Meaning of Business Ethics
Business ethics refers to moral principles and social values that business should adopt in its code of conduct. These are rules that businesses must accept and follow in its day to day operations for the welfare of society and all its stakeholders. Business is termed as a social organ, and therefore it should not indulge in any activity that is harmful to the interest of all its stakeholders. It should not only focus on objectives like profit maximization, higher growth but should work for the upliftment of its surroundings also. These ethics help the business in deciding what is right and what is wrong for the business taking into account its circumstances.
Business ethics helps the business to maintain better and harmonious relations with society, customers, employees, and the concerned industry sector. Ethics adopted by the business should be followed strictly by each and every person working with the business. There should be a reward-punishment system linked with business ethics for those violating these ethics and one who properly abide by these ethics. Business ethics have an important role in raising the profitability and productivity of a business and improves its goodwill in the market.
Importance of Business Ethics
Control Business Malpractices
Business ethics directly influence the operations of the business. It is the one which helps business in deciding what is wrong and what is right. These ethics set certain rules and principles to be followed strictly by business, and their violation leads to a penalty. Implementation of these principles ensures that business does not indulge in any unfair practices like black marketing, providing misleading advertisement, frauds in measures and weight, adulteration, etc. Through business, ethics works on providing better products to its customers at reasonable prices.
Better Relation with Employees
Employees are an important part of the business and necessary for the survival of the business. Business ethics ensures that business works for the welfare of its employees working with it. The business should not only work for the achievement of its objectives like profit maximization and higher growth but should also focus on peoples working with it. These ethics ensures that business provides better monetary compensation and good working conditions to its employees, active participation in decision making, addressing complaints, and providing promotions as per their progress. This helps in maintaining a good relationship with employees.
Improves Customer Satisfaction
The consumer is termed as king in the market and is the one who decides the success or failure of every business. It is important that the business fulfills the needs of its customers. Business ethics provides principles for business operations under which it is required to provide better quality products at reasonable prices. It ensures that the business provides better customer support and redressal of all complaints. This helps businesses in improving the satisfaction levels of its customers.
Business ethics improve the productivity and profitability of every business. It sets certain rules to be followed by every person working with the business. Every employee is required to adhere to these rules and should focus on its duties with sincerity. These ethics ensure that there is no wastage of resources, and every resource is efficiently utilized. This eventually leads to an increase in business profit in the long run.
Improves Business Goodwill
Business goodwill has an important effect on capturing the market. Better goodwill businesses are able to attract more and more customers. By implementing ethics in its operations business aims at providing better service to the market. Businesses that work ethically operate at the low-profit base and with honesty. This develops a better image in front of the public and is easily accepted by customers with fewer efforts.
Better Decision Making
Ethics in business helps them in making better decisions timely. It provides certain rules and guidelines that every business needs to follow in its operations. Every decision is taken in light of the moral principles and social values provide through these ethics. It helps businesses in deciding what is right and what is wrong. Every person working within the business is required to respect these ethics, violation of which would lead to the penalty.
Protection of Society
Society is very important for the success of every business. If a business does not consider the interests of its society, then it will harm its survival. Business ethics direct that business should work for the welfare of its society and take part in various infrastructural development programs.
It ensures that business contributes actively to its corporate social responsibility. A business should not perform any activity that creates a problem for the society in which business exists.
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