 2012);

• Businesses that obey business ethics are known to make more profits, this is because they are respected and trusted so most customers approach them for goods or services.

• When businesses make ethical decisions,

Pride, Hughes, Kapoor (2012) state that some ethical issues businesses face involve fairness and honesty, organizational relationships, conflict of interest and communication.

The Effects of Poor Business Ethics Have On a Business

Businesses get their name tarnished and lose a lot of business and later on profits and the business as a whole, when they practise poor business ethics. It becomes unattractive to both local and international potential investors. This harms the business because it loses income from other countries which it would use for expansion, operational costs and investments. Furthermore governments also miss out as it does not get foreign currency injected into its economy, when international investors reject a business because of poor business ethics.

The workers also lose respect for an unethical business which leads to them slacking in their duties and this then leads to the productivity of the business lowering hence lower profits.

When businesses get caught for their unethical behaviour, they are normally sued for a lot of money and this makes them lose their finances and fail to keep up with their operational costs, and ultimately these may lead to the businesses

Management and Leadership

Pride, Hughes, Kapoor (2012, p234), state that Management is “the process of coordinating people and other resources to achieve the goals of an organization.” The person in charge of management is called a manger. And Leadership is the ability to influence people to achieve a certain task. These people are called leaders.

To solve the problem of poor business ethics, business should employ ethical mangers and leaders. When ethical managers and leaders are employed to spear-head a business and its activities, the decisions they make will be ethical meaning they are going to consider if the decisions they make are morally right or wrong. Similarly when ethical leaders are employed they will have the ability to influence employees to be ethical too, thereby creating an ethical organisation.

However, managers and leaders can fail to evoke the ethical spirits in a business if there is no corporate governance stating how the business should be governed to operate well. Therefore this limits the managers and leaders when it comes to fixing the issue of poor business