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What are business ethics and what is their importance?
Business ethics are a matter of much debate. Every MBA
entrant is taught the meaning of them, and yet many will never follow these
guidelines in their real life careers. It has become a vast and complex field,
and is the subject of much research. Business ethics encompass a large and
significant portion of what it takes to do business today. Under the umbrella
of business ethics comes:
·
The social responsibility that a business is
supposed to have towards the community in general, particularly the one in
which it operates or has any interests. An example of this would be the Exxon
Mobil oil spill. It is the responsibility of a business to protect the
interests of the people, animals and environment where it uses resources. Due
to improper handling of the issue, it became a public relations nightmare for the
company. Exxon has now been ordered to clean up the area which it should have
taken care not to damage in the first place. Indifference to business ethics in
this case, caused a negative public image for the company and a huge lawsuit.
·
Issues regarding a company’s responsibility
towards its shareholders. This is a heavily regulated area but one that
requires a lot of government intervention due to certain unethical practices
adopted by many companies in the past. The concept of increasing shareholder value
is part of the fundamental principles of a company and if business ethics are
not brought into play here, the business can collapse due to the pressure
exerted by shareholders.
·
Inter-company dealings and negotiations. Often
rivalries in business can turn ugly due to the amount of money and ego riding
on them. Hostile takeovers and business espionage are some of the examples of
unethical behavior within the business world. If discovered, these deeds can be
punishable by law or simply public opinion. To allow for fair play and keeping
the best interests of the consumers in mind, the government regulates a great
deal of what goes on in company dealings. Microsoft has been the target of much
abuse and outrage due to its allegedly monopolistic techniques of doing
business. While this has not sunk the IT giant, many say that it may have long
term repercussions. The government has also stepped in to make sure that other
businesses and consumers are not harmed.
·
Stakeholder protection. Every business has
stakeholders other than its owners – the employees, the stockholders and the
general public. The business has to ensure that the rights and interests of all
of these groups are adequately protected in the course of its operations. The
recent outcry about the harassment and bad working conditions of employees in
Wal-Mart led to the generation of a lot of negative press about the outsized
department store. This gives the competition the lead and rivals take the
opportunity to get ahead while the company is busy trying to do some damage
control.
·
Fundamental business practices of a company.
Underhanded dealings, the use of substandard products, spreading misinformation
about the product, hiring illegal workers at lower than minimum wage, etc.
prove that a business is run in an unethical way and that it is not a high
quality work place or service provider. For instance, cigarette companies that
spent most of the seventies telling people that it was not unhealthy to smoke,
though they knew this to be untrue. In a recent judgment, one such company was
forced to pay out $28 billion.
