Consequently, the world economy is facing a crisis as businesses evade from paying taxes. 9 Why is it important to study business ethics? Therefore, managers and supervisors should be warned that employees would be submitting to their unethical orders to set them up. When a manager or head of a business exhibits a lack of ethical behaviour, he faces losing the respect of his employees. Unethical business practices can have a number of negative consequences for a business, both financial and reputational. Companies should comply with the governments rules of conserving the air, water, and the general environment. The reason might be to minimize taxes, cut production costs, or pocket extra income in return for something. "Unethical Business Practices Essay." Also, some companies bribe to bypass the rules and regulations. We use cookies on our website to give you the most relevant experience by remembering your preferences and repeat visits. Although enforcement of ethical rules by private . Distortion of facts to mislead or confuse. The unfair competitive practices would only earn a company massive profits in the short run. (2022, August 1). Thus, such disgraceful acts continue unchecked unless someone speaks out loud. They find gaps and swindle investors and their customers while being in the legal grey area. These cookies will be stored in your browser only with your consent. 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. In July 2 2010, the New York Times revealed the case of GlaxoSmithKline Company. These cookies help provide information on metrics the number of visitors, bounce rate, traffic source, etc. Hill, A. For example, a clothing company that uses child labor in its factories will likely lose customers who are opposed to this practice. In the short term, such practices may boost profits and help a company gain market share. Further, the company distorted the data of a diabetic drug that recorded very high sales, and it marketed other drugs improperly. Consequences of unethical business practices. However, some managers take advantage of defenseless employees to exploit them in one way or another. They offer bribes in different forms like gifts, political support, and sponsorships. If word gets out that a business is engaging in unethical behavior, it will likely lose customers and partners. Legal issues and policies 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 penalties. All companies ought to adhere to the pollution norms set by the government. Why are moral and ethical beliefs important in business? A loss of trust can be difficult to recover from. 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. The introduction of new regulations that apply to all companies could result from unethical practices. They can no longer trust anyone in their workplace, thus affecting their daily operations. Of course, new investors would never buy the shares for such companies, and the companys activities may come to a spontaneous halt because of the lack of funds. Spreading lies on social media, defaming for all the wrong reasons, and infringement of trademarks fall under these practices. (2010). It does not store any personal data. 5 What are the causes of poor business ethics? A poor unethical leadership projects the image that ethics dont matter. They trick consumers by making statements without accurate scientific evidence. Essentially, whistle blowers earn a great share of the amount that the federal government recovers from the unethical business practices that they report. To increase ethical behavior, you need to use rewards as well as punishment. Unethical behavior at work could have personal consequences. 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. The unethical practices in businesses are adversely affecting governments through the loss of taxes (George & Jones, 2010). 3 Types of unethical behavior in a business. A reward can be as simple as praise in the face of good behavior particularly when it would be easy for an employee to act unethically. Business ethics enhances the law by outlining acceptable behaviors beyond government control. 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. From mirroring its form factor to camera placement style, it has constantly reproduced iPhone models. "Unethical Business Practices Essay." What are the consequences of unethical and illegal practices in a business? This can result in high turnover rates as employees leave for greener pastures. Although it depends on the specific circumstances surrounding the case, this can result to being sentenced to prison, fines, withdrawal of license and other legal punishments to the accountants found guilty. "Unethical Business Practices Essay." Copyright 2023 performanceinspired.tv | Powered by Digimetriq, The definition of unethical business practices, How unethical business practices can damage a companys reputation, The financial cost of unethical business practices, The legal implications of unethical business practices, The impact of unethical business practices on employee morale, How unethical business practices can lead to a loss of customers, The social implications of unethical business practices, How unethical business practices can lead to environmental damage, The long-term effects of unethical business practices, Ways to avoid unethical business practices. Other unethical actions also impact public goodwill in a business environment. Incentivize Ethical Behavior. Consequences of Unethical Business Practices shareholders, consumers the environment, government and any other aspect of the society external to the organization (Anghel - Ilcu, 2014). Unethical conducts in business are the kind of practices that are deceiving, exploiting and very dangerous to the existence of human life. The executives confront the employees; they pay then low wages, and increase pressures in the work environment (Hill & Plimmer, 2013). https://ivypanda.com/essays/unethical-business-practices-and-their-effects-term-paper/, IvyPanda. Ethical issues can arise in a variety of areas, including marketing, human resources, and finance. What other two military branches fall under the US Navy? Businesses that operate without proper ethics often have to pay a hefty fine. Following are some of the activities that come under the ambit of unethical practice. Company ethics begin at the highest manager level in a company. It also gives employees the confidence to call out any wrongdoing. 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. Manipulating people emotionally by exploiting their vulnerabilities. It is noteworthy that the worst repercussion of unethical behaviors regarding the destruction of the environment is the lowered organizational credibility. We use cookies on our website to give you the most relevant experience by remembering your preferences and repeat visits. (3) Increased misconduct and conflict internally. Further, the courts can even order the company to be closed down. Copyright 2023 - IvyPanda is operated by, Wal-Mart inquiry reflects alarm on corruption, Glaxo agrees to pay $3 billion in fraud settlement, GlaxoSmithKlines Leadership Management Framework, GlaxoSmithKlines Limit to Supply in Canada, The Exchange Rate Impacts on GlaxoSmithKline Company, GlaxoSmithKline: Impact of Production Chain, GlaxoSmithKline: the Management of Innovation, GlaxoSmithKline Plc's Financial Reporting, Role of Hiring Ethical People in Creating and Sustaining Organization, Moral obligations of multinational corporations, News of the Ethics and Social Responsibility. Just one example is Deborah Shank, who was in a collision involving a semi-trailer in 2000, resulting in permanent brain damage and confinement to a wheelchair. Functional cookies help to perform certain functionalities like sharing the content of the website on social media platforms, collect feedbacks, and other third-party features. The executives of such companies protect their brand names, and they fight to maintain the companys reputation through corruption. For example, if a company engages in illegal price-fixing or other anticompetitive behavior, it may be subject to investigation and penalties by the Federal Trade Commission or other antitrust enforcement agencies. Liked this article? When the leaders deviate from ethical business practices, everyone finds unethical behavior rational. These cookies ensure basic functionalities and security features of the website, anonymously. Consequences of Unethical Business Practices, This textbook can be purchased at www.amazon.com, This report examines and discusses unethical business practices in corporate business, organizations where it focuses on the norm or ethics of a business organization; and the, meaning of unethical practices in business. This can lead to additional paperwork and careless errors that result in the task having to be completed again. This cookie is set by GDPR Cookie Consent plugin. Many companies dump their waste in water instead of treating and disposing of their wastes the right way. Consequences of unethical business practices is horrible for any organization the sooner or later. In other situations, they need to handle multiple tasks outside the scope of their job. Legal issues and policies. Employees make better decisions in less time with business ethics as a guiding principle; this increases productivity and overall employee morale. When the top management and executives behave responsibly, employees walk in the same direction. But the rash handling of the situation, instead of being cordial, was uncalled for. Unethical behaviour has serious consequences for both individuals and organizations. Businesses use many tricks to improve sales, from inconsistent comparison to price-based deception. In some cases, employees may be asked to participate in illegal or unethical activities as part of their job role. Advertisement cookies are used to provide visitors with relevant ads and marketing campaigns. This deters others from engaging in similar activities and shows that the business takes ethics seriously. What are the effects of unethical behavior by customers to the company and other customers? One of the most common consequences of unethical business practices is a decrease in employee morale. Nestle. ensure the integrity of our platform while keeping your private information safe. For a start, you could get fired. In summary, it is a. statement setting down corporate principles, ethics and rules of conduct (Anghel Ilcu, 2014. And swindle investors and their customers while being in the same direction inconsistent comparison to consequences of unethical business practices deception, it! Remembering your preferences and repeat visits of our platform while keeping your private safe... The case of GlaxoSmithKline company cut production costs, or pocket extra income in for. 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