In the UK, ethical businesses are not as successful as less ethical businesses. Discuss - Essay Example

Discussion of Ethics in Business By + Organizations in the United Kingdom (UK) are facing challenges in understanding the value of ethics for success of their businesses. Businesses that practice ethics in their dealings are more likely to “achieve and sustain success” than those that show little concern for ethics (Business Ethics -Your Way to Success, page i). On the other hand, unethical practices appear to be trending in the business sector since some organizations are thriving by engaging in such practices.

Investor confidence is one of the factors that contribute to the success of a business. Some organizations create a false image of their affairs in order to “mislead investors” (Sirico, par 1). The organizations decide to hide crucial information on their performance in a bid to lure potential shareholders to purchase the company stock. The non-reporting of sensitive information includes covering up of losses, non-disclosure of financial threats of liquidity and bankruptcy. These acts of deception end up boosting the organizations’ stock prices and increasing the business’ share capital.

The organization can expand its business and widen its investment options, making it successful. However, the unethical organizations fail shortly after they are establoioshed; for example in Enron, “deceptions took root and grew to bankruptcy” (Levin, par 14). Organizations that carry out honest dealings with the public by providing a true and fair copy of their state of affairs attract investors in the long-term since investors like to have dealings with honest organizations. Ethical behavior creates a sense of confidence of stakeholders in the organization due to its “truth-telling in public relations” (Jamnik, pg145).

Misleading potential investors in order to raise capital leads to litigation issues that damage the reputation of a business. Ethical businesses may not attract as much investments in the short-term, but through trust, they build a good reputation, and “attract investors” with the “share price high” (Businesscasestudies.co.uk, par2). Long-term growth is essential for the sustainability of the business. Most organizations aim to get attractive returns on their investments. One of the approaches of increasing revenue is minimizing costs while increasing the sales revenue.

The organizations may engage in unethical behavior in order to cut on costs and maximize profits. The organization may decide to manufacture items that do not meet “mandatory safety standards” in order to minimize their product costs, and sell the products at low prices to increase its market share and beat competition (Jamnik, pg147). The substandard goods may compromise the need to “safeguard the environment” though this forms the least of the concerns for the organization as it only cares about reaping high profits (Bones, par1).

These organizations get good returns, and their businesses grow fast. However, the practices of compromising quality usually lead to the termination of the business and litigation issues (Business Ethics -Your Way to Success, 2003). The businesses that provide substandard goods get out of business fast because they are not able to supply the goods for long before the authorities discover them. On the other hand, the organizations that maintain their high standards spend a lot on production and will have to sell their products at competitive prices in order to recover their manufacturing costs.

The organizations that provide quality items end up facing very stiff competition from the cheap substandard items, leading to shrinking markets that lead to low revenue and profits. However, an ethical organization will have more customers that are loyal and grow its market segments since people will want to identify themselves with “high-quality goods and services” (Bones, par22). The financial cost of building ethical practices in the organization is sometimes overwhelming. These costs may involve trainings and “conducting through auditing process” to ensure maintenance of ethical behavior in the organization (Seal, par10).

These costs are high, and unethical organizations maximize on their returns by avoiding such costs since they have minimal direct influence in generating profits. Since they lack statutory ethical standards, unethical organizations are likely to lose out more in terms of fines and penalties when sued. In contrast, ethical organizations invest in ethical standards in their business operations and suffer the associated costs. However, these costs help the organization secure itself from risks of litigation and business closure due to unethical behavior.

Ethical organizations feel that “the collection and reporting of information on ethics” is essential for success (Cimaglobal.com, par5). Some businesses engage in corruption deals in order to further their business objectives. These organizations bribe government officials and authorities in order to carry out illegal transactions. Since these transactions involve a lot of money, the businesses gain a lot and expand their operations. Corruption may also manifest itself in the organization’s compliance to taxation.

The organization can collude with tax officials so that they do not pay their “fair share of tax”, which is an unethical and illegal practice (Bones, par25). The organization may influence their staff to practice unethical behavior, which may later turn against the organization when employees lose “moral consciousness” at workplace (Webley, pg267). Unethical practices in business competition leads to the success of some businesses. A business may engage in “incidents of corruption” to impose sanctions on its competitors in order for it to thrive in the market (Webley, pg268).

Other malicious attempts to win over competitors are; to tarnish their names, disrupt their events especially during the launch of a product, engaging in destructive politics, and directly frustrating the competitors’ operations. These acts may not only be unethical, but they may also be “immoral, cruel, or criminal” (Painter-Morland and Werhane, pg13). The fall of the rivals is an opportunity for the growth of the unethical businesses. On the other hand, businesses upholding ethical behavior believe in fair competition.

Ethical organizations continue struggling to overcome business rivalry as competitors also grow strong every day, while unethical organizations succeed easily as their competitors grow weak every day. Ethical organizations attract and retain workers more than unethical organizations. Most employees want to work with organizations that encourage honest dealings and treat them fairly. These ethical organizations “reduce labor turnover, reduce recruitment costs, and increase their productivity” (Businesscasestudies.co.uk, par2).

The practice of unethical behavior sometimes acts in the favor of some businesses but most organizations a “stunning loss” because of unethical practices (Fowler and Levin, par 1). An increasing number of organizations are engaging in these ethical practices to “foster innovation, growth, and the success of their businesses’’ (Painter-Morland and Werhane, pg44). The drive for success makes some organizations to engage in not only unethical practices, but also criminal activities in order to dominate the markets.

The organizations do these practices at the expense of “long-term benefits of a well-deigned process” (Seal, par10). References Bones, C. (2014). Why business ethics are under the spotlight. [online] Telegraph.co.uk. Available at: http://www.telegraph.co.uk/sponsored/business/manchester-business-school/10646719/business-ethics.html [Accessed 10 Oct. 2014]. Business Ethics -Your Way to Success. (2003). 1st ed. [ebook] Available at: http://www.hkedc.icac.hk/english/files/publications/PG002.

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[online] Acton Institute. Available at: http://www.acton.org/pub/commentary/2002/12/31/ethical-challenge-business [Accessed 10 Oct. 2014]. Webley, S. (2001). Business ethics: a SWOT exercise. 1st ed. [ebook] MA: Blackwell Publishers Ltd. Available at: http://www.researchgate.net/profile/Simon_Webley/publication/227748536_Business_ethics_a_SWOT_exercise/links/0c96052809391e79e3000000 [Accessed 10 Oct. 2014].