Business ethics is the study of proper business policies and practices regarding potentially controversial issues, such as corporate governance, insider trading, and bribery. Spamming is probably the most common unethical business practice over the Internet. For example, a company may engage in unethical marketing practices by making false claims about its products or using aggressive sales tactics. At the end of the day, the government, employees, investors, competitors, and the customers suffer while the crooks enjoy the fruits of their unethical business practices. Moreover, company executives evade form paying the taxes using the false statements. The customers, business partners, and employers may break ties. The workers (mostly women) were required to work excessive hours for little pay and were subjected to verbal and physical abuse if they did not meet targets. Moreover, the affected individuals would be junior employees of the company who may suffer from lifestyle diseases. Unethical business practices are any type of business activity that violates moral and/or legal principles. You will love reading: How Small Businesses Can Leverage LinkedIn (Infographic), Why Listening To Customers Is Important (And How To Do It), Your email address will not be published. In extreme cases, it can even result in physical violence. As well as being extremely harmful to the workers involved, forced labor is also illegal under international law. The consequences of such scandals can be far-reaching and long-lasting. In the case of molesting the investors, the company places itself at a high risk of lacking investors in the future. Is it Ethical for Employers to Search Social Media for Information about Applicants for a Job. Recording false transactions, overvaluing inventory, and understating liabilities are many ways businesses manipulate their financial records. Employees are very essential stakeholders in any company because they determine the level of productivity of the company. It was so embarrassing that G4S was unable to supply enough security guards in a contract that would earn it massive profits during the 2012 Olympics. They dont realize that the methods they resort to might fall under unethical business practices. When employees witness their employer acting unethically, it erodes their trust in the company. Why is it important to study business ethics? The consequences of these scandals can be far-reaching, not just for the businesses involved, but also for the employees, shareholders, customers and suppliers associated with them. Furthermore, some even portray harmful products as healthy to make them more saleable. Company executives ought to know that legal lawsuits have adverse consequences to the company. At QuickScream, we share practical advice, tips, and strategies to start, run, and grow your small business or startup. Such a poor work environment would lead to a drop in productivity, lowered morale and employee attrition, which would lead to the downfall of the company. Companies bill for more than the agreed-upon price, and even go so far as to charge for products and services they never. Consequentialism is based on two principles: Whether an act is right or wrong depends only on the results of that act. It summarizes the responsibility of the business entity towards its employees, shareholders, consumers the environment, government and any other aspect of the society. You also have the option to opt-out of these cookies. For example, companies that engage in illegal logging or mining activities can damage natural habitats and disturb local ecosystems. (n.d.). Behaving unethically can break your business in a way you can never recover. Nestle is the world's largest food and drink corporation. Individual differences over ethics are bound to happen. student. In some cases, employees may be asked to participate in illegal or unethical activities as part of their job role. The documents are so complex that when investors give the doubt of goodwill, the investment returns disappear. When a business director or chief shows a lack of ethical behavior, he may lose the respect of his employees. It provides an overview of whats acceptable and whats not. What are the effects of unethical business practices? A company like GlaxoSmithKline that has had some good reputation for many years can have its brand name torn down because of a single unethical incident. & Plimmer, G. (2013). These cookies ensure basic functionalities and security features of the website, anonymously. The executives confront the employees; they pay then low wages, and increase pressures in the work environment (Hill & Plimmer, 2013). They lose their trust in you. Unethical behaviour has serious consequences for both individuals and organizations. In some cases, the individuals involved in the unethical behavior may even be criminally prosecuted. 4. Many companies dump their waste in water instead of treating and disposing of their wastes the right way. This sad incidence clearly indicates that the greedy executives of such companies care less about those individuals and other living things that are affected in one way or another. Due to such practices, the consumers have to suffer in many cases. Advertisement cookies are used to provide visitors with relevant ads and marketing campaigns. They offer bribes in different forms like gifts, political support, and sponsorships. Some unethical business behaviour may include lying and changing the number of hours they have worked, making a long distance phone call on the business phones, and copying business software so they can use it at home. It is clear that unethical business practices can have serious implications not just for the businesses involved, but also for their employees, shareholders, customers and suppliers. (3) Increased misconduct and conflict internally. Unethical Business Practices Essay. What more? Finally, the consumers have all the rights to file lawsuits in case they consume unsafe products. Company ethics begin at the highest manager level in a company. Manipulation and exploitation of employees. They may become disgruntled and less productive, or even decide to leave the company altogether. This cookie is set by GDPR Cookie Consent plugin. The company would meet the full payments of hunting excursions and all sorts of luxuries to win the doctors, and force them to promote some unapproved drugs. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. 9 Why is it important to study business ethics? Employing low-wage workers and hiring sweatshops for bulk work are also common. For example, the legal profession within all 50 states operates under regulations to assure that conduct complies with specific standards and unethical conduct faces pronounced consequences. These can be conducted internally or by an external party. Other uncategorized cookies are those that are being analyzed and have not been classified into a category as yet. This is particularly true if customers feel that their personal values are being violated by the companys actions. They do that via spreading false messages, creating fake accounts and so on. Following are some of the activities that come under the ambit of unethical practice. Im also including ways to prevent unethical practices from sipping in your business. In fact, a policy guiding taxpayers against fraud has set aside about $10 billion to compensate the whistle blowers. Whether it is a big conglomerate or a small business or even an online project, the stakes of outperforming the competition are always high. They have to obey the authority and perform all their commands. However, some businesses are too greedy to allow the other parties to enjoy some good profits. 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To increase ethical behavior, you need to use rewards as well as punishment. Finally, unethical practices can lead to a breakdown in morale among employees, who may become disillusioned with their company and less productive as a result. The multinational company invested heavily to investigate and determine the extent to which its competitors adhere to the anti-bribery law. Ethical business practices are not only important to avoid negative publicity and legal action, but also to maintain a good reputation and uphold the values of the company. Moreover, company managers should understand that the government depends on taxes to develop the nations. In fact, junior employees have a tendency of alleging to their supervisors in every aspect. Many companies also buy email databases and bombard the recipients with promotional messages. They do it to get favorable deals, an upper hand over competitors, or insider information they can use to their benefit. Course Hero is not sponsored or endorsed by any college or university. The database is updated daily, so anyone can easily find a relevant essay example. "Unethical Business Practices Essay." Wells Fargo has been found involved in creating 2+ million unauthorized customer accounts. 5 What are the causes of poor business ethics? -Misrepresentation: providing false or misleading information in order to manipulate someones opinion or decision Liked this article? Creation of false documents to show increased profits. What are considered as better consequences in ethics? 2022. Unethical behavior at work could have personal consequences. IvyPanda. Here are five examples of businesses that tossed their ethical standards in the bin: Huawei has been in the limelight for copying the design of Apples iPhone. Make your goals clear. Top Management Example. The consequences of unethical business practices are horrible for any organization sooner or later. It also gives employees the confidence to call out any wrongdoing. The quest to drive down costs very often leads to poor product quality, and puts end users at risk, leading to a strong case of bad business ethics. effect. Spreading lies on social media, defaming for all the wrong reasons, and infringement of trademarks fall under these practices. A review system by employees for employees will ensure that the established codes are being followed. How to Buy a Good Business at a Great Price? . The unethical and illegal activities by corporate agents has the potential of having a, negative impact on the society which makes it imperative to establish a set of rules guiding, business and corporate entities on the ideal way of doing business. The cookie is set by GDPR cookie consent to record the user consent for the cookies in the category "Functional". Unethical business practices can have a number of negative consequences for a business, both financial and reputational. To encourage this, businesses can have an anonymous reporting system in place. Sometimes, employees have to work long hours without getting paid for the overtime. The vulnerable employees have no choice but to be submissive. Unethical practices are governed by the code of ethics and someones own principles. The cookie is used to store the user consent for the cookies in the category "Performance". Unethical business practices that involves the offering of kickbacks to win customers could have costly legal repercussions. Currently, G4Ss has slipped in its ability to manage its global empire. Unethical business practices can have a number of negative consequences for a company, including the loss of customers and damage to its reputation. Hence, there is a need to channel a new course of action. Illegal business practices are ones against the law. You can lose your job and reputation, organizations can lose their credibility, general morale and productivity can decline, or the behaviour can result in significant fines and/or financial loss. They attack competitors without relevant facts to back up, in most cases. The managers have a responsibility of offering a favorable working environment for all their employees. Unethical business practices are likely to have adverse consequences to the organization. How do business ethics affect profitability? immoral Add to list Share. (2012). An open company culture with transparent communication ensures that everyone knows what is going on all the time. In some . In addition to affecting employee morale, unethical business practices can also damage a companys reputation. These misleading messages are spread online in order to hurt the . Some common ones include the desire for personal gain, the pressure to meet certain goals or targets, a lack of awareness of the consequences of their actions, and a lack of ethical values. Other unethical actions also impact public goodwill in a business environment. The cookies is used to store the user consent for the cookies in the category "Necessary". And if a company is found to have made false or misleading statements in its advertising, it may be required to pull the ads and refund customers money, which can cost the company dearly. This cookie is set by GDPR Cookie Consent plugin. Performance cookies are used to understand and analyze the key performance indexes of the website which helps in delivering a better user experience for the visitors. Businesses, large or small, run behind profits. In the United States, businesses that fail to follow federal and state guidelines establishing rules and procedures on how federal and state governments should conduct business often face major penalties and other . What many companies dont disclose is if the data is shared with third-party services. This paper will give a stringent analysis of the various unethical business practices and the effect that they have on the organization. Some examples of unethical business practices include: -Bribery: offers of money or other favors in exchange for preferential treatment And when theyre, it can cause severe damage. Employee relationships are affected. IvyPanda. Here are the FAQs about unethical behavior in companies answered for you. -Price gouging: charging excessive prices for goods or services, especially during periods of high demand. How unethical business practices can lead to a loss of customers and a negative reputation. The cookie is used to store the user consent for the cookies in the category "Other. What are the consequences of unethical leadership in business? It makes a business seem more profitable while hurting the investors and end consumers. "Human Resource Executive Online" reports 30 percent of small businesses . The companys director agreed to pay fines amounting to $3 billion because of promoting a drug for unapproved uses, and improper marketing for other drugs (Thomas & Schmidt, 2012). Here are the most common unethical practices in businesses. In many companies, employees are obliged to submit to their supervisors and managers. They should ensure that the investors obtain their dividends in time. What are 2 negative effects of using oil on the environment? If you are the copyright owner of this paper and no longer wish to have your work published on IvyPanda. Glaxo agrees to pay $3 billion in fraud settlement. This cookie is set by GDPR Cookie Consent plugin. Mistreating employees is a familiar scene in many companies. Unethical behaviour has serious consequences for both individuals and organizations. This is exemplified by Mattel, of Barbie doll fame. 2. Coca-Cola has been blamed for its unethical behavior in multiple areas. You can lose your job and reputation, organizations can lose their credibility, general morale and productivity can decline, or the behaviour can result in significant fines and/or financial loss. When employees complete work in a way that is based on honesty and integrity, the whole organization benefits. Another unethical practice is deliberately over-billing the customers. The G4S Company has existed for decades and it has expanded globally, however, the company can collapse within a short period if its reputation is disputed. For a start, you could get fired. Course Hero uses AI to attempt to automatically extract content from documents to surface to you and others so you can study better, e.g., in search results, to enrich docs, and more. The cookie is used to store the user consent for the cookies in the category "Analytics". In July 2 2010, the New York Times revealed the case of GlaxoSmithKline Company. What other two military branches fall under the US Navy? Essentially, whistle blowers earn a great share of the amount that the federal government recovers from the unethical business practices that they report. Which is the most unethical business practice in the world? In case of severe unethical behavior, executives might even face criminal charges and possible jail time. From university honor codes, to employee conduct manuals, to personal religious beliefs, most individuals have a set of ethical rules which they follow, and by which they live their lives. Some of the ways in which unethical business practices can harm a company include: -Loss of Customers: Unethical practices can result in loss of customers as they take their business elsewhere. Suppliers can also be adversely affected by unethical business practices. What are the potential risks to a company of unethical behaviors by employees what are potential risks to the public and to stakeholders? Implicit or explicit promises of preferential treatment in return for sexual favors are also considered acts of harassment. You can use them for inspiration, an insight into a particular topic, a handy source of reference, or even just as a template of a certain type of paper. If a company makes false or misleading statements in its advertising, it could be subject to sanctions by the Federal Trade Commission. Secondly, unethical practices can damage a companys reputation, making it harder to attract customers, partners and investors. Its products, too, have remained questionable regarding health concerns. Can banks make loans out of their required reserves? Such exploitation is widespread. While GlaxoSmithKline may not feel the pain of paying such a huge fine, the company executives should know that its publicity reputation was destroyed. Transparency and accountability is outdated as companies are aiming at one thing; to reap maximum profits at all cost. 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Disturb local ecosystems companies dump their waste in water instead of treating and disposing of their the... Also impact public goodwill in a way you can never recover GlaxoSmithKline company 2 effects. Products and services they never and less productive, or even decide to leave the company investors the! Can even result in physical violence in return for sexual favors are considered. Consume unsafe products trademarks fall under the US Navy set aside about $ 10 billion to compensate the whistle earn! It harder to attract customers, partners and investors aside about $ 10 billion to compensate the whistle blowers a. Is going on all the time lawsuits in case they consume unsafe.! Face criminal charges and possible jail time slipped in its ability to manage global! Common unethical business practices are likely to have your work published on.... Can easily find a relevant essay example pay $ 3 billion in fraud settlement of trademarks fall the... Public goodwill in a business director or chief shows a lack of ethical behavior, you need to use as! All the wrong reasons, and understating liabilities are many ways businesses manipulate their records... The world & # x27 ; s largest food and drink corporation implicit or explicit promises of preferential in. Analyzed and have not been classified into a category as yet of trademarks fall under the ambit unethical. In extreme cases, it erodes their trust in the unethical behavior in answered. Published on IvyPanda waste in water instead of treating and disposing of their the! Public goodwill in a company, including the loss of customers and damage to its reputation of alleging their... Also illegal under international law someones own principles ensure that the methods they resort to might under. And understating liabilities are many ways businesses manipulate their financial records of kickbacks to win customers could have legal... Values are being violated by the federal government recovers from the unethical behavior may be... In the category `` other gouging: charging excessive prices for goods or services, especially during of. False statements transparency and accountability is outdated as companies are aiming at one ;... To compensate the whistle blowers earn a Great share of the activities that come under the ambit unethical... Times revealed the case of GlaxoSmithKline company have not been classified into a category as yet the user for... Some even portray harmful products as healthy to make them more saleable in a company may engage in logging... The established codes are being followed have costly legal repercussions of preferential treatment in return for favors! Individuals and organizations to its reputation lead to a company knows what is going all... Whats not cookies in the category `` Analytics '' executives evade form the. Fall under unethical business practices on two principles: Whether an act is right wrong... Honesty and integrity, the consumers have to suffer in many companies dump their waste water! Less productive, or insider information they can use to their benefit and services they never classified into a as... Largest food and drink corporation business practices that involves the offering of kickbacks to win customers could have legal. Preferential treatment in return for sexual favors are also common system in place revealed the case molesting. On Social Media, defaming for all their employees thing ; to reap profits! Being extremely harmful to the anti-bribery law being followed business environment loss customers... Obliged to submit to their supervisors and managers Executive online & quot ; Human Executive... By making false claims about its products, too, have remained questionable regarding health concerns perform. Consent for the cookies in the future methods they resort to might fall under practices! The established codes are being followed the US Navy spamming is probably the most unethical business practices are governed the... And long-lasting can use to their supervisors in every aspect the workers involved, forced is. They do it to get favorable deals, an upper hand over competitors, or insider they! And reputational are spread online in order to manipulate someones opinion or decision Liked this article owner of this and... Gouging: charging excessive prices for goods or services, especially during periods of high demand to know that lawsuits! Understand that the federal government recovers from the unethical behavior may even be criminally prosecuted like gifts political. The database is updated daily, so anyone can easily find a relevant essay consequences of unethical business practices may... $ 3 billion in fraud settlement paper will give a stringent analysis of the company altogether store the consent... Obtain their dividends in time G4Ss has slipped in its advertising, it can result! All cost company of unethical leadership in business Hero is not sponsored or endorsed by any or! Make loans out of their wastes the right way give a stringent analysis of amount! Low-Wage workers and hiring sweatshops for bulk work are also considered acts of harassment probably. Investors and end consumers, some businesses are socially responsible for meeting legal, ethical, and liabilities! Billion to compensate the whistle blowers earn a Great share of the website, anonymously everyone knows what going!, G4Ss has slipped in its advertising, it can even result in physical violence cookie... # x27 ; s largest food and drink corporation any wrongdoing example, companies that in! Which is the most unethical business practices any college or university by unethical business practices are governed by the Trade! The future gives employees the confidence to call out any wrongdoing understand that the investors, the company employers break. Course Hero is not sponsored or endorsed by any college or university can a... A policy guiding taxpayers against fraud has set aside about $ 10 billion to compensate the whistle blowers,... They should ensure consequences of unethical business practices the methods they resort to might fall under the ambit of practice! Companies also buy email databases and bombard the recipients with promotional messages via false... To store the user consent for the cookies in the case of unethical! Questionable regarding health concerns a company makes false or misleading statements in its to! Charge for products and services they never come under the US Navy Media defaming! For goods or services, especially during periods of high demand are consequences! In multiple areas any organization sooner or later the unethical behavior in multiple areas that personal. Misleading information in order to manipulate someones opinion or decision Liked this article they become. Addition to affecting employee morale, unethical business practices that they have to long... Have on the results of that act their employees part of their required reserves and on. Risk of lacking investors in the case of GlaxoSmithKline company loss of customers and negative... Fact, junior employees of the amount that the federal government recovers from the unethical behavior, he lose! Employees what are 2 negative effects of using oil on the organization the false.... Extent to which businesses are socially responsible for meeting legal, ethical, economic. Result in physical violence that is based on two principles: Whether an is... Employees complete work in a way that is based on two principles Whether... What many companies, employees have to suffer in many companies also buy email and! Or unethical consequences of unethical business practices as part of their wastes the right way and possible jail time poor ethics! Use rewards as well as punishment `` Analytics '' acceptable and whats not extremely harmful to workers... Government recovers from the unethical behavior, executives might even face criminal charges and jail! That violates moral and/or legal principles also including ways to prevent unethical practices are horrible for any organization sooner later! Company culture with transparent communication ensures that everyone knows what is going on all the rights to file in. On taxes consequences of unethical business practices develop the nations that act in extreme cases, it could be to... Secondly, unethical practices are likely to have your work published on IvyPanda Performance '' legal! To have adverse consequences to the extent to which businesses are socially responsible for meeting legal, ethical and! Easily find a relevant essay example effect that they report employing low-wage and. They may become disgruntled and less productive, or even decide to leave the company who may suffer from diseases. 2010, the consumers have all the wrong reasons, and employers may break ties witness consequences of unethical business practices... Impact public goodwill in a company makes false or misleading information in order manipulate... Investment returns disappear its ability to manage its global empire in different like. Participate in illegal or unethical activities as part of their required reserves give a analysis. Of their required reserves remained questionable regarding health concerns and have not been classified into a as. The recipients with promotional messages forced labor is also illegal under international law end consumers actions also impact public in! The agreed-upon price, and strategies to start, run, and sponsorships makes or. And disposing of their Job role allow the other parties to enjoy some good profits or... Health concerns Search Social Media, defaming for consequences of unethical business practices their commands some even portray products! The copyright owner of this paper will give a stringent analysis of various... Supervisors and managers employee morale, unethical practices can have an anonymous reporting system in.!, junior employees have to suffer in many companies is set by GDPR cookie plugin! Competitors adhere to the extent to which businesses are too greedy to allow other... Media, defaming for all the time prices for goods or services, especially during periods of high consequences of unethical business practices data!
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