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Business ethics

Paper Type: Free Essay Subject: Business Strategy
Wordcount: 2243 words Published: 1st Jan 2015

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Business ethics is a well-institutionalized academic field, which deals with the moral dimension of business activity. In the context of international business, it means the treating of moral questions of international cultures and countries. International business should be sensitive to the environment and not just selfish for its own profits. Ethically, safety comes first and the profit comes last. The various issues that ethics target are diverse environmental concerns, animal welfare issues, labor practices, fair trade, health concerns, genetic modification, patenting of genes, cloning etc. International business is both more exposed to a variety of ethical conditions as well as in a position to exploit business ethics due to the sheer size an international company has. The end result of an ethical judgment entails its authenticity from being morally correct. But moral correction itself is a relative concept and is based upon the cultural perceptions as well as traditions. The international market and business arena can be ethically segmented into thedie hard, thedont cares, and the various groups in between. Companies all around the world are coming under scrutiny from governments, shareholders, customers, trade unions, human-rights groups, and others to prove that their activities are conducted in ethical ways.

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2.1. Ethical dilemmas

2.1.1. Decision making

Ethic, which is a managerial dilemmas to organization profits, this conflicts between economic activities and its social performance. The economic performances are measured by the organization benefits, revenue and the social performance are measured by the organizations obligation to people. Besides of attempting maximize businesss profits, all companies and organisations should solve these dilemmas in a case-to-case basis, due to the fact that there is not any general prescription , managers prediposetions are towards certain choices because of their own levels of moral development. The definitions of what isright according to the organization in which they work the informal cultural preferences and sanctions, and the pressures of the immediate situation. Acting without reflecting on these conditions could produce potentially unexpectedly results. But this is not easy because managers are subjectively involved in the situations themselves.

In most ethical dilemmas that businesses face to, they may have choices to perform. Furthermore, they should compare each choices to the part of moral stage. These choice should be reflected organizational values and beliefs. Government, through laws and regulation, may help establish the meaning of ethics. However, an effective solution to the dilemma must contain a mechanism in which ethical considerations become a central part of operations. A key component in ensuring ethical performance by modem corporations is the integration of moral reasoning throughout the organization.

2.1.2. Ethical frameworks

2.2. Profitability

2.2.1. Priority for businesss profits

The wordssocial responsibility may be famous among some companies but may be unimportant to others. if a company aims to maximize profit in the long run, the company has to recognize some social obligations such as being socially responsible, which may increase their cost. An activist approach should be implemented by protecting the welfare of society, preserving the environment and contributing positively as a socially responsible institution. Furthermore, most businesses in todays world are stressing on the importance of being ethically responsible and maximizing profit is not the main priority.

One view of social responsibility suggests that economic responsibilities are of the greatest magnitude in an organization. This view is in relation to the classical or purely economic view. Firstly, economic responsibilities are to manufacture goods and services to be sold at a revenue and being compliant to societal commandment and regulations. As explained, the classical view states the primary priority of maximizing profit for an organization as long as it constitutes to the minimum requirement of the economic and legal responsibilities. The meaning of economic responsibilities is similar as classical view as both stresses on profit making compared to upholding social services and producing social goods for the comfort of the society. Even the founder of Atlanta business community perceives that the economic responsibility was to make a profit (Joyner and Payne, 2002: pp. 9). Although socioeconomic view also stresses on the maximization of profit, but this aim is regarded, as the second priority and not the first, like classical view. Consequently, it can be seen that the classical or purely economic view suggests that economic responsibilities are of the greatest magnitude in an organization as its main priority is profit maximization, which is the main economic responsibility. A company, which only has profit maximization as primary priority from classical view may as well suffer through legal approaches if they do not constitute to protecting the welfare and environment.

2.2.2. Organizational obligation

Companies are supposed to have, an increased awareness of its role in the society, as they have the force in the modern globalize environment and hence they have the obligation to contribute in order to improve the society in which they live too. In addition, managers in highly visible positions in the organization should try to be ethical, because they have the power to play a key role in transmitting and diffusing codes of ethics.Indeed, acting ethically may make the difference between survival and closure of an organization.

2.2.3. Reputation & reward

In todays competitive environment, any adverse impact on the companys image can lead to a significantly decline in its competitive position. The rewards to organizations and managers supporting ethical cultures include increased efficiency in daily operations. Management of ethical and legal risks is not merely about conforming to rules and regulations, but in that way managers can protect the companys image and their reputation.

In facts, company regularly pays attention to its ethics, which is the image that could portray a strong positive to the public. People relize the organizations as valuing people more than profit, as striving to operate with the utmost of integrity and honor.

Customer nowadays have paid more attentions to ethical businesses. As customers being more ethical conscious and social responsible, they recognize more value to companies that act in a moral way and reward managers that operate those organizations. The inner benefit of virtue and the prudent to be ethical is an important motive for managers to act that way.

2.3. The possibility to balance ethics and profits

The issue of effectively integrating ethics into business decision making is a major area of debate confronting today’s corporate leaders. Persistent media reports of unethical behavior by corporations, business executives, and governmental officials highlight the need for effective solutions to the ethics dilemma. The ethics dilemma derives from the perceived conflict between the traditional corporate objective of profit maximization and the overall desire for increased social welfare. Although ethically responsible business practices are generally desired, opinions about what these practices are and how they should be encouraged are diverse. The complexity of the current business environment complicates the development and implementation of resolutions to ethical issues facing industry.

after a company tries to maximize profit, could bring the company down in the future. Coelho, McClure and Spry (2003) state,If logging an area enhances short-run profits, managerial income may be increased. However, the downside is the potential litigation that will reduce the firms wealth not to mention the additional moral hazard if the damage that is caused is potentially greater than the wealth of the firm. This shows no matter how much earnings a company may be maximized; its consequences for not being socially and ethically responsible would cause a bigger problem from the company in the future.

2.3.1. Examples of ethical and unethical organizations


Nike is known as one of the leading shoes manufactures in the worlds. It has large number of factories


Starbucks has won a number of ethics awards and has been recognized as a role model of social responsibility. The companys first priority is taking care of the employees in its retail stores who communicate with and serve customers. Starbucks managers believe that by taking care of these employees, the company can provide long-term value to shareholders

2.3.2. Possibility to intergrate ethics to doing business

In this world, people all understand not all things is right according by law, is ethical too. In doing business, leaders should focus on the organizations responsibilities rather than the rights. To begin with, organizations must consider and accept broader criteria for measuring the its performance and social role than those required by law and the market place. Many times companies may not need to apply the law or the moral code of the organization, because either those are insufficient to solve the specific problem or by implementing the law may lead to actions that are not ethical enough. Doing business must take define stands on issues of public concern and advocate ethical norms for the organization, the industry, and business in general.

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Ethical issue is the effective way to create and maintain a productive and ethical culture within the organization. An ethical management climate contributes to profits by reducing the cost of business transactions, establishing trust for doing business. Business ethics are considered in many businesses as a source of increased profits and competitive advantage. Moreover, ethical businesses help the bottom line by improving competitive advantage through improved performance and fewer negative events that damage corporate reputation. An ethical climate builds a strong competitive position that has been shown to positively affect business performance and innovativeness. Customers are likely to switch to brands associated with companies that have a good ethics reputation, if price and quality were equal. On the other hand, unethical behavior could trigger disloyalty and a switch to a competitors brand.As consumers are responding to ethically concerned businesses, being ethical can be extremely profitable. a business with high moral and ethical responsibilities will obliquely attract the attention of consumers, producers, suppliers even employees and this enhances its reputation as a socially responsible company. Then, being ethical and protecting the society and welfare will secure the business lots of money in terms of less fines and litigation. The company would even be safe from publicity of its appalling movements towards the society, especially with the high technology advancement today. With good status, the company would be assured of a good prospect in the future.

Hence, businesses and companies should practice the socioeconomic view as they can implement both protection and preservation of welfare and environment, and, maximize profit in the long run, rather than merely maximizing profit as long as it constitutes to the legal requirements.

There are many organizations in the world have created successfully ethical climate


To conclude with, some economists support that the ethics coexist with the enterprising practice and that the social responsibility of an enterprise is to provide products and services in a profitable and moral way, and overcame the problems of fraud, existence of monopolies, big rally of economic force in the hands of few, poor and the wastefulness of natural resources as well.In the frames of this new environment, the businessman beyond his traditional activities acquired also two new; he takes into consideration in each decision the wider economic and social consequences that arise from his actions, and collaborates with the government in the application of public policy. In that way not only the whole economy is improving with positive results for the manager and the enterprise, but also has been achieved resolution of such socio-economic problems, that if they were left unverifiable would give the stimulus for bigger requirements of interventions in the operation of enterprises.

In addition, the social sensitivity is essential, because if problems, such as the pollution of environment or the reduction of raw material, were not be faced directly, then in some years the society will be led to socio-economic and environmental destruction, so manager and the enterprises will collapse. Besides, there is no point to say whether are applied or not egoistic practices, but whether a manager recognizes and achieves his obligations, as they have been extended to include also the application of moral rules.


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