Business Ethics and Profitability

"The promotion of ethical business conduct is a critical part of operating a well regarded and profitable business," is a statement controversial enough to initiate debate in any place. The writer of this paper believes the contrary. There are some companies who might be able to find money in operating ethically but there are arguably more companies out there who make money by discarding ethics, though not in its entirety.

A lot of businesses nowadays are extremely profitable yet they have quite some questionable practices that consumers do not really take heed.

Between the cutthroat competition amongst suppliers to deliver the lowest prices and the consumers’ desire to get the best bang for their buck, business practice ethics are hardly ever put into serious consideration by the seller and the customer, the two parties in a sales agreement.

According to the BNET dictionary, business ethics “provide guidelines for acceptable behavior by organizations in both their strategy formulation and day-to-day operations.” The writer of this paper believes that business ethics is the moral principles set forth by a company in how they negotiate and conduct themselves in the commercial society.

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Since profit is the driving factor in many businesses and given that business ethics is not quite a law set in stone, it is the writer of this paper’s opinion that business ethics is disregarded by many corporations. Many simply abide to what is legal and all that is legal does not encompass all that is moral.

History would only give consumers the concept of ‘caveat emptor’, buyer beware in business negotiations.

Facts from ages ago recognize the sellers’ drive for profit and back then, without proper regulation, it is the buyer who must constantly watch his back for any malpractice in trade the seller might commit.

With the civilization of the world came regulation. There are plenty of codicils about warranties that have been promulgated by different governments. There are standards of quality (ISO 9000) that the manufacturers must adhere to, in order to start global trade. With the increase emphasis in human rights at the turn of the 20^th century in developed countries came the end of slavery and business owners have to pay at least minimum wages to their employees to start production. But legalities have its own territory and a business promulgated in its own country where so many restrictions apply can always move out to another where restrictions cannot follow it.

Globalization can actually be viewed as unethical, given the purpose of companies in starting it and the results it cause to the country of domicile of the company. It is quite an infrastructure that created a trend. Given the cost of high labor in the United States, many companies, in order to stay competitive, moved their production base to less developed Asian countries. As a result, the US is facing economic crises, many people found themselves jobless, the government has to pay unemployment remuneration benefits to these people and the mighty USA is facing the greatest challenge of its empire.

This is a classic example that when it comes to profit, everything is fair game. Companies were forced to move out of their domicile just to operate at fewer costs. The first of the companies who have moved their production to less developed countries could not have anticipated that it will start quite a trend, leading to such economic downturn. Perhaps even those companies are experiencing such a hit in sales given the low demand for any non-necessity goods in the USA so now those companies are probably devising ways after ways on how to make more profit and create demand.

Globalization is not by any means evil although it is turning out to be heartless as it steals the economy of the nation. But upon pondering about it, can the companies who outsource their production, their administration and whatever else aspect of their organization to other countries be considered evil? The answer is no.

There is a cutthroat world out there especially for competitors. A business, to stay afloat cannot be blamed for wanting to move out to another country to lessen operational costs and to deliver a product in the market that can potentially benefit majority of the market. The move is understandable, if not entirely moral. In a lot of ways it cannot be considered moral because the company can:

1. exploit the cheap labor of the people in the new country
2. heartlessly retrench people from its home country
3. exploit resources (as much as foreign government will allow) in the foreign country
4. drive its home government to more spending and less income given laws against double taxation. In this scenario, the business will likely be taxed more in the foreign country

Globalization is just one big business ethics dilemma, there are plenty of others. Generally, any situation wherein the business has not conducted itself in an honest way is considered a business ethics issue. Amongst these practices include harassment, blackmail, insider trading, discrimination, bribery, fraud and many other else. These situations, however, are not only unethical, but also illegal. Any offended person can simply file charges against the offender.

The great thing about developed countries like the US, UK and Canada is that there are laws to protect people against these types of offenses. A non-white person can file charges against anyone who so much as insultingly hinted he is from another race. Companies should establish some form of ethics patrol where any employee can raise concerns about a particular issue at any time. Sometimes the best way to stop discrimination, harassment and blackmail is for a victim to come forward and seek help to a higher authority. The higher authority will then determine the appropriate course of action and even encourage the offended person to press charges.

Fraud, though criminal, is hard to prove, but there are measures to determine it and the proven best methodology is external audit. However, it takes time. A properly executed fraud does leave a trace until many years have passed. Accounting, however is made to auto-balance itself and it will, in time.

The case of Enron is the emblem for fraud and insider trading. In Enron’s situation, even external audit failed because of a lot things but the bottom line is greed of top management who had the means to alter documentations, and even convince their auditors to attest the credibility of the falsification. Upon discovery, the law once intervened, giving the auditing profession a major overhaul. To promote an ethical business environment, the laws and corporations must walk hand in hand to provide credibility to the public.

Overall, corporations will always be motivated by profit. It need not matter their home country will be plagued with economic downturns as long as the corporation itself is earning money. Given the low demands in their home country, the corporations are simply expanding their market to other parts of the world. The corporations can easily get away with amoral acts as long as they are still within the vicinity of legality. Outside this boundary, there are laws to protect anyone against exploitative behaviors of others. The offended party must always report any such situation to make an example out of anyone who is considering doing the same offense in the future. Ethics do not necessarily mean profitability, but legality does as lawsuits can lead to a multitude of penalties and bad publicity.

Work cited:

“Business Ethics.” Definition. BNET Business Dictionary. 2010. Web. 22 May 2010. <http://dictionary.bnet.com/definition/Business+Ethics.html>