Improving working conditions and increasing workers’ wages results in reducing the overall profits of the company. The events that led up to the economic recession in 2008 and 2009 have placed a renewed emphasis on business ethics… These days, businesses talk about ethical behavior both within and outside of the company. In the past, businesses have succeeded in marketing the least expensive option to consumers. Customers prefer trusting ethical and sustainable brands and tend to remain loyal to them throughout. So, it is no surprise that business ethics has been a topic of interest for many companies lately. She owns her own content marketing agency, Wordsmyth Creative Content Marketing (www.wordsmythcontent.com) and she works with a number of small businesses to develop B2B content for their websites, social media accounts, and marketing materials. As a result, large corporations have had to shift their focus to encouraging sustainable and ethical business. These include integrity, loyalty, honesty, fairness, leadership, and respect. This ultimately strengthens its brand position by attracting a higher number of customers and skilled employees that seek to be associated with the company. Reviewed by: Michelle Seidel, B.Sc., LL.B., MBA. Large companies can afford to cut down a little on the profits but it is just not a feasible option for small companies. One of the major disadvantages and business ethics is that it reduces a company’s profits. For example, a company abusing child labor and paying low wages will produce goods and services that are much cheaper than competitor company following labor laws and paying a healthy wage. Ethics or wisdom, which is seen as an influential leadership strategy, is the promise of service. Ethics as a concept has driven the functionality of our society for centuries. With an increase in competition in the market, small companies are especially vulnerable. Hence, an ethical business means a profitable business that benefits the shareholders as well as the stakeholders. Business ethics requires a company to set certain organizational standards, values, and principles in place for everyone involved in the said business. Additionally, business ethics can also create a sense of false expectations as there are no guarantees that the ethical functioning of the company will give conclusive profitable returns. What Are the Advantages and Disadvantages of Business Ethics? Provide a Competitive Advantage in Terms of Customers Hence, the efficacy of business ethics is clouded with uncertainty. It is important that companies measure their success not only by profitability but also by looking at the potential of benefitting a wider society. Every policy has its own advantages and disadvantages, the business policy has its own i.e, it shows the directions but it does not empower the innovation in the organisation. get custom paper. The study of ethics focuses on human relationships and what is considered morally correct in human behaviors. Advantages of Business Ethics. A good business model and a loyal customer base attract more investors. For instance, a company that looks into the patterns of its impact, environmental footprint, ethical sourcing for raw materials, etc is better for society than a company that is only profit-driven. Better customer service, fair price, quality products are some ways to help a company in creating a better brand image for themselves. Therefore, consumers have the option of living in a better environment. 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But with international markets and competition expanding day by day, companies need to differentiate themselves with more than just a price tag. Know More – Advantages and Disadvantages of Organizing a Firm as a Corporation, Business ethics or corporate ethics is a form of, Business ethics sets a benchmark that should be followed to increase approval from the public. A business model runs on the goal of maximizing their profits. Shows Direction, Business policies help the business to guide and show the direction to the employees. //]]>. There are higher overheads for training and communication of the business ethics policy. If members of the management team decide to apply their own version of corporate ethics to the way they manage their departments, then this clash of principles can cause confusion in the workplace. For instance, better working conditions, comfortable living wages, adequate health, and safety standards in the workplace are all ways that help in achieving employee motivation. For example, a multinational company may move its … This, in turn, impacts any businesses looking for suppliers; they may not know why the price difference exists, and if only looking at their budget, the cheaper supplier would win. Here is a look at the importance as well as some drawbacks of ethics in business. Here are the advantages and disadvantages of business ethics.