Ethical Issues Affecting Businesses Today - Term Paper Example

?Businesses today are obliged to operate responsibly, paying attention to ethical issues in society if they have to make sustainable headway in the global market. There is an increasing external pressure for businesses and industries to abide by ethical standards ('Leveraging Corporate Responsibility' 2012), and apparently it has been argued that business practices at the workplace are essential for good business. Business ethics in this sense can be defined as the universally accepted code of conduct or behaviour for businesses and industries (Patil 2012). This paper will focus on ethical issues affecting businesses today, the importance of these issues to businesses and to the concept of responsible business. There exists a direct correlation between ethics and businesses, with the long-term benefits associated with the interaction between the two being sustainable businesses. To understand what constitutes a responsible business, it is essential to consider morally acceptable business practices. In this regard, a responsible business behaves ethically and ethics are the moral precepts that determine the acceptable code of behaviour (Riley 2012). Responsible business practice entails making decisions that are both legal and morally sound, basing on general standards of acceptable behaviour in society. The other notions that work in conjunction with business ethics include corporate social responsibility, corporate responsibility, sustainable business and social enterprise, whereby it is hardly possible to separate these concepts, as they are highly interrelated. This is because an ethical business must be socially responsible, and similarly, a socially responsible business must be ethical; therefore, these concepts are interlinked. Social responsibility is a broad concept as it covers the relationship between businesses and all the stakeholders involved and this relationship is defined with ethical principles and obligations. Every business is obliged to operate responsibly, and this entails doing what is morally acceptable and right all times; this calls for the establishment of principles that act as guidelines for the business. These principles define how the business relates to other stakeholders in the society such as consumers, suppliers, the surrounding communities and the government at large. Businesses must be careful to maintain good relationships with all these stakeholders for if they have to operate within the financial markets; this has both long term and short-term benefits. Businesses that are able to maintain such effective relationships are thus said to be socially responsible; a socially responsible business meets its obligations to society. For instance, businesses are expected to treat their employees with the utmost respect especially concerning employee privacy and protect employee rights such as entitlement to decent wages (Patil 2012); businesses that breach this obligation are bound to face criticism. Many businesses today have signed the UN Global Compact that obliges them to be socially responsible especially concerning environmental protection, human rights and labour standards (“From Fringe to mainstream” 2012). There has been a global drive to help firms become more socially responsible, especially with the initiatives of B- Lab, a non-profit organization that helps private firms be socially responsible (“B Lab's Bart Houlahan” 2012). Corporate responsibility entails being accountable to the society in general, by engaging in healthy business practices that promote the wellbeing of the world at large. In this case, businesses must take responsibility for their actions, as a form of responsible business behaviour as opposed to being insensitive and unresponsive. Both excellent and awful corporate responsibility influences not only on the local communities of operation, but also on the world at large. For instance, corporate responsibility has socio-economic and environmental effects in the world, and these can be either positive or negative. With regards to the environment, excellent corporate responsibility entails making business decisions that are guided by ethical and environmental protection laws, and do not undermine the safety of the environment. Sustainable business has to do with the ability of a business to survive the tough conditions in the highly competitive financial markets, by making gains, as opposed to losses. Maintaining an incredible record of accomplishment of ethical business practices promotes business sustainability in the long run. A responsible business survives in a competitive market while those that do not meet the ethical standards in the financial markets are automatically edged out of business. With a lot of global keenness and emphasis on ethical or responsible business practices, many businesses are forced to comply with legal and environmental ethical obligations in order to survive. More and more investors nowadays are looking to invest only in business that proves to be responsible, as opposed to those that are perpetually bedevilled with ethical issues and lawsuits. Social enterprise as the name suggests, is the endeavour to improve the environmental and the human condition through commercial strategies; such kinds of investments are mostly non-profit ventures, with little or no financial incentive to shareholders. In this regard, social enterprising is guided by social and environmental goals and objectives rather than individual financial gains except where it is deemed that the initial goals stand to be promoted. Social enterprising is driven by the premises that by promoting social and environmental goals, the enterprises are strengthened as they become more financially stable. In this regard, social enterprises are primarily concerned with social aims while profit motives always come secondary. Business ethics is an essential topic in the contemporary business world; many businesses are torn between the corporate dilemma of whether to be purely profit oriented, or to maintain proper business ethics at the expense of profits. However, many studies have indicated a direct correlation between business ethics and profits whereby there is a symbiotic relationship of sorts. The proponents of business ethics hold that profit oriented businesses must be guided by business ethics; this assertion is twofold, and both versions are justifiable. The first version states that good ethics translate into good business (Fieser n.d.), and this can be looked at from the profit perspective. In this regard, a business that is ethical makes more money than one that is not ethical. For instance, it is more profitable for businesses to make high quality and safe products as well as comply with environmental policies as this reduces product liability and lawsuits respectively. Maintaining proper employee relationship especially by respecting employee privacy at the workplace boosts their spirits, and this translates into an incredible workforce that yields more output. In this respect, ethical business practices shield businesses from negative publicity and legal suits that may arise because of a breach of business ethics, and saves the business from extra costs. The second version of this symbiotic relationship is inversely stated; good business generates ethical business practices in the competitive product market. This assertion assumes that if consumers demand safe high quality products, then businesses with a desire to make profits will be forced to operate ethically (Fieser n.d.). In this case, businesses that do not meet the ethical conditions are rendered unfit to compete in the free product market, and are faced out altogether. Responsible business behaviour is extremely significant to businesses today because it directly translates to multiple benefits for firms; businesses should endeavour to institutionalize a working code of ethical behaviour. For instance, responsible business behaviour may attract consumers to buy the products of a firm because the firm will be highly reputable and trustworthy. When more consumers buy a firm’s products, they boost the firm’s sales and profits, and this is good for business sustainability (“The Importance of Ethics in Business” 2002). Concerning employees, ethical business behaviour entices them to remain working in the firm and this reduces labour turnover while bolstering the firm’s output. In relation to the same, a reputably ethical business may attract more workers into the firm, and this enables the firm to get the best brains in the labour market at lower recruitment costs. Another essential benefit of maintaining ethical business behaviour is the business appeal to potential investors, which translates to high share prices. It has been undeniably proven beyond any reasonable doubt that investors are attracted to invest their monies in businesses that have a reputable business ethics record of accomplishment. A business that maintains ethical behaviour throughout in its operations and dealings is more likely to be more profitable to investors; this is influenced by their high share prices. Investors are attracted to invest in such businesses because their reputable record of accomplishment guarantees their sustainability in the highly competitive capital and product markets. Investors need to be assured that their investments are safe, or otherwise, they may not be willing to risk their monies where financial gains are uncertain. Responsible business behaviour hugely influences society, and that is why business ethics has become a serious topic of discussion in the modern business world. Ethical business behaviour entails making business decisions that promote the wellbeing of society and improving the human condition. However, not all businesses will make the right decisions, and in this case, the impact of business behaviour on society is twofold, negative and positive. For instance, businesses are supposed to maintain good working conditions for their employees, to protect them from harm and injury at the workplaces. Businesses are also obliged to explain to consumers the side effects of their products if any, to protect them from unwittingly consuming harmful products (Heerden 2012). Failure to do this will result to hazardous health issues in households, and this is both a social and economic burden to the society. In addition to that, unethical business behaviour may result into unjustifiable firing of employees, in the name of structural adjustments; this increases dependency in society.  Businesses are also obliged to make ethical decisions, especially when it comes to waste disposal in order to minimise damage on the environment. Businesses must take corporate responsibility in the event of environmental concerns related either directly or indirectly to their operations. In dire cases, the environmental impact of businesses and industries is exceedingly costly, and this often leads to a conflict of interests. For instance, when the multibillion British Petroleum company was affected by the infamous oil leakages, it was such a massive impact on the environment. Conversely, ethical business behaviour promotes the society’s wellbeing, for the benefit of all and sundry. For instance, an ethical business will promote social and environmental goal as opposed to profiting motives alone. This ensures that the society is a better place for living, especially concerning improved human conditions. Business ethics outlines the societal roles and obligations that all businesses should strive to achieve in the course of their operations. For instance, environmental protection and conservation is a critical concern for all businesses in today’s business world. Ethical business behaviour entails accountability for, and contribution to environmental goals and objectives; in this regard, businesses strive to minimise and where possible eradicate harmful impacts on the environment. The government as a stakeholder in the business world has a role to play in promoting ethical business practices and behaviour for all businesses in society. One way through which the government can promote ethical business practices is through regulation; in this regard, the government drafts regulation that encourages businesses to operate ethically. Through proper regulation, the government can curb unethical business practices in society, as businesses will strive to comply with legal obligations lest they face penalties to the contrary. For instance, the government’s environmental policies if concertedly enforced have an incredible potential to promote environmental consciousness at the workplace. Employee relationship policies and labour laws can also be an effective moderator and enabler of business ethics at the workplace. Such laws aimed at protecting employees will encourage firms to provide healthy working conditions and decent wages to their workforce. However, the government can also act as an inhibitor of business ethics in the sense that draconian regulation force companies to neglect their shareholders and customers. In this regard, the businesses will have less financial incentives to the shareholders, and consumers may not get optimum products and services to satisfy their needs. For instance, compliance with the Sarbanes Oxley Act has forced many firms such as Enron and WorldCom to fail in their fiduciary obligations to shareholders (Houston 2013). In the end, the noble government intentions of curbing unscrupulous business practices have an unintended negative impact on society, and this is counterproductive. Ultimately, business ethics is inevitable in modern day business operations for optimization of profits and business sustainability in the long run. It is hardly possible to divorce the two especially in the contemporary business world where global consciousness to ethical issues is highest (“From Fringe to mainstream” 2012). Businesses cannot afford to be totally indifferent to ethical issues in their operations as this normally has enormous cost implications on the businesses. Faced with disclosure obligations, it necessary for every business to consider ethical issues if it has to promote its reputation as an ethical firm in the corporate world (Heerden 2012). Ethical business practices and behaviour enables firms to avoid legal suits and operate profitably in the highly competitive capital, labour and product markets. In this case, firms are able to optimise their profits due to, but not limited to the lower operational costs accruing because of compliance with ethical obligations. Ethical business behaviour has the potential of promoting profit margins because of high employee morale that instigates increased output at the workplace (“The Importance of Ethics in Business” 2002). Ethical firms are also more likely to attract investors and a highly skilled workforce for the benefit of businesses and shareholders. However, in most cases, due to the highly competitive free economy in the business world today, many businesses are under pressure to remain afloat profitably to the shareholders (Goessl 2008). This often results to unethical business practices at the workplace, and these are driven by profit motives to the detriment of society’s wellbeing. Businesses should be encouraged to be socially responsible because despite scepticism, socially responsible businesses have the potential to be profitable in all types of markets. References “The Importance of Ethics in Business”. 2002. Businesscasestudies.co.uk. [Online] Availlable at. http://businesscasestudies.co.uk/cadbury-schweppes/ethical-business-practices/the-importance-of-ethics-in-business.html#axzz2HAoJXCO4 [accessed on 6th Jan, 2013] Goessl, L. 2008. “Understanding the relationship between business and ethics”. Helium.com. [Online] Availlable athttp://www.helium.com/items/581729-understanding-the-relationship-between-business-and-ethics [accessed on 6th Jan 2013] Riley, J. 2012. “ Introduction to Business Ethics”. Totor2u.net. [Online] Availlable athttp://www.tutor2u.net/business/strategy/business-ethics-introduction.html [accessed on 6th Jan, 2013] Fieser, J. n.d. “Business Ethics”. Utm.edu. 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