What Do We Mean by Unethical Business Practices - Essay Example

The concept of business ethics has gained significant consideration during the contemporary period given that it has a bearing on the success of business. Essentially, the main objective of business is to generate revenue as well as profits in a noble as well as responsible way to all the stakeholders involved (Rajeev 2010). However, the element of greediness as well as the need to get rich quickly by business owners has led to a situation where unethical business practices are being used. Against this background, this essay seeks to critically analyse the concept of unethical business practices. It will start by explaining the meaning of ethics so as to gain a clear understanding of what unethical business practices mean. This will be followed by an outline of some of the unethical business practices whereby real life examples of such practices will be drawn from different cases. Basically, ethics are moral values and principles that determine our conduct in the business world and are concerned with distinguishing between something that is good from bad (Rajeev 2010). It also refers to the commercial activities, either with other business houses or with a single customer. Thus, the basis of ethics is firmly rooted in the value system and it is the obligation of every business to ensure that they operate in a society hence the need to ensure that they do not violate the welfare of the people living in these societies. Being socially responsible is mainly concerned with producing and selling goods and products that are not harmful to the consumers and it is the right of the customers to expect to get quality product and services all the time. However, today’s business world is characterised by stiff competition and for a firm to remain viable, it must make adequate profits but this does not entail using unorthodox or unethical means as is the case with other businesses. Rajeev (2010) posits to the effect that the financial sector is awash with cases of violation of the norms by the individuals to amass wealth in an unethical manner. Some of the activities that can be characterised as unethical business practices include the following: resorting to dishonesty or deception, distortion of facts to mislead or confuse the consumers, greed to amass excessive wealth, lack of transparency, harming the environment for financial gains, lack of privacy as well as sexual discrimination. It can be seen that the economic crisis particularly of any given country is owed to unethical business practices such as corruption and graft. In most cases, unethical business practices constitute white collar crime. White collar crime is often rife in big financial institutions and it involves underhand dealings that mainly use deception as a tool to swindle unsuspecting people (Welsh 1999). This kind of crime is often difficult to easily detect like other forms of crime such as civil and criminal. It is a kind of sophisticated crime that also involves the use of computer technology which makes it hard to notice. In spite of it being difficult to detect, white collar crime is really a high profile crime that often results in financial institutions being swindled of very large sums of money which leads to their collapse in most cases. This is well planned crime but this does not make it any better from other crimes, it is a great crime that deserves severe penalties and prison sentences. White collar crime usually constitutes scandals that often make headlines in the media as a result of the high ranking people involved and its impact on the affected institutions. In most cases, white collar crime is orchestrated by high profile officials especially at financial institutions such as banks, big corporate organisations or even multinationals (Welsh 1999). It often involves people who are directly responsible for dealing with financial issues in the institution since they have readily access to the funds. Powerful officials such as politicians can use their political muscle to connive with a cliché of senior officials in the departments they head to engage in ‘smart’ but corrupt activities that would wipe out all the cash coffers. The high profile officials involved in this kind of crime often try to make it a guarded secret as much as possible fully knowing the consequences once discovered. Unethical business practices such as white collar crime constitute a serious crime in that it has negative impacts on the institutions affected as well as the general populace at large. The most notable impact of white collar crime is the collapse of the financial institution involved. By virtue of the fact that white collar crime can only be uncovered after a financial audit has been conducted, it becomes difficult to detect it while it is taking place until signs of collapse as a result of bankruptcy of the institution are first noticed. The collapse of a financial institution means a lot to all the stakeholders involved. Of great concern are the unprecedented job losses which can lead to hundreds or even thousands of people losing their jobs as a result of greedy actions of a few unscrupulous people who will benefit from the shoddy deals that would siphon all the money from the institutions involved. Also central to the concept of ethics is the phenomenon of corporate social responsibility (CSR) which posits that organisations operate in societies where there is need for them to plough back to the communities in which they will be operating (Zarka 2007). A good example can be drawn from the case of Nike when it began using traditional forms of advertising (http://www.docstoc.com/docs/5801173/nike-unethical-business-practices ). The problem encountered by Nike is related to CSR and how it ought to disclose some of the information to the citizens through advertisements. Davenport (2000 as cited in this case) posits that companies are obliged to engage the stakeholders in an ethical way with regards to CSR. However, as is the case with Nike, their use of traditional advertising did not however reflect this position. In as far as the operations of the company are concerned, they should truly reflect what it has promised its customers as part of the CSR initiative. The organisation ought to be truthful all the time and act in goodwill so as to fulfil its corporate social responsibility to the citizens. However, instead of providing this timely information to the customers, Nike found itself in a position to advertise good corporate conduct in response to negative publicity. For the sake of generating revenue, Nike did not stick to the dictates of the concept of CSR which attracted negative publicity. Indeed, acting against the expectations of the stakeholders for the sake of revenue generation raises eye brows and this can be classified as unethical business practice. Nike created persuasive information that amounted to deception given that the information was incomplete with regards to the expectations of a higher standard of responsibility to the stakeholders involved (http://www.docstoc.com/docs/5801173/nike-unethical-business-practices ). Traditional practices used in advertising are solely meant to improve the performance of the organisation and the products for the sake of profitability whereby it can be noted that when it comes to marketing the corporate image of the organisation, this method is inappropriate. Somehow, Nike was not open in its operations and the use of advertising to portray a positive image confirms an element of unethical business practices that were conducted in a hidden manner. An attempt to use paid advertising to create a positive image is deceptive in a way given that a company that is socially responsible will stick to its principles that will not violate the norms and values of the stakeholders involved. In this case, it can be seen that Nike gave precedence to revenue generation at the expense of giving correct corporate information to the public in a bid to maintain its positive image. In as far as dissemination of correct corporate information to the public is concerned, a serious company about its viability in a trustworthy manner should never conceal some of the information as this would amount to unfair business practices. For instance, corporate social responsibility statements are regarded as reports that compel all the companies doing business in the US to divulge some of the information that is related to their operations with regards to manufacturing of goods and products so as to ascertain if they meet the expected standards. However, Nike did not fulfil this obligation. Thus, Silanpaa (1998 as cited in this report) states that these reports help the companies to generate an increased understanding of their corporate image and gain greater confidence from their stakeholders. Thus, CSR reports are less deceptive and they are transparent which is a positive development in as far as ethics in an organisation are concerned. Another good case of unethical business practice can be drawn from Nestle where there has been a call for boycotting its products as a result of not being ethical in its conduct. According to Gates (2010), an overview of Nestle’s unethical business practices include the following: promoting infant formula with misleading and harmful strategies that violate the International Code of Marketing Breast Milk substitutes that put the lives of babies at risk, using suppliers that violate human rights and destroying the environment, controlling and abusing of water sources in its bottles as well as promoting unhealthy foodstuff especially among the young people. In this case it can be seen that Nestle denies the allegations and used deception as well as denials in order to justify its practices. There is no law that can stop it from its practices the reasons why the consumers are advocating a boycott of the organisation’s products. According to the blog by Gates (2010) “the Nestlé boycott has been going on for more than 30 years and Nestlé is still one of the three most boycotted companies in Britain.” However, the officials of the company deny these allegations and they claim that this boycott is long over. By virtue of being the largest food company in the world with a lot of brands, it may be difficult for the boycott to have a full impact but there is an element of unethical business practices at this organisation. In most cases, unethical business practises are done by companies that are primarily concerned with their profitability and generation of revenue at the expense of the welfare of the stakeholders involved. Ethically, the interests of the stakeholders should be given precedence given that business is there to serve those very same people. It can also be noted that the business world today is characterised by stiff competition which is a health situation in as far as marketing is concerned. However, instead of focusing on defaming another competitor, each and every organisation should focus on its innovation and creativity so as to ensure viability. Focusing on defaming another competitor amounts to unethical business practice which deserves to be treated with the contempt it deserves. Instead of focusing on their own operations, some business operators have a tendency putting effort in defaming other competitors so as to gain the favour of the customers. By any standard, this amounts to unethical business practices. In my own opinion, the criteria I will choose to counter the unethical business practices is the appropriate use of a code of ethics. A Code of Ethics "is generally a more blanket statement of values and beliefs that defines the organization or group" (Brandl and Maguire as cited in Rajeev 2010). Research has shown that companies that achieve long run business success are those that practice high ethical standards. Since ethical and responsible actions relate to business success, there is a need for fair and trustworthy behaviour on both a personal and business level. Many companies have established codes of ethics and operating standards of performance to provide objectives for all company and even personal relationships. Thus, being ethical requires the company to adhere to the set value and believes instead of giving precedence to financial gains only. Over and above it can be noted that concept of business ethics has gained significant consideration during the contemporary period given that it has a bearing on the success of business. Essentially, the main objective of business is to generate revenue as well as profits in a noble as well as responsible way to all the stakeholders involved (Rajeev 2010). However, the element of greediness as well as the need to get rich quickly by business owners has led to a situation where unethical business practices are being used. These include white collar crime which is not easily detected and is more common in big financial institutions or corporate organisations. These practices often impact on the operations of the organisation as a whole as well as the welfare of the stakeholders involved. Against this argument, it can be noted that crime of this magnitude is just as bad as any other crime as it is capable of causing social upheaval if left unchecked. In order to ensure viability of an organisation in an ethical manner, it is noble for every company to have a code of ethics where the values and norms that guide its operations are espoused. This will go a long way in ensuring that there is a cordial relationship between the company and its stakeholders. References Gates A. (August 3 2010). Raising awareness about Nestle’s unethical business practices Accessed on January 4 2011, from: http://crunchydomesticgoddess.com/2010/08/03/raising-awareness-about-nestles-unethical-business-practices/ Nike unethical business practices (N.D.) Accessed on January 4 2011 from: http://www.docstoc.com/docs/5801173/nike-unethical-business-practices Rajeev L (2020). Ethical and unethical business practices. Accessed on January 4 2011 from: http://www.buzzle.com/articles/ethical-and-unethical-business-practices.html Unethical business practises and defamation (2010) Accessed on January 4 2011, from: http://uk.answers.yahoo.com/question/index?qid=20100814061507AAsTTNm Gates A (2010) boycott Nestle’s products. Accessed on January 4 2011 from: http://www.buzzle.com/articles/ethical-and-unethical-business-practices.html Welsh F. (1999). Dangerous Deceits: Askin and the Tollgate Scandal. London. Harper Collins Publishers. Zarka H (May 24 2007). Ethical and unethical business practices. Accessed on 18 January 2011 from: http://www.associatedcontent.com/article/256353/ethical_and_unethical_business_practices.html?cat=3 Read More