Everything about business ethics

Organizations can be maintained by creating long-term shareholder equity as well as being accountable when it comes to corporate citizenship. This sustainability can be accomplished by incorporating social, fiscal, and environmental ethics into an organization's corporate plan. Furthermore, the global expansion that has occurred over the years has resulted in greater involvement with different social structures and societies. As a result, ethical issues in any company are extremely relevant. There is a need to develop a good ethical culture because it is critical to an organization's success, credibility, and financial management. It is necessary since it builds an attractive brand, and creates trust among the shareholders and stakeholders as well as attracts the best talent. At present, several organizations have realized that it is a good idea to make an effort of accomplishing the above along with the utilization of business ethics to enhance their competitive advantage. This paper is aimed at discussing how organizations can achieve the best business ethics where competition is very high. It will also analyze the effects of business ethics on the competitiveness of the business both globally and locally.

Business Ethics

Introduction

Ethics is a collective and communal enterprise rather than a solitary one and involves the study of web like relationships with other organizations. This fact is true since companies do not operate in a vacuum, but in the midst of relationships with various stakeholders. Increased globalization has made the operations of organization complex due to the emergence of various global stakeholders. This globalization has also led to increasing in competition among organizations, thus the need to devise ways of building a competitive edge. Business ethics, therefore, has become a prerequisite in the establishment of any firm, especially if it is operating in the global market. It is among the valuable intangible assets to thrive well in the currently competitive world of business. Business ethics can simply be viewed in this way by an organization as well as the stakeholders if the ethics are to be a competitive advantage.

Business ethics can be defined as how the management of an organization relates to its customers, employees, competitors, and suppliers based on confidence-building and credibility. It involves doing what is meaningful and not harmful to other people, not carrying out deceptive transactions and not engaging in practices that favour a particular party alone. When the society, as well as a given firm, is characterized by all these features, they qualify to be described as ethical. It also includes the features like honesty and integrity, objectivity, and independence as well as transparency and integrity. The main objectives of the business ethics are cost reduction, innovation, and competitive advantage.

Business ethics has two roles as far as the business of any organization is concerned. One of them is that ethics pays since when the firm act in a socially responsible way towards the shareholders, the shareholder’s wealth is enhanced. Secondly, the main aim of the ethical, social responsibility is the maximization of shareholder’s value (Ferrell & Fraedrich, 2015). It has also been suggested that ethics are a natural consequence in the business market. Employers, employees, clients, and customers of every organization need an ethical environment to work well. Thus it is the organization’s best interest to do so. The paper will present a discussion of the role and importance of business ethics for a firm that is in a competitive landscape. It will then explain the business ethics’ concept within the context of competition as well as how a firm can achieve ethical credibility. Finally, it will present the need to see business ethics as an advantage both in the short and long-term competitive situations.

Business ethics’ Importance

Business ethics is mainly a function of business ethos. The nature of every kind of business is described by the trends that exist in the society in which the business operates. The society, in general, can enhance or discourage some business aspects basing on its well-being and ideals. The most important factor in achieving as well as maintaining a competitive advantage at present is the people. It is therefore important to create an ethics program that guides the employees to act according to the noble aspirations. An ethics program is also a critical source of competitive advantage in a competitive landscape since it guides in the creation of value within an organization.

For an organization to be described as having a competitive advantage, it should be able to implement a value-creating strategy that is not being implemented by their competitors simultaneously. If the competitors are not in any way able to duplicate the strategy, the organization then can be said to have a competitive advantage that is derived from business ethics. It is the concept of globalization that has enhanced a greater involvement with ethical considerations and has been of great help in achieving competitive advantage by use of business ethics.

Business ethics fosters high levels of customer value that in turn enhances the satisfaction among customers. When the customers are satisfied, their loyalty increases which are a good achievement especially for a firm that is in a competitive landscape. This fact is not to say that customer loyalty and satisfaction are similar; whereas customer loyalty is an action, customer satisfaction is an attitude (Blowfield & Murray, 2014). This description means that the customers have to maintain the best business relationships to be able to continue operating with organizations. These positive effects are achieved mainly through the availability of the best ethical behaviors. Loyal customers, for instance, purchase for many numbers of times as well as more products and services from a given firm hence increasing the profits earned by the firm. Also, loyal customers buy repeatedly from the firm and for a long period compared to not so loyal customers. Finally, the loyal customers refer other people to do business with the firms they feel they are satisfied with, and those who are referred become loyal within a very short time.

Ethical culture of a firm

The context of an organization is the most significant thing in making decisions regarding ethical issues. A firm can either successfully guide its people towards the achievement and maintenance of the best ethical conduct or propagate unethical behaviours. The pressure to be unethical mainly comes from the managers of the firm who are also under pressure of meeting certain hard goals. The ethical culture of a company is what determines how a firm reacts to the pressure. When a firm can develop a strong ethical culture, all the individuals working within or in partnership with the firm portray the correct behavior. Also, there is a clear flow of information, guidance, and training from the top management regarding how work needs to be done to enhance performance (Ferrell & Fraedrich, 2015). Through these, the people feel supported and are willing to do what they can to enhance business ethics within the firm. For these reasons, the management of a firm has an important role in defining the ethical issues it is associated with and offering decision making guidance to all the people it is associated with.

Ethics strategy

At present, the spotlight of the business world has concealed the misuse of the stakeholders’ and shareholder’s trust. There has been a rise in business scandals to the extent that lawmakers and politicians have organized more stringent rules for control and reporting that is aimed at restoring the reputation of the corporate world. However, as much as these detailed codes of conduct, strictly reporting and regulations are necessary for every organization, they are not sufficient. An organization that has a good reputation always portrays an image that suits the ethical values of every individual associated with the organization and enhance good relationships.

A business reputation is based on the values, culture, and strategy of the organization. A good business reputation, therefore, creates a strong bond with several stakeholders and portrays trust in a firm. It is also the source of credibility and authority in all the operations of an organization, also known as ‘ethics of strategy.’ For this reason, it is good for companies to handle business ethics as a corporate strategy that could lead to the achievement of competitive advantage if implemented uniquely. This one is the best approach compared to just waiting to respond to the possible important ethical issues that come with the targeted stakeholders.

How a firm can achieve ethical credibility

A conscious strategy that incorporates ethics is not just a written or formal strategic plan. Most firms even do not have formal strategic plans to start with, but even without the formal plan successful firms can be able to successfully carry out their businesses in the midst of competition. There are various strategies that a firm can employ to enhance its moral credibility in a competitive environment. These strategies need to be considered together to achieve ethical success and employing each one of them increases both market and ethical success. These strategies are as discussed below.

Defining the value of the specified ethics

If a firm is committed to ethical behavior, there is a need to believe in the ability of the ethical stance to benefit its customers. The believe should be more than just hoping that the customers will notice it, but it has to go to an extend of defining the benefit and making it apparent to the customers. For instance, if the firm invests in extra time to ensure that its products suit the needs of the customers, it has to make an effort effective in distinguishing it in the marketplace (Crane & Matten, 2016). An example of a simple ethical commitment is to treat all the customers in the same way, whether they are making a new purchase or return. Also, the benefit need not be something big, but something simple is enough as long as the customers can recognize it and prefer the firm over its competitors.

Enhancing the aspect of truth

Each time the firm has a direct contact with its customers; there is a need to treat them fairly to win their loyalty. All the employees, therefore, need to know how to treat the customers at these moments. This fact also applies for business ethics; if every individual in the firm treat all the constituents of the firm, especially the clients when they are in direct contact with them, the company will stand a chance of earing a long lasting and best ethical reputation. This fact will increase their performance even in the midst of stiff competition. What will make this possible is when every employee understands the ethical traits that are expected of them.

Evaluating available business opportunities ethically

A firm can achieve moral credibility in a competitive landscape through looking at its business opportunities with a regard of their ethical implications. Though despite this, there are some businesses opportunities that cannot be easily pursued ethically even in when dealing with domestic markets. One of them is the ethical strategy in a market whose competition is based on price. For this reason, there is a need for a firm to ensure that the best time to employ an ethical judgment when considering a business opportunity as opposed to after trying to handle it. Also, the firm needs to work up to show the importance of ethics in an organization. Business ethics is a significant and necessary corporate value bit it is not easily visible unless it is shown up.

Providing the best product or service

Though this strategy seems too obvious in most firms, the customer is always forgotten or rather left out as far as the topic of ethics is concerned. It always seems dull to talk about the customers of a firm when compared to talking about any other topic. Unless a firm provides a good value to its customers, ethics cannot be said to be part of the business strategy (Crane & Matten, 2016). This fact, therefore, calls for putting the customer above everything else. A firm can achieve moral credibility if in everything it does it strives to ensure that their products and services are the best and safe for the customers. Ethics always starts with offering the best value for the customers.

Choosing business partners carefully

For a firm to succeed in ethically doing business, it will be able to achieve this through choosing partners that practice ethics in their businesses. Despite the fact that the partners are independent, partnering with other businesses make one business responsible for the actions of the rest of the partners. The reason for this is that it is not wise to blame a contractor for a mistake since responsibility cannot be outsourced. Also, it has been discovered that managing well the relationships among business partners if the key to success in a competitive environment. A good business strategy and ethical strategy are both useful, and both require a keen look at how the business partners work, through the lenses used may not be same. This action is aimed at understanding the other business well to enhance success in the midst of competition.

Business ethics as competitive advantage

Being ethical does not always translate to success in the business in which a firm operates in, but ethical companies have always been seen to be successful compared to unethical ones. Though some companies succeed by luck, most thrive well since they have an ethical strategy. Ethics is part of the competitive advantage that enhances their success.

There is a dire need to include business ethics among the codes of conduct of an organization and should be implemented in the line of business philosophy to enhance the competitive advantage of an organization. Competitive advantage can be achieved in the short term by creating ways of appealing to customers in the targeted markets; the long-term competitive advantage is achieved through exploiting various skills and assets, whether tangible or intangible. An organization’s business ethics is among the intangible assets that are of great help in increasing competitive significance in the increasingly changing global and local markets. The increase in the acquisition of comparable tangible assets increases the pace of imitation. Therefore, to sustain a global competitive advantage an organization has to exploit, enhance and enhance their unique business ethics, especially the feature of integrity.

A sustainable competitive advantage in the midst of competition can be achieved through the implementation of a strategy that creates value and one that other firms cannot be able to imitate. For instance, a firm with excellent business leadership skills that improve integrity has a good reputation among various stakeholders. The organization is also able to position itself at the best competitive advantage compared to the organizations that lack this kind of leadership performance. To earn the best performance, an organization has to demonstrate the best ethics, to understand their stakeholders, put themselves in a position of competitive advantage compared with other organizations and respond best regarding the management of moral issues. All these are achieved by first coming up with a comprehensive list of ethical capabilities.

In the current competitive marketplace, the organizations that fail to meet the criteria of the best principles of ethical management and best operations of the ethical business cannot be able to perform. The reason for this is that with globalization, the marketplace is becoming very much competitive and organizations with the best ethics are the only ones that thrive. Various international organizational leaders are therefore the ones accountable for enhancing the best intangible ethical standards such as integrity attitude (Blowfield & Murray, 2014). It has been realized that a strategic integrity capacity is very critical in enhancing the excellence of an organization which is within a competitive landscape. Sustaining a competitive advantage also calls for change, and this involves exploiting the various trends in the industry rather than ignoring.

A firm also needs to invest in closing off the various avenues which the competitors can utilize as forms of attack. Business ethics as a competitive advantage, therefore involve building efficient and effective relationships with the stakeholders of an organization while using integrity to maintain the relationships. Like personal relationships, business relationships are built on mutual respect and trust among the people involved. Also, successful organizations are built through treating all the parties affected by the actions of the firm as part and parcel of development. This idea will enhance the capability to consult them when need is instead of just ignoring them as if they were spectators. This step is one of the novel attempts of explaining the effect of ethical behavior in an organization. There is also the need to understand that the purpose of an organization is not just to make profits, but also to serve the welfare of the people involved.

Conclusion

Business ethics is simply the appropriate way to carry out business since it enhances responsibility as well as a risk-free business environment. In a competitive landscape, a firm needs to be well equipped with desirable business ethics that its competitors do not have to increase its competitive advantage. Utilizing the approach of integrity, for instance, is a reliable way since it strengthens the competitiveness of a firm. It also improves how the firm relates to its stakeholders as well as instilling a positive mindset that enhances innovation and creativity. Business ethics is fundamental since it enhances the relationships and good lives among the people in and out of the firm. Because of this, it is increasingly becoming a necessity to include ethics in the strategy of a firm as well as implement the best ways of achieving a competitive advantage within a competitive landscape. Also, it is good to invest in developing and implementing strategies that foster business ethics since it increases the value for the stakeholders of the firm.

References

Blowfield, M., & Murray, A. (2014). Corporate responsibility. Oxford University Press.

Crane, A., & Matten, D. (2016). Business ethics: Managing corporate citizenship and sustainability in the age of globalization. Oxford University Press.

Ferrell, O. C., & Fraedrich, J. (2015). Business ethics: Ethical decision making & cases. Nelson Education.