What is unethical business practice? Learn the answer in the paper below!
Introduction
In the contemporary world, businesses that comply with the rightful ethical conducts are decreasing drastically. In most businesses, at least one business practice is done in an unethical manner. The unethical practices in businesses are adversely affecting governments through the loss of taxes (George & Jones, 2010). Consequently, the world economy is facing a crisis as businesses evade from paying taxes.
With globalization, companies are trying their best to reap maximum profits and outweigh their competitors’ profits at the expense of the global economy. Transparency and accountability is outdated as companies are aiming at one thing; to reap maximum profits at all cost. Cases have occurred where companies that had been involved in unethical practices clear their names in courts through bribery.
The executives of such companies protect their brand names, and they fight to maintain the company’s reputation through corruption. 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.
This paper will give a stringent analysis of the various unethical business practices and the effect that they have on the organization. The paper will bring in ideas, information, and examples of unethical business practices in major organizations.
Examples of Unethical Business Practices
Manipulation and exploitation of employees
Employees are very essential stakeholders in any company because they determine the level of productivity of the company. However, some managers take advantage of defenseless employees to exploit them in one way or another. The vulnerable employees have no choice but to be submissive.
Some unethical practices that harm the employers include low wages and unsafe working environment. Some employers have made it a routine to have their private cloakrooms while the other employees use unsanitary cloakrooms. Essentially, any practices that make the employees uncomfortable in the work place are unethical, as they do not comply with the federal working standards.
We take an example of G4S Company, which is one of the largest private companies in the world. The company has a motto of delivering excellent services and maintaining the highest level of ethical standards. However, in the recent past, reports indicated that G4S did not adhere to its motto, and its ability to control its worldwide operations failed considerably.
The executives of the company have turned up to be violent towards their junior employees. The executives confront the employees; they pay then low wages, and increase pressures in the work environment (Hill & Plimmer, 2013).
Unethical business practices are likely to have adverse consequences to the organization. G4S is at the risk of destroying its reputation; therefore, the future of the company is at risk. 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.
Currently, G4S’s has slipped in its ability to manage its global empire. 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. It is noteworthy that G4S operates in third world nations that have rampant corruption and fraud cases.
There is a very high possibility of the G4S executives in such nations to be drawn into unethical practices that may further portray the company’s incompetency. Essentially, there are numerous fraud cases in the management of the company, and those practices are driving G4S into the grave.
Unfair competitive practices
All business people aim at gaining a competitive advantage over their competitors to win the trust of many customers. Companies would spend millions of dollars to employ strategies that would enable them to enhance their sales. However, there are those business people who opt to employ unfair and unethical business practices that result into unfair competitive practices.
Wal-Mart was a victim of unfair business practices in the recent past. The multinational company invested heavily to investigate and determine the extent to which its competitors adhere to the anti-bribery law. Wal-Mart did the investigation in Mexico, Brazil, China, and India, which are its major international markets.
In its investigations, Wal-Mart discovered that its competitors were indeed violating the corruption act that guides foreign investors. One of the Mexican subsidiaries that happen to be Wal-Mart’s major competitors had indeed paid bribes to be allowed to open new stores in Mexico (Clifford & Barstow, 2012).
To make the matters worse, the subsidiary’s parent company suppressed the investigations through bribery. With regard to the mentioned allegations, there is a high possibility that the competitor company evades many other compliance payments to the government though bribery.
The unfair competitive practices would only earn a company massive profits in the short run. However, upon investigation and publicity of the matters, the company will have its reputation destroyed. Unethical business practices as those practiced with Wal-Mart’s competitors will result into bad publicity, and the company may never win the publicity trust in the future even though it struggles to employ ethical conducts.
Moreover, if the courts decide to be very strict with such companies, they may be fined heavily. The executive may receive merciless jail terms and finally, the company may end up becoming bankrupt because of the high costs associated with unethical business practices.
Bending the company rules
In many companies, employees are obliged to submit to their supervisors and managers. They have to obey the authority and perform all their commands. In fact, junior employees have a tendency of alleging to their supervisors in every aspect. Therefore, regardless of how wrong an instruction is, the junior employees are sometimes obliged to abide by the rules of their supervisors and managers.
It is noteworthy that performing unethical practices in the work environment is wrong regardless of where the orders came from. Some junior employees are obliged to withhold information regarding the unethical practices of their bosses for the fear of intimidation, which that is also unethical.
In July 2 2010, the New York Times revealed the case of GlaxoSmithKline Company. The company’s 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). Further investigations indicated that the company lured the doctors by enticing them with luxury trips and spa treatments.
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. Moreover, GlaxoSmithKline financed the publishing of a medical journal that had manipulated clinical trial data to promote the use of the Paxil drug in children.
The highly sensitive information was very essential for the prosecutors to file charges against the GlaxoSmithKline Company, and it was very controversial to find out who disclosed those unethical practices. Sure enough, the whistle blowers were some of the employees of the company.
Companies have to be warned that there is a whistle blower policy that rewards employees with substantial rewards. Essentially, whistle blowers earn a great share of the amount that the federal government recovers from the unethical business practices that they report.
In fact, a policy guiding taxpayers against fraud has set aside about $10 billion to compensate the whistle blowers. Therefore, managers and supervisors should be warned that employees would be submitting to their unethical orders to set them up.
Lack of transparency
Companies are always obliged to portray transparency in all their activities. However, cases have occurred where company executives hide some controversial information from the most important stakeholders of the company. Some companies will present false statements to the investors to clarify why they cannot afford to pay the dividends.
Whenever the investors resolve to have the company investigated, the company managers and other executives resist the investigations. The executives of some companies have taken advantage of humble investors to mishandle their propriety. Some executives are even sued for creating false financial statements to deceive the investors.
Moreover, company executives evade form paying the taxes using the false statements. Cases have occurred where auditors are bribed to certify false financial statements so that powerful companies can evade from paying the rightful amounts of taxes to the government.
Company executives ought to know that legal lawsuits have adverse consequences to the company. Firstly, the court can impose heavy fines to the company, which can declare it bankrupt.
The court can order the suspension of the company’s activities for a considerably long period. In the case of molesting the investors, the company places itself at a high risk of lacking investors in the future. Of course, new investors would never buy the shares for such companies, and the company’s activities may come to a spontaneous halt because of the lack of funds.
Unethical treatments to suppliers and customers
Every business must have suppliers of raw materials and customers who purchase their finished products. Essentially, the relationship between the company, its suppliers, and its customers ought to have mutual benefits. However, some businesses are too greedy to allow the other parties to enjoy some good profits.
Some companies pay their suppliers so low, such that the suppliers lack the value of the efforts that they input in their work. As if that is not enough, some companies go ahead to produce low quality or unsafe products.
In case the company faces strict regulations in the country of production, the unsafe products are shipped into third world nations. This very sad incidence affects innocent individuals who purchase such products unknowingly. Some companies are used to offering the intermediaries with kickbacks so that they can continue purchasing their products.
Companies that practice unethical business conducts that harm the suppliers and the consumers should know that their practices might have adverse consequences than anticipated. Once the suppliers find other places where they can sell their products at fair prices, they would stop supplying raw materials for such companies with immediate effect.
Unethical business practices that involves the offering of kickbacks to win customers could have costly legal repercussions. Finally, the consumers have all the rights to file lawsuits in case they consume unsafe products.
Such cases may have adverse consequences to the business, which may end up paying heavy fines, or even being ordered to close down because of their unethical practices. The destroyed reputation of such companies may cause their sales to reduce drastically, and the company may end up being bankrupt.
Deceptive sales practices
Companies’ sales managers are obligated to try all possible ways of making massive sales. However, that does not mean that the companies should involve themselves in deceptive sales practices. In the GlaxoSmithKline case, the company promoted its unapproved antidepressants for human consumption (Thomas & Schmidt, 2012).
The unethical business practice clearly indicated that the executives of the company were extremely selfish. No amount of fine can compensate for the unethical practice of selling unapproved drugs to humans. Further, the company distorted the data of a diabetic drug that recorded very high sales, and it marketed other drugs improperly.
Genuinely, drugs are meant to enhance human life, and the named unethical practices concerning drugs are so inhumane. Even after paying the fine amounting to $3 billion, GlaxoSmithKline does not tremble because their sales exceeded that amount by far.
While GlaxoSmithKline may not feel the pain of paying such a huge fine, the company executives should know that its publicity reputation was destroyed. The company may never gain the huge profits that it made in the past. Regardless of how effective their drugs would be, informed customers will tend to shy away from purchasing their drugs.
Once consumers know that a company employs unethical business practice in their operations, the effects are inerasable. 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. Therefore, companies that are practicing deceptive and unethical sales practices should know that their practices would tore the company down in a matter of seconds.
Harming the environment
All companies ought to adhere to the pollution norms set by the government. Moreover, the companies should adhere to the corporate social responsibility policy that obliges companies to honor the surrounding environment and the people in it. However, cases have occurred where companies are involved in unethical behaviors that harm the environment.
Some companies release chemical pollutants into the air or into water bodies. Such companies do not care about the repercussions of their ill deeds. The companies release toxics that harm the lives of the living things around their locality.
They evade the expenses that are associated with the treatment of toxics before they are released into the environment. 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.
One thing that companies harming the environment without caring ought to know is that some individuals who lived in the past cared about the people in the current generation. They should make it their obligation to think about their descendants who will need a safe environment. Moreover, the affected individuals would be junior employees of the company who may suffer from lifestyle diseases.
Of course, the company will have to cater for their Medicare bills, and pay fines if employees decide to sue the company. It is noteworthy that the worst repercussion of unethical behaviors regarding the destruction of the environment is the lowered organizational credibility.
The company’s partners, customers, and all other stakeholders will feel intimidated to be associated with a company that does not value the environment. Further, the courts can even order the company to be closed down.
Conclusion
Indeed, unethical business practices harm a series of people, whereas; only a few greedy incumbents enjoy the fruits of their ill deeds. Essentially, if the global economy is to be on the safe side, companies must adopt ethical business practices. Business executives must ensure that their businesses spend their investors’ monies in worthwhile projects.
They should ensure that the investors obtain their dividends in time. As discussed, some vulnerable employees suffer in silence, and it is upon the business managers to ensure that they treat all their employees equally. The managers have a responsibility of offering a favorable working environment for all their employees.
They have to ensure that the employees’ salaries are disbursed at the right time. In the case of customers, the involved stakeholders of the company must ensure that the customers obtain quality products and services. Business managers should never take advantage of their might to disadvantage their competitors. Moreover, company managers should understand that the government depends on taxes to develop the nations.
Therefore, company executives are obliged to ensure that the company pays taxes exclusively. Finally, companies are requested to have a corporate social responsibility. Polluting the environment should be outdated, as companies ought to employ practices that are environmental friendly.
Companies should comply with the government’s rules of conserving the air, water, and the general environment. Certainly, if all companies adopt the above named ethical practices, every individual in the world would be very comfortable, whereas, companies will be making honorable profits.
References
Clifford, S. & Barstow, D. (2012). Wal-Mart inquiry reflects alarm on corruption. The New York Times. Web.
George, J.M. & Jones, G.R. (2010). Understanding and managing organizational behavior (6th ed.). Upper Saddle River, NJ: Prentice Hall.
Hill, A. & Plimmer, G. (2013). G4S: The inside story. Financial Times. Web.
Thomas, K. & Schmidt M.S. (2012). Glaxo agrees to pay $3 billion in fraud settlement. The New York Times. Web.