What is Business Ethics and its Advantages
In general terms, Business Ethics revolves around relationships. These relationships exist between businesses and consumers on multiple social and economic levels. Business ethics, therefore, define the relationship between an individual and a business or may apply to employees, various areas of government, and the community.
In other words, Business Ethics refers to moral principles and standards and a code of conduct are expectedthat businessmen to follow while dealing with others.
Business is a means to society to use scarce resources to produce in an efficient manner those goods and services which society wants and is ready to pay for.
Maximisation of profits is the target or objective of a business but it needs to be balanced with the needs of the stakeholders. The important issue in business ethics includes ethical management of the enterprise in relation to its stakeholders.
Advantages of Business Ethics
- Attracting and retaining good employees: Talented individuals at all levels of an organization want to be compensated fairly for their work and dedication. They want career advancement within the organization to be based on the quality of the work and not favoritism. People aspire to join organizations with high ethical values. Ethical organizations create an environment that is trustworthy, making employees willing to rely on. Thus, companies’ policies cultivate teamwork, promote productivity and support employee growth.
- Investor Loyalty: Earning investor loyalty is not an event, it’s a process. Investors are concerned about ethics, social responsibility, and reputation of the company in which they invest. Investors today are very much aware that an ethical environment in an organization provides efficiency, productivity, and profits.
- Customer Satisfaction: Customer satisfactions a marketing term that measures how products or services supplied by a company meet a customer’s Customer satisfaction is important because it provides marketers and business owners with a metric that they can use to manage and improve their businesses. The company should evoke trust and respect among customers for enduring success. This can only be achieved through good ethical practices.
- Avoid Legal Problems: At times, a company’s management may be tempted to cut corners in pursuit of profit, such as not fully complying with environmental regulations or labor laws, ignoring worker safety hazards or using substandard materials in their products. The penalties for being caught can be severe, including legal fees and fines or sanctions by governmental agencies. The resulting negative publicity can cause long-range damage to the company’s reputation that is even more costly than the legal fees or fines. Companies that maintain the highest ethical standards take the time to train every member of the organization about the conduct that is expected of them.
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