Business Ethics

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The five major characteristics of ethical problems are:  
1.   Most ethical decisions have extended consequences—Managerial decisions, actions and results have consequences that extend beyond their control and beyond the organization into society. For example, bribes change governmental processes. Pollution affects environmental health. All the consequences and effects should be considered before decisions are made. 2.    Most ethical decisions have multiple alternatives—Simple yes or no choices do not adequately characterize the many alternatives that exist and that should be considered for decisions such as “Should a manager pay a bribe?” and “Should a factory pollute the air?” 3.    Most ethical decisions have mixed outcomes—As noted in the second point for alternatives, outcomes are not unambiguous; they have social benefits and costs as well as financial revenues and expenses associated with the ethical choices. 4.    Most ethical decisions have uncertain consequences—Unanticipated and unknown consequences can follow ethical choices. 5.    Most ethical decisions have personal implications—Such decisions can affect the lives and careers of the decision makers. Individual costs and benefits, in addition to financial and social ones, are associated with most alternatives in ethical decisions. Ethical behavior

Definition

Acting in ways consistent with what society and individuals typically think are good values. Ethical behavior tends to be good for business and involves demonstrating respect for key moral principles that include honesty, fairness, equality, dignity, diversity and individual rights.

Importance

Business ethics are easily overlooked by the potential entrepreneurs because they often have other priorities, such as business ideas, marketing, and financial matters, to consider. However, business ethics have a more powerful influence on the existence of a business operation than most people think. They can create a positive image of a business that boosts the growth and sales by increasing consumer trust. On the other hand, breaching business ethics could create serious damage, causing customers turn their backs on a business. Ethical people are those who recognize the difference between right and wrong and consistently strive to set an example of good conduct. In a business setting, being ethical means applying principles of honesty and fairness to relationships with coworkers and customers. Ethical individuals make an effort to treat everyone with whom they come in contact as they would want to be treated themselves.

Build Customer Loyalty

Consumers may let a company take advantage of them once, but if they believe they have been treated unfairly, such as by being overcharged, they will not be repeat customers. Having a loyal customer base is one of the keys to long-range business success because serving an existing customer doesn’t involve marketing cost, as does acquiring a new one. A company’s reputation for ethical behavior can help it create a more positive image in the marketplace, which can bring in new customers through word-of-mouth referrals. Conversely, a reputation for unethical dealings hurts the company’s chances to obtain new customers, particularly in this age of social networking when dissatisfied customers can quickly disseminate information about the negative experience they had.

Retain Good Employees

Talented individuals at all levels of an organization want to be compensated fairly for their work and dedication. They want career advancement within the organization to be based on the quality of the work they do and not on favoritism. They want to be part of a company whose management team tells them the truth about what is going on, such as when layoffs or reorganizations are being contemplated. Companies who are fair and open in their dealings with employees have a better chance of retaining the most talented people. Employees who do not believe...
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