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Business ethics refers to a set of principles that govern the conduct of businesses and the general behavior that is expected of employees and managers. Ethics is an important aspect of business communication since it ensures that businesses are run in a legally and acceptable manner. Ethical guidelines vary from one community to the other based on the established perception regarding the right behavior. For multinational companies, challenges often arise in the standardization of the ethical codes since such regulations must reflect the diverse cultural norms and national values of the different countries. Various benefits accrue from the strict observance of the ethical principles, among them being higher profits, avoidance of legal penalties, and the recruitment and retention of the best talents. However, in some cases, ethics may limit a firm’s short-term profits and hence the reason why some scholars argue against strict observance of the ethical provisions.
This situation has led to an ethical dilemma in business communication today. The stiffening competition among firms is largely to blame for the defiance by some firms to follow the ethical code. Carroll and Buchholtz argue that globalization has contributed to the high competition in the contemporary business world and that it has compelled firms to ignore some of the ethical provisions that may limit their profitability (67). This paper explores this dilemma in terms of the extent to which a firm may abide by the ethical provisions against the backdrop of the heightening competition. To achieve this purpose, the paper will analyze the short -term and the long-term benefits and drawbacks of the strict observance of ethics by the firms.
Dilemma in Exercising Ethical Behavior in Business Communication
Carroll and Buchholtz assert that the strict observance of ethical provisions can be very expensive in the short-run since it may harm the firm‘s prosperity (78). The argument is grounded on the view that a firm must use every tool at its disposal in a competitive business environment to ensure that it outsmarts its rivals. Practices such as corruption may influence the award of tenders. Strict observance of ethics has attracted a dilemma where businesses have been caught in corruptive deals to sustain themselves.
Corruption refers to the wrongful issuing or receiving of monetary and non-monetary gifts to a person in exchange for a wrongful favor. This business malpractice is an ethical wrong. However, businesses today are increasingly using the practice to obtain tenders from clients. The avoidance of corruption by a firm to abide by the ethical principles will mean non-issuance of gifts to obtain such tenders (Chand and Fraser 241). Given the competitive nature of the business environment, there is a high possibility that the concerned enterprise will lose the tender to the rivals. Such a loss translates into low profits for the firm in the short run. Given that the main aim of a business is to maximize its profitability, managers of the firm will have diverted from the stated objective by not giving bribes to qualify for the award of the tenders. Therefore, business people find themselves in a dilemma where they are tempted to engage in corrupt practices to maximize their profitability.
Compensating employees fairly refers to paying them competitive salaries to increase their satisfaction. High employee payments affect the profitability of a firm since wages are offset by the profits. Employers are ethically bound to compensate their employees fairly and to ensure that the working environment is conducive. Issues such as higher payments coupled with the betterment of the human resources’ working conditions imply reduced profits for the firm in the short-run. This point can be illustrated by the fact that most businesses are going global to benefit from cheap labor in industry-surplus countries. For example, economies of the developing countries are low compared to those of the industrialized nations (Chand and Fraser 243). Therefore, compensating employees fairly leads to a dilemma where employers have to deal with diminished returns for the concerned firm. To maintain the firm’s profitability, most companies have resulted in exploiting their workers by paying them low salaries and/or subjecting them to poor working conditions to avoid cost overruns.
Ethics requires businesses to procure raw materials exclusively from principled suppliers (Abela and Murphy 39). Heeding to the requirement increases suppliers’ bargaining power due to the corresponding reduced competition. In such a situation, buyers do not enjoy discounts from the suppliers, a case that leads to higher costs of the raw materials. The increased cost of raw materials translates into low profits for the concerned firm, a situation that raises a dilemma on the importance of abiding by the ethical requirements. If the competitors fail to abide by the requirements, they will procure their raw materials at a lower cost compared to the concerned firm. This case, which will lead to low prices for their goods, complicates the problem of competition further. Therefore, businesses will tend to ignore the requirement to avoid compromising their profitability objective.
Ethics requires businesses to adopt a universal pricing strategy whereby they will sell a certain item at a unified cost. Given that different companies have diverse operational costs based on the quality and legislations of the country of production, the unification of costs may lead to diminished returns for some firms. Producing high-quality products requires the engagement of the best employees and the procurement of high-standard raw materials. The duo factors lead to inflated operation costs for the firm. Such a firm must set the prices high to maintain a favorable profit margin. Adopting a unified pricing system will make a firm that produces premium products realize diminished returns, which may pose a great threat to its existence.
An additional ethical obligation that may ruin a company’s returns in the short-run is the restriction of advertising toys to adults to evade ‘pester supremacy’. This supremacy arises after placing adverts that are directed to children with the view of causing them to pressurize their parents to procure an item for them (Abela and Murphy 42). Placing such ads is unethical for toy producing companies. However, targeting kids in the ad of toys may lead to increased turnover of the commodity. This situation may be tempting for the concerned firms.
Observing Ethics in Business Communication
In most cases, non-observance of the ethical principles leads to court cases against the concerned company. Such cases, if ruled against the company, may cause huge fines or even liquidation, especially where the violation is severe. The fines lead to reduced profits for the concerned firm, thus violating the company’s main objective of maximizing its net gains. This outcome is also against the shareholders’ interest since it leads to negative publicity. The costs may still be incurred even if the case is not successful since the company may have to spend a substantial amount of money trying to defend itself. Negative publicity may affect the firm’s profitability both in the short and long run (Abela and Murphy 46). Therefore, companies must shun unethical behaviors if they are to achieve perpetuity and increased shareholder value in the end.
As the campaigns about ethical practices intensify across the globe, customers are increasingly interested in dealing with ethical firms (Husted and de Jesus Salazar 76). Given that the number of ethical customers is growing at a very speedy rate across the globe, firms must remain ethical to be relevant. Customers have the power to cause firms to adopt ethical behaviors against the backdrop of the intensifying buyers’ power. Customers achieve this goal by boycotting goods from unethical firms. Such boycott may affect a firm’s profitability in the future or even cause its liquidation. Therefore, it is imperative for firms to embrace the principles of ethical conduct to ensure that they remain lucrative in the end.
Employees tend to be attracted to ethical firms, as opposed to those that do not abide by business communication laws. An ethical business balances between the interest of its shareholders, customers, and employees. Such firms remunerate their employees fairly while at the same time providing better working conditions for them. Ferrell and Fraedrich argue that employees are keen on their welfare and that they tend to be more motivated if the employer looks into their needs (31). Paying employees competitive salaries and the provision of favorable working conditions are at the heart of the workers’ morale. The duo incentives cause increased morale among the workforce, thus leading to the production of quality goods at a reduced cost. The production of premium goods enables a firm to charge a top price, which may lead to increased efficiency. Efficiency may in turn lead to increased profits for the firm. Hence, it may be a source of a sustainable competitive advantage over the rivals.
Ethical companies tend to have a positive publicity among customers. Such favorable publicity may lead to an increase in the number of customers and hence amplified turnover. The increased turnover will then attract profits for the business. Besides, a company may market its products through corporate philanthropic works, which are equally ethical endeavors. This goal could be achieved through sponsoring social activities such as sports and/or partnering with the community in mitigating environmental pollution (Abela and Murphy 51). Such endeavors act as passive marketing strategies that may cut the direct marketing costs.
The issue about the extent to which a business can observe the ethical provisions and retain its market share in the contemporary business communication environment has ignited a heated debate among experts. Some experts argue that compliance with the ethics may lead to a short-term loss of profits. The argument is sound since the concerned business may not secure tenders from potential clients without corrupt practices. However, observing ethical conduct is beneficial in the long run in terms of increased profits as described in this paper. Therefore, conclusively, it is possible to remain ethical while making good profits, despite the high competition in the contemporary business environment. In other words, businesspeople should strive to embrace ethical standards in their endeavors.
Abela, Andrew, and Patrick Murphy. “Marketing with Integrity: Ethics and the Service-Dominant Logic for Marketing.” Journal of the Academy of Marketing Science, vol. 36, no. 1, 2008, pp. 39-53.
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Carroll, Archie, and Ann Buchholtz. Business and Society: Ethics, Sustainability, and Stakeholder Management. Nelson Education, 2014.
Chand, Masud, and Susan Fraser. “The Relationship between Corporate Social Performance and Corporate Financial Performance: Industry Type as a Boundary Condition.” The Business Review, vol. 5, no. 1, 2006, pp. 240-245.
Ferrell, Odies, and John Fraedrich. Business Ethics: Ethical Decision Making & Cases. Nelson Education, 2015.
Husted, Bryan, and José de Jesus Salazar. “Taking Friedman Seriously: Maximizing Profits and Social Performance.” Journal of Management Studies, vol. 43, no. 1, 2006, pp. 75-91.