Business ethics relate to the generally accepted morals that govern an organization. The conduct determines what is wrong or correct and goes beyond government control (De Bakker et al., 2019). Ethical issues arise when an individual or business conduct contradicts society’s moral and social standards. An ethical dilemma arises where a course of action would conflict with one or more moral standards. Ethics affect both the business and other stakeholders. This paper evaluated how business ethics affect the business and other stakeholders. Moreover, two examples of business dilemmas will be evaluated.
A business that is ethically managed has various benefits. The bottom line of the organization will improve. Ethical issues lead to the motivation of workers, which results in increased productivity. Unethical behaviors that lead to loss include theft of organization assets and misappropriation (De Bakker et al., 2019). Often, workers may carry home the organization’s assets or misuse organization assets. The organization may also incur financial losses through creative accounting that prevent the management from undertaking corrective measures. Ethical observation ensures that the community supports the business and provides a conducive business environment. The company can source resources and staff from the community at a low cost. Society forms the market for the business; moreover, the organization ensures the retention of skilled workers. Where the organization observes ethical issues, workers remain loyal, and the cost of recruitment is low. The business’s reputation is enhanced by maintaining moral standards.
Owners
The business belongs to these people who are the shareholders of the business. The owners benefit from sharing the profit and are affected by the losses. Business ethics help grow the wealth of the owners. Ethical issues such as illegal tax manipulation and child labor may result in the total closure of the organization. Moreover, the owners may become bankrupt, where their sole source of income is the business.
Employees
The motive of workers is to grow and develop in their careers. Ethical issues may define the trajectory of the workers. Where ethical issues are observed, the workers are promoted accordingly while their salary increases, leading to motivation and personal growth. On the other hand, ethical issues result in discrimination, where the potential and growth of workers are inhibited. Such workers are demoralized due to a lack of fairness while stagnating in one position over a long period.
Volunteers
These are people who volunteer their services to organizations without pay. Observing business ethics attracts more volunteers. The volunteers are motivated to work and feel their services are properly utilized. There is an increased bond and trust with the organization. In an ethical environment, the volunteers may end up being hired. In conditions of unethical behavior, the volunteer feels their services are misused. The volunteers suffer from excessive allocation of duties while those under pay take a leave.
Consumers
Ethics benefit the consumer by ensuring the consumer obtains the right quality product at the right price. The essence is that the consumer gets value for their money. An organization with ethical issues results in poor product service and quality. Consumers may obtain defective products. The consumers may incur losses where the product was meant to be durable, and the client is forced to repurchase the product.
The suppliers
The suppliers are those that provide raw materials to the organization. Ethical issues ensure that the suppliers receive their payments on time. They get their tender to supply on merit, and defective raw materials are recognized relatively. Where their ethical issues, the suppliers incur losses through returns. There is delayed payment to some suppliers and cancellation of tenders without notice.
Investors
Investors buy shares and commit their resources to an organization. Ethics ensure an organization has an accurate financial report that reflects the true and fair picture. The investor expected return is met through the growth of a business. Where there are unethical issues, the investors suffer from losses. The information relied upon is falsified, which impairs the investor’s decision-making. The investors make losses as the predicted growth is never achieved the value of the organization drops.
The Government
The government depends on business through payment of licenses and taxes. A business that is governed by business ethics results in increased income. There is little follow-up with the organization as the taxes are limited on time. An organization with ethical issues results in court suits and closure of enterprises. The government is continuously auditing the organization while trying to get information from informers, which is a costly affair. There is animosity between the business owners and the government.
Competitors
Companies face competition from other organizations that offer similar products, except for monopolies. Every organization has a moral obligation to conduct business fairly. If an organization practices business ethics, the competitors benefit from fair pricing and marketing. A competitor may be phased out in an unethical environment. Large organizations may use economies of scale to lower prices, a strategy competitor cannot follow.
The Community
Community benefits where the organization is ethical in its operation. The community members are hired in various capacities. The organization source the material from the locals. The environment is protected through controlled disposal of waste products, such as the carbon dioxide released into the environment. The organization maintains the rules and laws of the environment. An organization with ethical issues sources raw materials from other areas and ignores labor from the local communities.
Ethical Dilemma
An ethical dilemma results in a situation where an individual faces a conflict of moral standards through a course of action. T the first case involved a departmental head who had to issue a report to the CEO regarding a worker’s performance for promotion. The worker was to be promoted to branch manager. The head of the department did not want to lose the worker and therefore issued a false report denying the worker the opportunity to get promoted. The negative factious issues raised by the head of the department made the CEO fire the worker in the subsequent month.
The second case involved a financial director who was compelled by the CEO to adjust the quarterly financial reports to induce the bank to issue an overdraft to solve the company from a financial crisis. The CEO and the financial director felt the financial crisis was temporary and that the company would be able to repay the loan.
Comparing the two cases, an ethical dilemma and a conflict of interest are apparent. In the first case, the head of a department wants to retain the worker in his department, but this can only occur if he issues a falsified personal performance report; in doing so, the worker will lose the promotion opportunity. In the second case, the financial director has to issue a falsified financial report to obtain an overdraft, putting the financial institution at risk.; failure to do that, the organization will not be able to meet its financial obligation.
Contrasting the two cases, the first one was easy to handle as the department would have overcome the loss over time. The second case was tricky as this would have resulted in the organization’s operation is stopped. To remain ethical, the concerned parties should have issued the correct reports and found solutions for the outcome.
Conclusion
Ethical issues affect businesses and stakeholders. Ethical dilemmas lead to conflict in decision-making. Some of the stakeholders affected include the workers and government. Maintaining standard ethical benefit the stakeholders and the business in general.
Reference
De Bakker, F. G., Rasche, A., & Ponte, S. (2019). Multi-stakeholder initiatives on sustainability: A cross-disciplinary review and research agenda for business ethics. Business Ethics Quarterly, 29(3), 343-383
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