Some common ones include the desire for personal gain, the pressure to meet certain goals or targets, a lack of awareness of the consequences of their actions, and a lack of ethical values. Following are some of the activities that come under the ambit of unethical practice. Mistreating employees is a familiar scene in many companies. And in most cases, auditors may not detect the manipulation unless they go deep. They outline vague and dubious agreements to exploit users. Some junior employees are obliged to withhold information regarding the unethical practices of their bosses for the fear of intimidation, which that is also unethical. This, act of unethical business practices continues to capture world attention. Business managers should never take advantage of their might to disadvantage their competitors. This cookie is set by GDPR Cookie Consent plugin. Whether it is a big conglomerate or a small business or even an online project, the stakes of outperforming the competition are always high. Wal-Mart was a victim of unfair business practices in the recent past. What are the effects of unethical business practices? To increase ethical behavior, you need to use rewards as well as punishment. As scientific research primarily aims to benefit society (Rull, 2014), ethical standards, which permit discrimination between beneficial ("right") and detrimental ("wrong") research practices are necessary. Wal-mart is well-known for their unethical business practices concerning employees. What are the consequences of unethical business practices? Legal Consequences of Unethical Behavior. The cookie is used to store the user consent for the cookies in the category "Performance". It contains thousands of paper examples on a wide variety of topics, all donated by helpful students. The manager is meant to oversee how this money is spent. Greed to amass excessive profit. Consequentialism is based on two principles: Whether an act is right or wrong depends only on the results of that act. Bribery and corruption are common in many business dealings. Consequences of Unethical Business Practices Strain, M. (2016). Performance cookies are used to understand and analyze the key performance indexes of the website which helps in delivering a better user experience for the visitors. They consistently place profits before the health of their employees. Company ethics begin at the highest manager level in a company. Some unethical actions are also illegal, and you could be arrested. If a business is caught bribing officials or engaging in other illegal activities, it will be subject to fines and other penalties. These cookies track visitors across websites and collect information to provide customized ads. But opting out of some of these cookies may affect your browsing experience. Another unethical practice is deliberately over-billing the customers. One thing that companies harming the environment without caring ought to know is that some individuals who lived in the past cared about the people in the current generation. But opting out of some of these cookies may affect your browsing experience. Years later, they sued her . Unethical behaviour has serious consequences for both individuals and organizations. It has either failed or has little or no. IvyPanda. We also use third-party cookies that help us analyze and understand how you use this website. They trick consumers by making statements without accurate scientific evidence. Consequence ethics is a philosophical approach to morality by which the results of an action determine the potential good of the action. Abhijeet Kumar is working as a freelance writer. The executives of such companies protect their brand names, and they fight to maintain the companys reputation through corruption. They do it to get favorable deals, an upper hand over competitors, or insider information they can use to their benefit. The company would meet the full payments of hunting excursions and all sorts of luxuries to win the doctors, and force them to promote some unapproved drugs. You can lose your job and reputation, organizations can lose their credibility, general morale and productivity can decline, or the behaviour can result in significant fines and/or financial loss. Hence, there is a need to channel a new course of action. The Bottom Line The system of moral and ethical beliefs that guides the values, behaviors, and decisions of a business organization and the individuals within that organization is known as business ethics. Employees are very essential stakeholders in any company because they determine the level of productivity of the company. effect. Upper Saddle River, NJ: Prentice Hall. Essentially, any practices that make the employees uncomfortable in the work place are unethical, as they do not comply with the federal working standards. It can lead to costly lawsuits and potential loss of reputation. we share practical advice, tips, news, and strategies to help you start, run, and grow your business or startup. For example, in 2013, two executives of British energy company GDF Suez were found guilty of corruption in relation to a gas supply contract in Bangladesh. It is clear that unethical business practices can have serious implications not just for the businesses involved, but also for their employees, shareholders, customers and suppliers. (Assume that a customer would visit twice in his/her life-time upon watching the advertisement once) Avg CPC (cost, A popular vegan restaurant is known to have long waiting lines from 12-2 pm in the afternoon. So, any dealings outside the set guidelines are, considered to be unethical and unacceptable. Liked this article? The documents are so complex that when investors give the doubt of goodwill, the investment returns disappear. The New York Times. The vulnerable employees have no choice but to be submissive. Need a custom Term Paper sample written from scratch by Businesses, large or small, run behind profits. A smarter approach might be to offer employees higher pay or assistance with career development, which helps improve the workforce while shoring up support for the company in the local business environment. Required fields are marked *. It was so embarrassing that G4S was unable to supply enough security guards in a contract that would earn it massive profits during the 2012 Olympics. A bit of pampering speeds up the complicated administrative procedure and pleases the decision-makers involved. Consequences of Unethical Business Practices - Consequences of Unethical Business Practices Consequences of Unethical Business Practices Erastus, 6 out of 6 people found this document helpful. IvyPanda. The cookie is used to store the user consent for the cookies in the category "Other. Why is it important to study business ethics? What equipment is necessary for safe securement for people who use their wheelchair as a vehicle seat? Its also not right to make unjust claims about them and their practices. In most businesses, at least one business practice is done in an unethical manner. Analytical cookies are used to understand how visitors interact with the website. Here are the most common unethical practices in businesses. Although it depends on the specific circumstances surrounding the case, this can result to being sentenced to prison, fines, withdrawal of license and other legal punishments to the accountants found guilty. Such practices are always unethical. It is not just shareholders and customers who are affected by unethical business practices; employees can also suffer as a result of their employers actions. Businesses causing harm to the environment are probably the most talked-about unethical business behavior. Unethical behavior at work could have personal consequences. Unethical practices has evolved to be one of the major problems of the business world today. It leads to data misuse, which often surfaces when it goes out of hand. Employees are required to work long hours for little pay and are at risk of serious injury if they do not meet production targets. It is difficult to have a successful business without well-respected leaders. However, in the recent past, reports indicated that G4S did not adhere to its motto, and its ability to control its worldwide operations failed considerably. While some companies are able to get away with these practices, others are not so lucky. Top Management Example. 2022. The highly sensitive information was very essential for the prosecutors to file charges against the GlaxoSmithKline Company, and it was very controversial to find out who disclosed those unethical practices. Some unethical business behaviour may include lying and changing the number of hours they have worked, making a long distance phone call on the business phones, and copying business software so they can use it at home. In its investigations, Wal-Mart discovered that its competitors were indeed violating the corruption act that guides foreign investors. For example, a clothing company that uses child labor in its factories will likely lose customers who are opposed to this practice. Spreading lies on social media, defaming for all the wrong reasons, and infringement of trademarks fall under these practices. Creation of false documents to show increased profits. The New York Times. 1 August. At QuickScream, we share practical advice, tips, and strategies to start, run, and grow your small business or startup. 4 What are some of the consequences of the use of unethical accounting practices? You can lose your job and reputation, organizations can lose their credibility, general morale and productivity can decline, or the behaviour can result in significant fines and/or financial loss. (2012). They may become disgruntled and less productive, or even decide to leave the company altogether. Such companies do not care about the repercussions of their ill deeds. How long is it safe to use nicotine lozenges? There are many unethical companies out there, but this list is going to examine the ethical issues on the top 20 worst ones. In some cases, unethical business practices can lead to criminal charges. These cookies help provide information on metrics the number of visitors, bounce rate, traffic source, etc. Web. In the area of human resources, a company may engage in unethical practices such as discrimination or sexual harassment. Such acts lead to mass mistrust when they come to the surface. United Airlines has received massive backlash for dragging a passenger off an overbooked flight. The moral principles may relate to values such as honesty, respect, trustworthiness, and fairness. Of course, the company will have to cater for their Medicare bills, and pay fines if employees decide to sue the company. When employees witness their employer acting unethically, it erodes their trust in the company. Such research fails to accurately enhance . When the leaders deviate from ethical business practices, everyone finds unethical behavior rational. It inspires the staff at all levers to be ethical in all regards. This preview shows page 1 - 5 out of 11 pages. What many companies dont disclose is if the data is shared with third-party services. From lying to customers to bribing government officials, there are a variety of ways in which businesses can act unethically. As if that is not enough, some companies go ahead to produce low quality or unsafe products. Many companies also buy email databases and bombard the recipients with promotional messages. Cases have occurred where companies that had been involved in unethical practices clear their names in courts through bribery. It does not store any personal data. At the end of the day, the government, employees, investors, competitors, and the customers suffer while the crooks enjoy the fruits of their unethical business practices. George, J.M. Some companies will present false statements to the investors to clarify why they cannot afford to pay the dividends. Unethical behavior in a company has a broad range of consequences. Unethical business practices can have a number of negative effects on the environment. At QuickScream. However, that does not mean that the companies should involve themselves in deceptive sales practices. Once the suppliers find other places where they can sell their products at fair prices, they would stop supplying raw materials for such companies with immediate effect. Companies that practice unethical business conducts that harm the suppliers and the consumers should know that their practices might have adverse consequences than anticipated. (2) Decreased productivity. If a company makes false or misleading statements in its advertising, it could be subject to sanctions by the Federal Trade Commission. what are the consequences of unethical business practice? It is noteworthy that performing unethical practices in the work environment is wrong regardless of where the orders came from. Such exploitation is widespread. Indeed, unethical business practices harm a series of people, whereas; only a few greedy incumbents enjoy the fruits of their ill deeds. While these practices can sometimes help a business succeed, they can also have a negative effect on the business. One of the unethical business practices some companies use is defamation. In 2013, it was revealed that Walmart had been using forced labor at its suppliers factories in China. Employee relationships are affected. These unethical practices continue until the consumers become aware of them. Its not limited by gender. It is therefore essential that companies ensure that their employees are aware of the ethical standards expected of them, and that they have systems and procedures in place to prevent and detect any unethical behavior. 23 Feb, 2021, 10.38 AM IST All News Videos What are the conflicts in A Christmas Carol? Legal issues and policies. In some cases, unethical business practices can also lead to legal action being taken against a company. Manipulating financial statements to show improved financial performance is another popular tactic in the business world. 2 How do business ethics affect profitability? The year is 2012 and the light bulb has not yet been invented. They should ensure that the investors obtain their dividends in time. 3 What are the effects of unethical behavior by customers to the company and other customers? The customers, business partners, and employers may break ties. This term paper on Unethical Business Practices Essay was written and submitted by your fellow All businesses store customer data in one way or the other. activities of an organization in dealing with employees, customers, government agencies. Therefore, regardless of how wrong an instruction is, the junior employees are sometimes obliged to abide by the rules of their supervisors and managers. For example, following the Enron scandal in 2001 (in which the energy company was found to have engaged in widespread accounting fraud), many investors lost faith in corporate America and there was a significant decrease in confidence in the stock market. What are the positive and negative effects of industry? Many companies go to extreme lengths to maximize their revenues. Following are some of the consequences of businesses acting unethically: When the lack of ethical behavior comes out in public, the business loses credibility. Some also release chemical pollutants into the air without proper filtering. Companies have to be warned that there is a whistle blower policy that rewards employees with substantial rewards. These cookies track visitors across websites and collect information to provide customized ads. How are unethical actions affect the business environment? High standards of organizational ethics can contribute to profitability by reducing the cost of business transactions, building a foundation of trust with stakeholders, contributing to an internal environment of successful teamwork, and maintaining social capital that is part of an organizations market-place image. ranging from the distortion of facts to mislead or confuse, generation of false data to show increase in profits, avoiding penalty or compensation for, unlawful act and a whole lot of others are being perpetrated in todays business world. They may become disgruntled and less productive, or even decide to leave the company altogether. They offer bribes in different forms like gifts, political support, and sponsorships. What are the effects of unethical behavior by customers to the company and other customers? 4. "Unethical Business Practices Essay." The workers (mostly women) were required to work excessive hours for little pay and were subjected to verbal and physical abuse if they did not meet targets. A clear line between unethical and illegal business practices, however, doesnt exist. Thus, such disgraceful acts continue unchecked unless someone speaks out loud. Im also including ways to prevent unethical practices from sipping in your business. Nestle was sued by the Federal Trade Commission for making false claims about their infant formula. -Encourage reporting: Employees should feel comfortable reporting any unethical behavior they witness. The G4S Company has existed for decades and it has expanded globally, however, the company can collapse within a short period if its reputation is disputed. The consequences of these scandals can be far-reaching, not just for the businesses involved, but also for the employees, shareholders, customers and suppliers associated with them. Finally, the consumers have all the rights to file lawsuits in case they consume unsafe products. Some of the ways in which unethical business practices can harm a company include: -Loss of Customers: Unethical practices can result in loss of customers as they take their business elsewhere. Financial Times. Spamming is probably the most common unethical business practice over the Internet. A damaged reputation can take years to repair, if it can be repaired at all. Nestle is the world's largest food and drink corporation. Although, unethical research which flouts these standards, can arise by various means. You also have the option to opt-out of these cookies. Some executives are even sued for creating false financial statements to deceive the investors. No amount of fine can compensate for the unethical practice of selling unapproved drugs to humans. IvyPanda. This is particularly true if customers feel that their personal values are being violated by the companys actions. Some companies release chemical pollutants into the air or into water bodies. However, there are those business people who opt to employ unfair and unethical business practices that result into unfair competitive practices. Employees incorporate the ethics of top-level managers of the organization. They try to create a false impression of their competitors in the mind of the consumers. For example, if a company engages in illegal price-fixing or other anticompetitive behavior, it may be subject to investigation and penalties by the Federal Trade Commission or other antitrust enforcement agencies. They adhere to the norms set by the government but try to skip the expenses associated with a suitable setup. Unethical behaviour has serious consequences for both individuals and organizations. In addition to affecting employee morale, unethical business practices can also damage a companys reputation. 1 What are seven consequences of unethical business practices? Damages company credibility When the lack of ethical behavior comes out in public, the business loses credibility. They do that via spreading false messages, creating fake accounts and so on. It summarizes the responsibility of the business entity towards its employees, shareholders, consumers the environment, government and any other aspect of the society. Consequences of Unethical Behaviour in Businesses Following are some of the consequences of businesses acting unethically: 1. When a manager or head of a business exhibits a lack of ethical behaviour, he faces losing the respect of his employees. Furthermore, some even portray harmful products as healthy to make them more saleable. The executives confront the employees; they pay then low wages, and increase pressures in the work environment (Hill & Plimmer, 2013). The executive may receive merciless jail terms and finally, the company may end up becoming bankrupt because of the high costs associated with unethical business practices. And when theyre, it can cause severe damage. This cookie is set by GDPR Cookie Consent plugin. It provides an overview of whats acceptable and whats not. For example, if a company is caught engaging in price-fixing or other anticompetitive behavior, it may suffer reputational harm that causes customers to take their business elsewhere. IvyPanda, 1 Aug. 2022, ivypanda.com/essays/unethical-business-practices-and-their-effects-term-paper/. There is a very high possibility of the G4S executives in such nations to be drawn into unethical practices that may further portray the companys incompetency. This paper will give a stringent analysis of the various unethical business practices and the effect that they have on the organization. Thus, businesses slip into undesirable and complex conditions, which they can tap later to their advantage. the general conduct of business. Illegal practices are determined and regulated by the law. Resorting to dishonesty, trickery or deception. Even if they mention it in their agreement, the usage rights are often vague. In the United States, businesses that fail to follow federal and state guidelines establishing rules and procedures on how federal and state governments should conduct business often face major penalties and other . Is it Ethical for Employers to Search Social Media for Information about Applicants for a Job. Some of them are: The three main reasons behind unethical business practices are: Big and small businesses both can be stirred by unethical behavior. In July 2 2010, the New York Times revealed the case of GlaxoSmithKline Company. "In civilized life, law floats in a sea of ethics.". Therefore, managers and supervisors should be warned that employees would be submitting to their unethical orders to set them up. The cookie is used to store the user consent for the cookies in the category "Other. As discussed, some vulnerable employees suffer in silence, and it is upon the business managers to ensure that they treat all their employees equally. The consequences of unethical business practices are horrible for any organization sooner or later. They should make it their obligation to think about their descendants who will need a safe environment. In many cases, an ethical dilemma arises due to money. Unethical business practices can have a number of negative effects on a company. We take an example of G4S Company, which is one of the largest private companies in the world. -Lying: deliberately misrepresenting the truth in order to deceive others Employee relationships are affected. This cookie is set by GDPR Cookie Consent plugin. They want to keep such incidences hidden from public knowledge. Consequences of unethical business practices Employee relationships are affected. Customers feel betrayed. Here are five examples of businesses that tossed their ethical standards in the bin: Huawei has been in the limelight for copying the design of Apples iPhone. Deception, collusions, swindling sounds like the plot of a best-selling novel. A poor unethical leadership projects the image that ethics dont matter. Regardless of how effective their drugs would be, informed customers will tend to shy away from purchasing their drugs. Why are moral and ethical beliefs important in business? Consequently, the world economy is facing a crisis as businesses evade from paying taxes. 2. Toyota ignored passengers safety even when the management knew about the fault in their vehicles. Necessary cookies are absolutely essential for the website to function properly. The cookie is set by the GDPR Cookie Consent plugin and is used to store whether or not user has consented to the use of cookies. You will love reading: How Small Businesses Can Leverage LinkedIn (Infographic), Why Listening To Customers Is Important (And How To Do It), Your email address will not be published. Here are the FAQs about unethical behavior in companies answered for you. Most users dont go through the pages-long fine prints in the agreements. Essentially, whistle blowers earn a great share of the amount that the federal government recovers from the unethical business practices that they report. & Jones, G.R. The burgeoning, proliferation of unethical practices impacts the global financial crisis, deepening the fallout in, human terms and slowing the ability to rebuild (Gill, 2012, P.371 -391), The code of conduct put in place by various governments has so far been very, ineffective in combating or reducing unethical practices.
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