IMPORTANCE OF BUSINESS ETHICS

Business ethics is a set of corporate values and codes of principles, which may be written or unwritten, by which a company evaluates its actions and business related decisions.  It applies to the employees both rank-and-file and managers as well as the company as a whole.

Some of the ways in which business ethics are important may be discussed as follows:

1)Create Customer Loyalty and Maximizes Profit- Customers of businesses which follow ethics are loyal and satisfied with the services and products. For example- there is an organization which manufactures cosmetics. The organization strongly believes in the importance of business ethics. When the organization advertises its cosmetics in the market, being an ethical organization, it will be very truthful and honest in its communication with the customers. It will not exaggerate about the benefits or uses of its products. So the customers who buy its cosmetics, know precisely what they are buying and how useful that product is going to be for them. This way, the product will meet their expectations and thus, satisfy the customers. When customers are satisfied, they will become loyal to the company and come back again for repurchasing. This will surely increase the profits of the organization.

2)Stop Business Malpractices- Some dishonest businessmen perform business malpractices in the company. They do such things like black-marketing, artificial high pricing, cheating in weights and measures, selling of duplicate and harmful products, etc. Such practices are harmful to the customers. Business ethics help to stop these business malpractices.

3)Efficient Utilization of Business Resources- In an organization people working at the junior levels often imitate the ethics of the ones working at the top. So, if the seniors follow ethical business practices, the employees will follow the same. This will result in better and efficient utilization of the business resources.

4)Protect Consumer’s Rights- Business ethics help to protect consumer’s rights such as right to health and safety, right to be informed, right to select, right to redress, etc. Several companies do not respect and protect these rights.

5)Create Goodwill in the Market- For a company to grow, reputation is one of the most important possessions a company should have in order to stand in the market among its competitors. An organization, which is well-known for its ethical practices, creates goodwill for itself in the market.

6)Help Enhance Productivity- The ethics in an organization helps to bring out superior employee performance in terms of productivity. Ethics help build morals among the employees. 

7)Smooth Functioning- If the business follows all the business ethics, the employees, shareholders, consumers, dealers and suppliers will be happy and satisfied. They will provide full cooperation to the business. This will lead to smooth functioning of the business.

8)Healthy Competition- The companies should follow business ethics while dealing with the competitors. Business ethics help to create healthy competition. Business ethics do not accept cut-throat competition. Business ethics give equal opportunities to small-scale businesses.