Ethical Influence on Business activity

Definition of Business Ethics

Business Ethics refers to the moral rules, standards and principles that determine acceptable behaviour inside and outside a business.
Ethics influences the actions, decisions, policies, and practices of a business.

Importance of Ethics to Businesses

Ensures the business maintains a good reputation and builds a positive public image.
Helps to attract and retain loyal customers, who are increasingly concerned about the ethical position of companies.
Attracts motivated and committed employees, who prefer to work for companies with strong ethical values.
Ethical businesses avoid legal issues and penalties as they comply with laws and regulations.

Ethical Issues in Businesses

Fair treatment of staff, which includes equal pay, diversity, and non-discrimination.
Responsible sourcing, which means using suppliers who respect human rights and environmental laws.
Environmental responsibility, such as reducing waste, conserving energy and promoting recycling.
Honest marketing, including the truthfulness of claims about products or services.

Ways Businesses Display Ethical Practices

Codes of conduct: Businesses outline their ethical commitment by creating these as guiding principles for the employees.
Corporate Social Responsibility (CSR) reports: Businesses share their accomplishments in different social and environmental areas.
Product labelling: Businesses provide ethical information like ‘Fair Trade’, ‘Organic’, or ‘Cruelty-free’ on their products.
Employee training: Businesses educate employees about the importance of ethics and their role in adhering to business ethics.

Challenges of Acting Ethically

Ethical practices often mean higher costs, e.g., paying workers higher wages or setting up recycling programs.
Depending on the location, ethical standards can vary, which makes maintaining high ethical practices globally challenging.
Enhancing ethical practices might require organisational change which is always challenging and time-consuming.

Remember, businesses that successfully manage their ethical responsibilities are likely to have a competitive advantage and ensure their long-term survival. Business ethics isn’t just about “doing the right thing”, it makes good business sense too.