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35. ETHICS HAS NO PLACE IN BUSINESS.

DISCUSS

Business ethics is an application of moral values when conducting a


business.

Business Ethics is relevant to conduct of individual and

organization. It applies to every type of activities that involved, in particular


business such as meeting procedures, customer care, the way the
organization treats their employees, supplier, shareholder, sales techniques,
accounting procedures and etc.

Law often controls business ethics, while

other times business ethics provide an essential framework that businesses


may choose to practice to earn public acceptance.
Ethics is a study of morality that define good and bad activities.
Business ethics is a process where we examine our moral standards and
applied it to the business in a right way and right time. But, there are some
businessman and businesswoman denying that applying moral values in
business is not applicable. Different opinion arises that applying moral values
or follows ethical guidelines in business doesnt generate any profits to the
companies or organizations.
Some businessman claims that Ethics has no place at all in business.
This perspective is no doubt grounded on the assumption that business is an
autonomous human being activity. And morality does not exist and that
businessman is allowed to do what they think. To claim that business is an
activity which is independent of morality is again, a shortsighted view of the
relationship between ethics and businesses. Business is a part of human
society. Business activities, interrelated with the structure of belief and value
system of people. Business should also be seen and analyzed from the view
of ethics. Any business activity that doesnt follow the morality will bring
more harm than good to individuals in particular, and the society in general.

Further, the belief that Ethics does not mix with business will only justify
unlawful activities. Certainly, Ethics has a place in business.
Ethics is a subjective matter. Its viewed as a morality which depends
on ones cultural and religious perspective. It is a wrong perception of the
role of ethics in business. Some businessman has a perspective that ethics
are a morality, which means, the fundamental concepts of right and wrong
rely on cultural values of people. This implies further that what might be
viewed as a right activity in one nation may be unacceptable in another
nation. Prostitution is definitely banned in Malaysia, however, legal in
Thailand. If morality is relative, then what is bad in one place may be great in
other places, and vice-versa. And if ethics are viewed this way, then whos
going to tell us which actions are great and which activities are awful? The
reality is, there are global ethics that people accepts and follows regardless
of religion, cultures and moral value system.

For example, society in all

around the world believes that murder is definitely unacceptable action, and
bribery is always wrong. The study of ethics reflects the way of our common
understanding of the fundamental ideas of right and wrong as reflected in
our human nature and our human conduct.
Some businessman guarantees that good business implies good ethics.
It is a myth. A business may be profitable, but the source of gaining profits
may be questionable. Drug-trafficking is a definitely profitable business, but
they disregard same rules and values of people. The study of Ethics in
business encourages businessmen and managers to look closely into the end
and the means of doing business, but the ways of getting those profits must
be also inspected. The end does not justify the means.
Certain business leaders and businessman have a perspective that
business is a war. For them, the market is an arena of gladiators trying to
battle for survival and vying for the number one position. Because of this
belief,

businessmen

often

use

predatory

strategies

to

destroy

the

competitors in order to emerge as the market leader. Business is a good


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human activity. And as an integral part of the society, it must promote


healthy competition and not to destroy competitors.
Ethics plays an essential part of business. Without ethics, business will
be a chaotic human activity. Ethics is a not a study of positive laws. Laws are
always insufficient. They cant regulate all aspects of human nature and
human action. The law is sometimes absent and unclear in certain areas.
Ethics is unwritten law and written in the hearts of men. An action is may be
legal and may not necessarily moral. The ethics provides clear distinction
between morality and legality. Peter Ducker argues that, the enterprise is an
organ of society and its actions have a decisive impact on the social scene.
Drucker simply reminds us that a business corporation is not just created to
make profits, but to consider its moral and social obligation to the
stakeholders. Businesses should not just look after their own interests, but
also the interest of the common good.

CASE STUDY: ENRON


Enron cooperation was an Americas most innovative Company based
in Houston, Texas. Enron is a one of the most leading company in 2000. It is
electrical, natural gas, pulp and paper, and communications companies, with
claimed revenue of S111 billion in 2000.
After several years of international and domestic expansion involving
complicated deals and contracts, Enron was billions of dollars into debt. All of
this debt was concealed from shareholders through partnerships with other
companies, fraudulent accounting and illegal loans. The guilty parties are
Kenneth Lee Lay, Jeffrey Skilling and Andrew Stuart Fastow. The main reason
for the downfall of Enron is deregulation, mark to market and special purpose
entities.

Due to the actions of the ENRON main executives, the ENRON


Company went bankrupt. The loss sustained by investors exceeded $70
billion. Furthermore, these actions cost both trustees and employees
upwards of $2 billion; this total is considered to be a result of
misappropriated investments, pension funds, stock options, and savings
plans as a result of the government regulation and the limited liability
status of the ENRON Corporation, only a small amount of the money lost was
ever returned.

IMPORTANCE OF ETHICS IN BUSINESS


Build Customer Loyalty
Consumers may give an organization a chance to exploit them once.
But consumers believe that they have been cheated such as being
overcharged, they will not be a loyal customer. The Loyal customer
base is one of the ways to achieve success in business. Good
companys reputation for ethical behavior helps to create a positive
image towards the company and its product. It will bring more
customer from referral. An unethical company may gain a bad
reputation. This reputation will lead to companies failure. In this era
global world, dissatisfied customer can spread a negative image about
the company and the negative experience they had.
Retain Good Employees
Capable individuals at all levels of an organization want to be treated
fairly for their work and dedication. They want career enhancement
within the organization based on the work they do effectively and not
on favoritism. They expect the management team tells them the
reality about what is going on. Companies who are true and open when
dealings with employees, will gain good and capable employees work
in their organization.

Positive Work Environment


Ethical employees will be honest in their first job interview about their
talents and experience. Employees need to be seen as a team player
not just an individual who work in an organization. It is very important
to develop good relationships with colleagues. Their managers will
believe in them and give autonomy to take some decision in their
organization. Employees who lie will gain risk of being terminated. An
extreme case of poor ethics is employee theft. This will make company
loss. It is very important to have ethical employees.
Avoid Legal Problems
Sometimes, companies organization tends to be irresponsible in some
areas such as safety precaution of employees, using substandard
materials and etc. The chances of being caught is very high. If that
happens, companies need to pay legal fees and fines by governmental
agencies. This will lead to negative image to the companys reputation.
Companies that follow the highest ethical standards will train their
employees not to mislead their company and follow the standard and
legal procedures.