In many cases, an ethical dilemma arises due to money. For example, in 2013, two executives of British energy company GDF Suez were found guilty of corruption in relation to a gas supply contract in Bangladesh. Regular reporting and auditing will discourage employees from being unethical. Consequently, some investors might lose everything if a company's true financial position is shakier than revealed. & Jones, G.R. Further investigations indicated that the company lured the doctors by enticing them with luxury trips and spa treatments. Consumers keep receiving unsolicited mails as long as theyre subscribed. As scientific research primarily aims to benefit society (Rull, 2014), ethical standards, which permit discrimination between beneficial ("right") and detrimental ("wrong") research practices are necessary. In the case of customers, the involved stakeholders of the company must ensure that the customers obtain quality products and services. In the case of molesting the investors, the company places itself at a high risk of lacking investors in the future. 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. Unethical business practices can damage a companys reputation and lead to negative consequences such as loss of customers, legal action, and decreased employee morale. This website uses cookies to improve your experience while you navigate through the website. August 1, 2022. https://ivypanda.com/essays/unethical-business-practices-and-their-effects-term-paper/. Such acts, even if performed unknowingly, lower the repute of the organization. Here are five examples of businesses that tossed their ethical standards in the bin: Huawei has been in the limelight for copying the design of Apples iPhone. 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 . It also gives employees the confidence to call out any wrongdoing. But the rash handling of the situation, instead of being cordial, was uncalled for. They try to create a false impression of their competitors in the mind of the consumers. 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. (n.d.). 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. Thomas, K. & Schmidt M.S. This, act of unethical business practices continues to capture world attention. When someone is immoral, they make decisions that purposely violate a moral agreement. This cookie is set by GDPR Cookie Consent plugin. At QuickScream. Business ethics are moral values and principles that guide the day to day business. And if a company discloses confidential information or trade secrets without authorization, it could be sued for misappropriation of trade secrets or breach of contract. Pressure from the supervisors, with hourly tracking, led them to take this unethical route. 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. It has either failed or has little or no. This can ruin a companys financial stability and result in its collapse. The multinational company invested heavily to investigate and determine the extent to which its competitors adhere to the anti-bribery law. 4 What are the consequences of unethical and illegal practices in a business? A clear line between unethical and illegal business practices, however, doesnt exist. These cookies track visitors across websites and collect information to provide customized ads. Polluting the environment should be outdated, as companies ought to employ practices that are environmental friendly. -Develop policies and procedures: Comprehensive policies and procedures can help to prevent and address unethical behavior. Therefore, companies continue without hassle. Last updated on September 8th, 2022 at 03:26 pm. A documented code of conduct specifies the type of conduct and behavior expected in the workplace. Copyright 2023 WisdomAnswer | All rights reserved. To increase ethical behavior, you need to use rewards as well as punishment. In some cases, employees may be asked to participate in illegal or unethical activities as part of their job role. The report also took a look at some unethical, practices by a selected multinational corporation before proceeding to discuss the, consequences on the internal and external environment of the organization. In the contemporary world, businesses that comply with the rightful ethical conducts are decreasing drastically. What happens when someone doesnt follow or do ethics? 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. Suppliers can also be adversely affected by unethical business practices. Employee anxieties, feelings of helplessness, frustration, low job satisfaction, loss of trust toward the leaders, work alienation and related negative consequences for private lives of employees - these all are the malign products of unethical leadership. In the area of human resources, a company may engage in unethical practices such as discrimination or sexual harassment. Firstly, the court can impose heavy fines to the company, which can declare it bankrupt. As well as being fined, the company was banned from doing business in Bangladesh for 10 years. In most businesses, at least one business practice is done in an unethical manner. Since most businessmen think in terms of profit and loss, compromising on ethics may seem like a necessary evil to them. Due to such practices, the consumers have to suffer in many cases. These cookies will be stored in your browser only with your consent. In its investigations, Wal-Mart discovered that its competitors were indeed violating the corruption act that guides foreign investors. Abhijeet Kumar is working as a freelance writer. When the top management and executives behave responsibly, employees walk in the same direction. The quest to drive down costs very often leads to poor product quality, and puts end users at risk, leading to a strong case of bad business ethics. Consequence ethics is a philosophical approach to morality by which the results of an action determine the potential good of the action. Instead of solving issues with the faulty brakes and pedals, they tried covering up their mess by attributing it to human error. Consequences of Unethical Business Practices - Consequences of Unethical Business Practices Consequences of Unethical Business Practices Erastus, 6 out of 6 people found this document helpful. Therefore, managers and supervisors should be warned that employees would be submitting to their unethical orders to set them up. Legal issues and policies. student. Such use of information in a way it wasnt intended falls under unethical behaviors. professional specifically for you? Unethical business practices as those practiced with Wal-Marts 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. This cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Performance". What are the effects of unethical behavior by customers to the company and other customers? How are unethical actions affect the business environment? This can be devastating for a company, as its reputation is one of its most valuable assets. Some companies release chemical pollutants into the air or into water bodies. They adhere to the norms set by the government but try to skip the expenses associated with a suitable setup. Other unethical actions also impact public goodwill in a business environment. How Can a Business Leader Create an Environment of Transparency. And when such practices are unearthed, people begin boycotting their products and services. Advertisement cookies are used to provide visitors with relevant ads and marketing campaigns. What are seven consequences of unethical business practices? Unethical behavior includes all the actions unacceptable in day-to-day business operations. But opting out of some of these cookies may affect your browsing experience. This set of rules and guidelines are the acceptable norms with which all business entities are to carry out their businesses. However, personal, excessive and rapacious desire has led. Unethical business practices are any type of business activity that violates moral and/or legal principles. This very sad incidence affects innocent individuals who purchase such products unknowingly. How long is it safe to use nicotine lozenges? It summarizes the responsibility of the business entity towards its employees, shareholders, consumers the environment, government and any other aspect of the society. However, some managers take advantage of defenseless employees to exploit them in one way or another. Employing low-wage workers and hiring sweatshops for bulk work are also common. How does unethical financial reporting affect a companys stockholders? They may become disgruntled and less productive, or even decide to leave the company altogether. These cookies help provide information on metrics the number of visitors, bounce rate, traffic source, etc. Moreover, the affected individuals would be junior employees of the company who may suffer from lifestyle diseases. How does unethical financial reporting affect a companys stockholders? They attack competitors without relevant facts to back up, in most cases. 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. The companys stock price plummets as a result of the wrongdoings. This cookie is set by GDPR Cookie Consent plugin. 1 What are the effects of unethical business practices? Unethical behaviour has serious consequences for both individuals and organizations. How chemistry is important in our daily life? Manipulating people emotionally by exploiting their vulnerabilities. The customers, business partners, and employers may break ties. However, upon investigation and publicity of the matters, the company will have its reputation destroyed. What are the positive and negative effects of industry? While GlaxoSmithKline may not feel the pain of paying such a huge fine, the company executives should know that its publicity reputation was destroyed. Behaving unethically can break your business in a way you can never recover. In extreme cases, executives may even be sent to prison. Consequences of Unethical Business Practices Strain, M. (2016). It can lead to costly lawsuits and potential loss of reputation. Some unethical practices that harm the employers include low wages and unsafe working environment. Of course, the company will have to cater for their Medicare bills, and pay fines if employees decide to sue the company. They should make it their obligation to think about their descendants who will need a safe environment. The cookie is used to store the user consent for the cookies in the category "Analytics". Sexual harassment is another common issue found in unethical companies. The unethical practices in businesses are adversely affecting governments through the loss of taxes (George & Jones, 2010). How Can a Business Optimize Its Online Business Presence? When employees witness their employer acting unethically, it erodes their trust in the company. 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. They trick consumers by making statements without accurate scientific evidence. Essentially, the relationship between the company, its suppliers, and its customers ought to have mutual benefits. The cookie is set by the GDPR Cookie Consent plugin and is used to store whether or not user has consented to the use of cookies. The executives confront the employees; they pay then low wages, and increase pressures in the work environment (Hill & Plimmer, 2013). Furthermore, some even portray harmful products as healthy to make them more saleable. Finally, unethical practices can lead to a breakdown in morale among employees, who may become disillusioned with their company and less productive as a result. Hill, A. It encompasses opposite-sex harassment as well as unwanted physical contact and advances by the same sex. 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