The Important of Business Ethics

DIFINATION OF BUSINESS ETHICS

Business ethics are moral principles that guide the way a business behaves and also the study of

proper business policies and practices regarding potentially controversial issues, such as

corporate governance, insider trading, bribery, discrimination, corporate social responsibility and

fiduciary responsibilities. Business ethics are often guided by law, while other times provide a

basic framework that businesses may choose to follow in order to gain public acceptance.

Business ethics is also about the set of moral rules that govern how businesses operate, how

business decisions are made and how people are treated. In business, there are many different

people you have to answer to: customers, shareholders and clients. Determining what to do when

an ethical dilemma arises among these different interests can be extremely tricky, and as such

business ethics are complex and multi-faceted. Some business ethics are imposed by law.

Business ethics values vary by company, and are defined largely by the behaviors and values that

govern a business environment. In general, business ethics values are a set of guiding principles

that encourage individuals in an organization to make decisions based on the company’s stated

beliefs and attitudes toward business practices within its industry.

WHY PEOPLE STUDY BUSINESS ETHICS

Managing a business takes a lot of knowledge and experience. Obviously you need knowledge

about accounting, finance and marketing, as well as at least a working knowledge of the industry

the business is in. However, it is equally important to have a real understanding that how you

operate your business reflects not just on you, but impacts your neighbors and the larger

community as well. Ethics in business is an individual's moral judgements about right and

wrong. Decisions taken within an organization may be made by individuals or groups, but

whoever makes them will be influenced by the culture of the company. The decision to behave

ethically is a moral one; employees must decide what they think is the right course of action.

This may involve rejecting the route that would lead to the biggest short-term profit. Study

business ethics because ethics are at their essence, moral judgements about what is right and

what is wrong. In a business sense, these ethics are decided upon and formed by each company

and underpin the decisions that anyone in the business makes. The decision to behave ethically

as one individual to another is easy for any decent moral human being, but it is easy to forget the

impact a large, faceless business can have on the world. Business Ethics and Corporate Social

Responsibility are all about bearing in mind the full weight of any corporate decision. Business

ethics are a reflection of the standard of business that either an individual or business uses when

conducting transactions. Business ethics are important because they add a line of defense to

protect the company, enable company growth, save money and allow people to avoid certain

legal implications.
IMPORTANT OF BUSINESS ETHICS

The important of business ethics is can be said as a movement refers to the development of

structures internal to the corporation that help it and its employees act ethically, as opposed to

structures that provide incentives to act unethically. The structures may include clear lines of

responsibility, a corporate ethics code, an ethics training program, an ombudsman or a corporate

ethics officer, a hot or help line, a means of transmitting values within the firm and maintaining a

certain corporate culture, and so on. Ethics play a major role in the prevention of fraud. Fraud

prevention becomes a shared responsibility among the members of the organization. The

important of ethics can reduce Loss of physical assets, increased costs of security, loss of

customers especially those who value ethics, loss of employees especially the more ethical, loss

of reputation, increased legal costs, higher costs of debt, loss of investor confidence, regulatory

intrusion and costs of bankruptcy. A company which sets out to work within its own ethical

guidelines is also less at risk of being fined for poor behavior, and less likely to find themselves

in breach of one of the multitude of laws concerning required behavior – for example, laws

around payments to corrupt regimes, or environmental practice policies. The whole company can

be fined, the directors can be fined, and individual employees can be fined if the responsibility

for an infraction falls on their shoulders. Reputation is one of a company’s most important assets,

and one of the most difficult to rebuild should it be lost. Upholding the promises, it has made is

crucial to maintaining that reputation. Ethics concern an individual's moral judgements about

right and wrong. Decisions taken within an organization may be made by individuals or groups,

but whoever makes them will be influenced by the culture of the company. The decision to
behave ethically is a moral one; employees must decide what they think is the right course of

action. This may involve rejecting the route that would lead to the biggest short-term profit.

Ethics also help better decision making attitude helps the management make better decisions and

decisions which are in the interest of the public, their employees and the company's own long

term goal even though decision making is slower. This is so because respect for ethics will force

the management to take various aspects like economic, social and ethical into consideration in

making decisions. Ethics corresponds to basic human needs. It is a human trait that man desires

to be ethical; not only in his private life but also in his business affairs where, being a manager,

he knows his decisions may affect the lives of thousands of employees. Moreover, most people

want to be part of an organization which they can respect and be publicly proud because they

perceive its purpose and activities to be honest and beneficial to the society. Most top managers

would like to respond to this need of their employees and they themselves feel an equal need to

be genuinely proud of the company, they are directing. These basic-ethical needs compel the

organizations to be ethically oriented.

EXAMPLE OF BUSINESS ETHICS

1. Toyota Scandal

Toyota was "confronted with safety concerns regarding faulty brakes and sticking pedals in

2009” and refused to take immediate recall action, enabling a potential unstoppable force to

unconsciously make its way around overflowing city streets. Toyota also announced that

substituting side airbags for properly installed breaks save them "US$124 million and 50,000

man hours," the cost of what it would have taken to recall and fix vehicles. They soon added that

they began "delaying a rule for tougher door locks saved them US$11 million." Proving that the

globally recognized million-dollar company chose to save a little more money by removing

standard safety features. The financial greed lead to the death of many Toyota customers whose

families were shocked in terror upon hearing about a once trusted care company. Two years

later the trial appeared before Congress where Toyota manufacturers could try another fraud

attempt at providing an explanation to a fatal decision. However, the unethical handling of the

situation did not seem to phase any Toyota employees upon stating "We did not see it as such a

big deal." When asked how they were planning to accommodate families and come up with a

valid solution to the problem their senior Toyota executive and global managing director were

sorry for getting caught than they were for the choices they made in the first place. The problem

was not announced until Toyota was "accused of hiding evidence in hundreds of roll-over and
death cases." Personally at this point, the report is too late for some unfortunate families and

injured victims of careless manufacturers.

2. Foxconn Forced Labor

In 2010, the most infamous incident of exploitation of workers happened in one of those

Foxconn factories, where 18 workers attempted to commit suicide and 14 of them succeeded.

Workers in those factories were reportedly forced to work for long hours’ overtime with reduced

overtime payment. It is also reported that Foxconn have infringed on the laws since the company

did not pay full amount of pension to the workers. Moreover, Foxconn imposed serious

restrictions on the workers. For instance, all workers in the Apple production line were virtually

given no rest. In order to go to the bathroom or drink water, they must find a substitute to take

their places. Also, Workers were not allowed to send email unless they were authorized.

Although the exploitation is evident and blatant, one-point worth noting is that there is no legal

battle against Foxconn. No one has successfully filed a lawsuit against Foxconn. At this point, it

could be concluded that either there are some flaws in the law or there is ineffective enforcement

of law. It would be a perfect time for us to explore the Labor Contract Law of the People’s

Republic of China.
 3. Nestle Scandal

In 2001, Nestlé faced criticism for buying cocoa from the Ivory Coast and Ghana, which may

have been produced using child slaves. According to an investigative report by the BBC,

hundreds of thousands of children in Mali, Burkina Faso and Togo were being purchased from

their destitute parents and shipped to the Ivory Coast, to be sold as slaves to cocoa farms. The

Ivory Coast is the biggest producer of cocoa worldwide. These children, ranging in age from 12

to14 years and sometimes younger were being forced to do hard manual labor 80 to 100 hours a

week, paid nothing, barely fed and beaten regularly. In the widespread uproar caused by the

reports, Nestlé expressed its 'concerns' over the use of child labor but could not confirm that none

of its chocolate was derived from slave-labor sources.

CONCLUSION

What makes the ethics and values in business special relevant and topical in the present day

context in the world, the fact that we are on the threshold of environmental changes of far-

reaching consequences. Owing to the happenings on the political scene, the winds of change

being brought about by the force of globalization, liberalization, privatization and new

digitalization, challenges being faced by managers today is to somehow reconcile the pragmatic

demands of works to the call of the inner voice which somehow prevents them from using

unethical means for achieving organizational goals. The sense of deceit always breeds a sense of

distrust and skepticism that kills the business image. Trust breeds trust and a natural goodwill in

heart, good business ethics are necessary for, such mutual trust and goodwill. Therefore, business

ethics must be charted out very carefully; commercially they should be sound to be values that

should be valuable to the society. The single most important factor in improving the climate for

ethical behavior in organizations are the actions taken by top managers, in addition to setting

examples by them own behavior. Top managements should establish clear policies that

encourage ethical behavior. All employees who observe or become aware of criminal practices

or unethical behavior should be encouraged to report the incident to their superiors. Management
training seminars and orientation meetings that include discussion of actual situations can alert

employees to potential ethical conflicts and serve to communicate the organizations.