Define Business ethics . Explain its significance.

Business ethics 

Business ethics are moral principles that guide the way a business behaves, wrong Acting in an ethical way involves distinguishing between right and then making the right choice.

Business ethics are applied or professional ethics. They may take the form of actions within written and unwritten codes of principles, and values and are determined by an organization's culture. They largely govern the decisions in the organization. However, determining what practices are ethical or not is more difficult since the lines between ethical and unethical can become blurred. The following are some of the notable definitions of business ethics

Decenzo & Robbins

Ethics commonly refers to a set of rules or principles that defined right and wrong conduct.

Ricky W. Griffin

Ethics is an individual's personal beliefs about whether a behavior, action o decision is right or wrong. Managerial ethics are the standard of behavior the guides individual managers in their work.

Clarance D. Walton

Business ethics are concerned with truth and justice and has a variety of aspec such as expectation of society, fair competition, advertising, public relation social responsibilities, consumer autonomy and corporate behavior in the hom country as well as abroad.

The concept of business ethics began in the 1960s as companies became mor aware of consumer-based society that showed concerns environment, social issues, and corporate responsibility and accountability. regarding the Based on above discussion and definitions, it may be concluded tha business ethics are the principles that guide business operations.

Significance of Business Ethics

Business environment is being more challenging because of growing competition because of globalization. No matter the size and nature of business, none of the organizations can sustain their business with generosity of time, market situation, and its customers without ethical standards. Not only the customers, but employees also pay high value to the organizations with high business ethics in practice. So, business ethics is a supporting pillar for stability, and prosperity of business. More specifically, business ethics has the following significance.

Prevents malpractices: Business ethics prevents business malpractices like treating in unfair trade practices such as black-marketing, unnatural price hiking, adulteration, cheating in weights and measures, selling low quality and harmful products, promoting false commitment, abusive use of natural resources, etc. of various business organizations. Because of business ethics, consumers and the entire society get benefits.

 Improved confidence: Customers need to have high level of confidence for making product purchase decisions. Business ethics helps make decisions with greater confidence as the business organizations with business ethics treat fair in terms of quality, utility, reliability, quantity, price, etc. of the products. Business ethics helps to increase the confidence in using the products as the ethics binds business organizations to maintain trust by offering quality products and services to customers.

 Survival and growth of business: Business ethics is the foundation for business survival and growth. Consumers trust those organizations while follow business ethics absolutely because of which consumer's retention can be maintained. But, consumers cannot trust t the business organization which once cheated to them. After being cheated, the consumer do not buy goods or services from that businessman. There will be negative word of mouth Le. telling tendency to others not to buy that goods. Various research revealed that once consumer feels cheated, s/he tells to 10 consumers while satisfied consumers tell to 4 other consumers. This shows that to survive and grow the business depends upon the business ethics of the organization.

Protection of consumers rights: Business ethics protects the rights of consumers such as right to information, right to choice, right to compensation, right to health and safety, right to be heard, right to redress, etc. Business ethics must safeguard these basic rights of the consumers. This provides sufficient evidence of being socially responsible. Socially responsible organizations get ample opportunity for growth.

Develops good relations: Business ethics follows the fair treatment principles to the consumers as well as with entire business community. This helps develop good and friendly relations between business society. Being ethical in business, community takes the business organization as a good organization. Thus, business ethics helps to maintain good profit and sustainable growth. Along with growing economy, ethical business practice helps improve the standard of living of the society.

Good organization image: Business ethics creates a good image of the organization. If the business follows all ethical rules, then they will be fully accepted by the society. The society always supports such business and businessmen who follow the necessary business ethics and avoids dishonest activities. If the business succeeds in creating and maintaining its goodwill in the society, it flourishes well even in the most competitive markets.

Protects employees and shareholders: Business ethics is required to protect the interest of employees, shareholders, competitors, dealers, suppliers, customers, government, etc. It protects them from exploiting each other through unfair trade practices like cheatings or frauds. Ethics compels each entity participating in the business activity to properly execute its role by adhering the established code of conduct. Since everyone is disciplined and functions appropriately, business grows well in the long run.

Healthy competition: Business ethics is the only way to make competition healthy. If all the business organizations follow business ethics, all of them treat the consumers equally. This increases the fair competition. Healthy competition fosters creativity and innovation, competitive pricing, affordable services, corporate responsibility, consumer satisfaction, etc. In healthy competition, competitors work for market creation and development jointly. It provides equal opportunities to all the business organizations whatever the size and nature of the businesses. 

Smooth functioning: As discussed earlier, business following business ethics makes the stakeholders i.e. employees, shareholders, consumers, dealers, and suppliers happy. Happy stakeholders fully cooperate the business which helps in smooth functioning of business activities. Effectiveness, efficiency, productivity and profitability of the business organization. Thus, business ethics maintains ultimate level of satisfaction and protects the business from being dysfunctional. 

Consumer satisfaction: Satisfied consumers are the source of business success. With business ethics, business organizations can satisfy the customer's expectations at their level best. Business ethics pushes business organization working with keeping the consumers at the center. The consumer's satisfaction becomes high only if the business follows the business ethics.

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Importance/Significance of Business Ethics

Strategic decision makers should consider ethical issues while making decisions since a business with high ethical standards can be benefited in a number of ways:-

1. Promotes goodwill and image: Business ethics the goodwill and image of the organization. Ethical practise promote relationship of the organization with all its stakeholders such as customers, employees, shareholders and wider society. The ethical organizations discourage practices such as black marketing, price gouging, and false advertising, exploitation of workers, production and sale of inferior products, and exploiting tax.

2. Good relationship with stakeholders: A business has multiple stakeholders such as shareholders, government, society, and employees. Ethical business practices interact with these stakeholders in a fair and social manner. For example, customers should be offered qualitative products at reasonable price and tax should be paid to the government reasonably. In other words, ethical business practices help to maintain good relationship with the stakeholders.

3. Less government intervention: Ethical businesses follow all the rules and regulations and carry their activities honestly in the interest of the wider society. Due to this, there is less invention of government in ethical businesses.

4. Promotes competition: Ethical business practices discourage business mal-practices such as black marketing, price gouging, and false advertising. Therefore, they promote competition which is beneficial for the customers as well as other stakeholders

5. Promotes social responsibility: Social responsibility is the discretionary effort of an organization to solve social problems. Social organizations keeps social welfare at the centre which formulating their plans and programs. They carry their activities ethically and promote social interests.

6. Improve working environment: Ethical business practices promote fairness, justice, and equality which lead to a congenial organizational environment based on mutual relationships and interest. It benefits both the employees as well as the organization.

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