ASSIGNMENT

ETHICS IN BUSINESS

TOPIC
DISCUSS THE IMPORTANT OF BUSINESS ETHIC IN A
ORGANIZATION. WHAT ARE THE CHALLENGES IN ITS
IMPLEMENTATION?

PREPARED BY

MOHD ALIF ANAS BIN MD NOOR

201609040014

SUBMITTED TO

DATO MARY MAGDELINE

 There are probably many meanings when it comes to business ethics; as many
as business companies are. Different companies have different view and governance
on their actions depending on the perspectives of their directors and stakeholders.
Thus, that factors could define their business ethics measure. However, in this
relativism era, it is important to define business ethics to address arising issues such
as corporate social responsibility, customer and shareholder relations, insider trading
and fiduciary accountability. Obedience to the unforceable is an example of the
meaning quoted by Lord Moulton. There are also several other examples such as The
market has no morality by Michael Heseltine, a British conservative politician and
also It is a commonplace executive observation that businesses exist to make money,
and the observation is usually allowed to go unchallenged. It is, however, a very
limited statement about the purposes of business by Daniel Katz and Robert L. Kahn
in The Social Psychology of Organizations (1966). Those quotes may be short and not
enough but it may make all confusing and doubts close to crystal clear.

So the question is how do you define the business ethics? Business ethics
could be define as a written or unwritten principle, policies, practices or governance
of actions taken to examine and address the arising issues given above. It is not the
same with the objective choice of right or wrong because it involves recompilation
and reconciliation of actions considering legal, customer concerns, and companys
interests while maintaining competitive advantage. It is not surprising to discover that
some company even may had to putting regards to its competitive advantage than
fully address their customer concerns.

Business ethics is importance in many level including from individual up to

macro level. From top executives and head of departments, leadership ethics is
important for individual (employee) to follow the footsteps. Keeping ethics in
leadership can retain smooth and effective management thus would also ensure
employees high cooperation and energy. This overall would bring productivity and
positive images not only to shareholders but also the public. Following business
ethics, a company would also govern legal and customer demands and also its profits
and finding firm stability in that. Business ethics practice would ensure that their
business practices would not cause illegal trades, false claims, deceptive marketing
and product that can rupture the companys reputation and trust. Thus its importance
are to not only avoiding issues but maintaining a companys reputation and stability
while also retaining their stakeholders interests.

There are examples of study case showing the importance of business ethics
such as the case of huge corporate collapses like Lehman Brothers (2008) and such
huge risks and balance sheet holes like Morgan Stanley (as late as 2012). Business
ethics is important to make sure a long term growth. These case studies are painful
example of when business ethics were disregarded. Ceaseless hunger for big and
bigger profit without considering long term plan has caused these huge companies and
economy generally busted. When considering self-interest is more important than the
business and long term plan, huge amount of bonus allocation were allocated to
individuals, long term investment were disregard, and real change needed were goes
unnoticed. This caused the companies bust after only a brief time of boom. Taking
lessons from this, more and more companies at that time were reconsidering their
bonus allocations, profits management and long term plan. Thus, business ethics is
important to check and balance its profits and plan so that it could survive for the long
term.

Next, business ethics is also important to boost profits. Not to mean hypocrisy
of gaining more profits, but business ethics practices could become a selling point for
a companys product. Many companies have achieved recognitions, benefits and
boosted profits from such example. For an example, Cadbury Schweppes' gained
those benefits when it was voted as Most Admired Companies for Community and
Environmental Responsibility' by Management Today magazine in 2003. Cadburys
attentive and comprehensive practice and standard was recognized from dealing with
suppliers, manufacturing, retailing and production and up until to the mouth of
customers. Their ethics including concerning environmental impact good
manufacturing practices, employees remuneration and appreciation, and many more
has overall gave them not only selling point but also international interests. Their
ethics practices has been expressed thoroughly and has been set as a benchmark by
many. This example is not too big some people that have small businesses and
company. People have to understand that business ethics began from individual and
its intention to create both wins situation for all and this has been displayed by the
Cadbury Schweppes.

Other than that, business ethics could manage a companys cost and risk
reduction. In the early 1980s, products were began to be inspected through quality
assessment (QA) before pass through the final packaging in the factory. This practice
were made to reduce the risk of costly customer complaints. Since then, QA practice
has been evolving and products came with warranties. In the case of some electronics
manufacturers, the warranty is up to 3 years. This shown that ethics practices in
business has greatly reduce risk of costs and complaints. The more the ethics
practiced, the more the reduction in costs. In addition, it also protect the company
from any potential fraud, false claims and ensure good governance that will also
increase the customers loyalty and trust.

However, implementing business ethics is no easy feat especially for big

companies. There are challenges and obstacles that can come from both within and
outside of a companys business. One of the challenges in implementing it is to set
and present it. In a company, top level executives is accountable to directors and also
accountable to provide leadership to employees. They are the model for ethics
behavior and practices. To ensure consistency and good presentation of business
ethics, company leaders are challenged to follow their own strict practices. If the
executives, managers and also trainers are not fully understand the degrees involved
in implementing it, misinterpretation may be occur. For an example, if an executive or
a trainer make an in-depth presentation on a particular religious or culture holidays
while glossing over others, some employees might get offended. If an executive also
were to involve in unethical practices, they might set a bad example or losing the trust
of their employees and customers.

In addition, another challenge is satisfying all shareholders interests especially

if there are a large number of stakeholders involved. It is difficult to cater all the needs
of stakeholders especially when the interests goes again social and ethical
responsibility. This resulted in companies violates ethics and went through illegal
solution. An example of this dilemma is the case with Wal-Mart. Wal-Mart is big
company that has a huge number of stakeholders and has been involving with long
lasting relationship with some supplier factories. The dilemma rose when some of this
supplier used child labor. It is understandable where it was hard to immediately break
up the relation with the factory because of the stakeholders interest in keeping the
relationship. What Wal-Mart did was, they listed 200 factories that violated labor and
safety standards and barred from doing business with those factories. However, two
years later, the US customs records detected that, there were at least 2 among the 200
barred factories were still selling merchandise to Wal-Mart. It was confusing and
shady that the barred supplier in question was producing garments under the label of
another company. This is just an example of how challenging it is to address interests
of stakeholders while keeping ethics in check. Challenges came when a company
didnt have clear steps to estimate and foresee this kind of situation.

Limitation can also challenge the implementation of business ethics. This

limitation is the cost induced by corporate social responsibility (CSR). Whilst it is
necessary for a company to do their part of social and community responsibility and it
can give long term benefits, the cost involved can be high. According to Hopkins
(2012), in the implementation of CSR, a company may lose its focus on the main
objective; making a profit. Note in mind that a company profits depends on their
customers, so they are obliged to make sure that they can attract the customers by all
means in which including providing high cost just to make a good reputation through
CSR initiatives. Thus, a company is challenged to find equilibrium in making profits
and in examination of benefits of CSR when implementing the business ethics to
ensure the interests of its stakeholders including customers and shareholders.

Hence, despite those challenges involved, business ethics are important to be

implemented comprehensively through various business aspects. Companys
management must recognize the nuances of their ethical practices that in adherence to
their business benefits and loss. Important reminder is that in business, we are dealing
with people, in which business ethics can be defined differently. Thus, in
implementing business ethics, one must considered enforcing the righty way of
business ethics; both compliance and business oriented ethics.
Reference:

Moriarty, Jeffrey, "Business Ethics", The Stanford Encyclopedia of Philosophy

(Winter 2016 Edition), Edward N. Zalta (ed.),
<https://plato.stanford.edu/archives/win2016/entries/ethics-business/>.

Melissa Horton, Why are business ethics important? Investopedia

(February 29,2016) <http://www.investopedia.com/ask/answers/040815/why-
are-business-ethics-important.asp>