The primary objective behind doing business by the companies all over the world is for making profits and creating wealth for its stakeholders but not all companies are same and some companies follow ethical behavior and do something good for society as well people while doing business even if it involves some dent in profits of the company. In order to understand this concept, one should look at the advantages and disadvantages of business ethics –
Advantages of Business Ethics
Support from Consumers
Modern day customers are different from traditional customers in the sense that these customers use social media and technology and in the age of technology any wrong news about the company can damage the reputation built by company over the years in few hours and good news about the company also travels fast and that is where if the company is following ethics and social responsibility towards society get patronage from both current customers as well as potential customers leading to increase in loyal customer base of the company.
Employees Trust
If a company is following unethical practices to earn profits then you cannot expect employees of the company to perform their task ethically besides employees will never trust such companies and good employees will look to go into other companies which in turn again is a big loss for the company as human capital is perhaps the most important asset as far as the company is concerned.
Brand Image
Good quality products, customer service, fair price are some of the factors which help the company in creating brand image but one can add business ethics also to these factors because over a long period of time business ethics plays a big role in creating as well as sustaining the brand image of the company in the minds of the consumers.
Disadvantages of Business Ethics
Reduction in Profits
If the company is following ethical route than chances of it earning more profits are less as sometimes for snatching business opportunities from competitors the company has to adopt unethical route. In simple words, if a company is willing to forgo extra profits so as to stay on the ethical path than only a company can follow business ethics properly otherwise it is a waste of time, money and effort of the company.
Long Term Process
Another drawback of business ethics is that company cannot become ethical overnight rather it is a long term process which requires considerable discipline and effort on the part of the company which only a few company’s top management can manage.
Small Companies find it Difficult
Another argument against business ethics is that as far as big companies are concerned they can afford to lose some business for doing business ethically but as far as small companies are concerned in this age of cut-throat competition where small companies vanish quickly due to low sales and profits one cannot expect all small companies to do business ethically. In simple words, in case of small companies it not about them earning lower profits but it is about survival and when talk of survival comes chances are small companies will throw talk of ethics out of a window.
As one can see from the above that business ethics has advantages as well as disadvantages and it depends on company top management whether they want to earn only profits from their business or want lesser profits but more respect from the society as a whole.