Business >

Are business ethics or profits more important?

This Debate has 18 articles on the Ethics side and 7 articles on the Profits side. Click here to see all the articles rated and ranked by Helium members.

Ethics

Profits

3 of 18

Ethics

In this modern world, competition is the order of the day as companies fight to maintain their market share and thus customers. May of these companies, due to pressure, may be forced to engage in unethical business practices so as to maintain their market share. It is however interesting to note that unethical business standards are practiced to different extends depending on who the company is relating with which therefore leads us to answering this question by identifying the level at which the business is transacting.

At the level of business to business, unethical business practices tend to be most prevalent. Profits may become more relevant as the company engages in unethical practices to keep competition at bay. For example, the company may engage in unethical advertising and publicity practices that make the other company appear as a bad company in the public eye. This may include revealing competitor company practices in relation to waste management or treatment of employees to cause customers to avoid the competitor's products. However, this strategy will not be effective if the competition maintains proper ethical business standards. So, eventually business ethics wins.

At the employee level, sound business ethics tend to lead to more employee satisfaction and hence higher productivity. I know of one company that has cut the commissions of its employees from 10% to 3% so as to increase its profits and please the shareholders. This company has one of the highest employee turn over and is slowly creating a large pool of former employees who are setting up business to compete with their former employer in the hope that one day the company will fall. These employees normally also speak ill of their employer in public and even to would be customers thus affecting the image of the company and its products. This means that business ethics in relation to employees eventually affect the company's products and customers.

In relation to the suppliers, business ethics are still more important. A case to display this fact is of a Kenyan company that with held payments to suppliers over the maximum number 90 days to the disappointment of suppliers. However, at the time the company was a monopoly with no meaningful competition. Later, the company made an ill advised expansion plan made it have liquidity problems. Its competitors rode on this weakness and paid the suppliers promptly leading the company to collapse. During a rescue mission by the receiver managers, the company had problems convincing the suppliers to supply goods on credit an integral element in the retail business. It took bank guarantees and post dated cheques to convince the supplies to supply goods- a practice that continues up to date. If the company had been more ethical, it would have been able to attract more goodwill.

At the customer level, some business cut costs in the production by following unethical business procedures like the importation of goods without paying taxes to attract customers and also to increase profits. Depending on the extent of these unethical practices, it might make some business sense to increase profits through unethical business practices as long as the customer is not aware and the product standards are maintained. However, if the customer gets to realize the unethical business practice, something that they will eventually do like in the case of Gap's production of clothing in Asian countries, the customer may boycott the company's products thus leading to lower profits.

In the long run therefore this question brings to light a huge debate on who is more important to please; the stakeholder who includes customers, suppliers, employees and the general public who monitor business ethics or the shareholder who include the company's owners who desire more profits. My opinion is that in the short run, profits may be more important but if the company desires to expand and retain customers in the future, it must engage in ethical business practices. This is what makes business ethics more important.