It makes a business seem more profitable while hurting the investors and end consumers. In extreme cases, executives may even be sent to prison. The database is updated daily, so anyone can easily find a relevant essay example. Unethical business practices are likely to have adverse consequences to the organization. In summary, it is a. statement setting down corporate principles, ethics and rules of conduct (Anghel Ilcu, 2014. Hence, there is a need to channel a new course of action. These should be regularly reviewed and updated as needed. Loss of company credibility. Such practices are always unethical. Employees make better decisions in less time with business ethics as a guiding principle; this increases productivity and overall employee morale. 1 What are the effects of unethical business practices? IvyPanda. -Enforce consequences: It is important that there are consequences for those who engage in unethical behavior. This can create a hostile working environment and lead to stress and anxiety among staff. what are the consequences of unethical business practice? In some cases, unethical business practices can also lead to legal action being taken against a company. You are free to use it for research and reference purposes in order to write your own paper; however, you What are the effects of unethical business practices? A bit of pampering speeds up the complicated administrative procedure and pleases the decision-makers involved. the general conduct of business. The consequences that research misconduct can have are considerable and potentially disastrous. However, you may visit "Cookie Settings" to provide a controlled consent. They adhere to the norms set by the government but try to skip the expenses associated with a suitable setup. Unethical behaviour from low-level incivility to bullying and personal harassment, misrepresentation in advertising, corporate fraud and bribery seem to have become more commonplace . Unethical practices are those that are morally wrong. Further, the courts can even order the company to be closed down. 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. When the top management and executives behave responsibly, employees walk in the same direction. August 1, 2022. https://ivypanda.com/essays/unethical-business-practices-and-their-effects-term-paper/. Companies that practice unethical business conducts that harm the suppliers and the consumers should know that their practices might have adverse consequences than anticipated. 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. In addition to the possible legal implications, unethical business practices can also damage a companys reputation and adversely affect its bottom line. Businesses, large or small, run behind profits. 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. 2 What are the consequences of unethical leadership in business? Following are the different ways you can avoid unethical behavior in your organization. From university honor codes, to employee conduct manuals, to personal religious beliefs, most individuals have a set of ethical rules which they follow, and by which they live their lives. Essentially, there are numerous fraud cases in the management of the company, and those practices are driving G4S into the grave. IvyPanda. The destroyed reputation of such companies may cause their sales to reduce drastically, and the company may end up being bankrupt. Businesses also, occasionally, get into creating unfair advantages over their competitors. Wells Fargo has been found involved in creating 2+ million unauthorized customer accounts. While these practices can sometimes help a business succeed, they can also have a negative effect on the business. False advertising is the most prevalent unethical practice. What are the effects of unethical behavior by customers to the company and other customers? Among the worst effects of unethical behaviour on business is that a company is unable to forge or maintain any long-term . This term paper on Unethical Business Practices Essay was written and submitted by your fellow A reward can be as simple as praise in the face of good behavior particularly when it would be easy for an employee to act unethically. No amount of fine can compensate for the unethical practice of selling unapproved drugs to humans. The court can order the suspension of the companys activities for a considerably long period. The cookie is used to store the user consent for the cookies in the category "Performance". In the contemporary world, businesses that comply with the rightful ethical conducts are decreasing drastically. However, some managers take advantage of defenseless employees to exploit them in one way or another. While some companies are able to get away with these practices, others are not so lucky. A documented code of conduct specifies the type of conduct and behavior expected in the workplace. (2010). The companys partners, customers, and all other stakeholders will feel intimidated to be associated with a company that does not value the environment. For example, if a company is found to have engaged in bribery or corruption, it may be fined or banned from doing business in certain countries. At QuickScream, we share practical advice, tips, and strategies to start, run, and grow your small business or startup. Employee anxieties, feelings of helplessness, frustration, low job satisfaction, loss of trust toward the leaders, work alienation and related negative consequences for private lives of employees these all are the malign products of unethical leadership. Consequences of Unethical Business Practices, This textbook can be purchased at www.amazon.com, This report examines and discusses unethical business practices in corporate business, organizations where it focuses on the norm or ethics of a business organization; and the, meaning of unethical practices in business. 5 What are the causes of poor business ethics? 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. What are the causes of poor business ethics? Further investigations indicated that the company lured the doctors by enticing them with luxury trips and spa treatments. Mistreating employees is a familiar scene in many companies. In some . Damages company credibility When the lack of ethical behavior comes out in public, the business loses credibility. While many companies grow profits ethically, others maximize profits unethically via deceptive marketing, slashing employee expenses, lowering product quality or impacting the environment negatively. There are a number of possible legal implications of unethical business practices. In some cases, employees are so concerned with getting ahead and making money that they ignore procedures and protocol. 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. Unethical behaviour has serious consequences for both individuals and organizations. An open company culture with transparent communication ensures that everyone knows what is going on all the time. Employee anxieties, feelings of helplessness, frustration, low job satisfaction, loss of trust toward the leaders, work alienation and related negative consequences for private lives of employees - these all are the malign products of unethical leadership. From mirroring its form factor to camera placement style, it has constantly reproduced iPhone models. Even after paying the fine amounting to $3 billion, GlaxoSmithKline does not tremble because their sales exceeded that amount by far. the current business environment towards unethical business practices (Strain, 2015). Of course, the company will have to cater for their Medicare bills, and pay fines if employees decide to sue the company. Some unethical actions are also illegal, and you could be arrested. Certainly, if all companies adopt the above named ethical practices, every individual in the world would be very comfortable, whereas, companies will be making honorable profits. Greed to amass excessive profit. 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. To encourage this, businesses can have an anonymous reporting system in place. Legal issues and policies 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 penalties. Unethical behavior in a company has a broad range of consequences. 3 Types of unethical behavior in a business. By clicking Accept All, you consent to the use of ALL the cookies. "Unethical Business Practices Essay." And if a company is found to have made false or misleading statements in its advertising, it may be required to pull the ads and refund customers money, which can cost the company dearly. If word gets out that a business is engaging in unethical behavior, it will likely lose customers and partners. They have to obey the authority and perform all their commands. Toyota ignored passengers safety even when the management knew about the fault in their vehicles. Companies would spend millions of dollars to employ strategies that would enable them to enhance their sales. 7 What are some examples of unethical business practices? The companies release toxics that harm the lives of the living things around their locality. This cookie is set by GDPR Cookie Consent plugin. The employees did so to hit their sales quotas. 3 What are the effects of unethical behavior by customers to the company and other customers? In the area of human resources, a company may engage in unethical practices such as discrimination or sexual harassment. You also have the option to opt-out of these cookies. Consequences of unethical business practices. This cookie is set by GDPR Cookie Consent plugin. Unethical behaviour has serious consequences for both individuals and organizations. In its investigations, Wal-Mart discovered that its competitors were indeed violating the corruption act that guides foreign investors. Why are moral and ethical beliefs important in business? The reason might be to minimize taxes, cut production costs, or pocket extra income in return for something. However, cases have occurred where company executives hide some controversial information from the most important stakeholders of the company. Unethical business practices lead to the mistreatment of people and animals. Unethical business practices that involves the offering of kickbacks to win customers could have costly legal repercussions. Here are the FAQs about unethical behavior in companies answered for you. Therefore, regardless of how wrong an instruction is, the junior employees are sometimes obliged to abide by the rules of their supervisors and managers. 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. You can use them for inspiration, an insight into a particular topic, a handy source of reference, or even just as a template of a certain type of paper. must. They trick consumers by making statements without accurate scientific evidence. Business managers should never take advantage of their might to disadvantage their competitors. Companies have to be warned that there is a whistle blower policy that rewards employees with substantial rewards. Business ethics is the study of proper business policies and practices regarding potentially controversial issues, such as corporate governance, insider trading, and bribery. Furthermore, some even portray harmful products as healthy to make them more saleable. It does not store any personal data. Finally, unethical business practices can lead to legal trouble for a company. But opting out of some of these cookies may affect your browsing experience. 2022. This website uses cookies to improve your experience while you navigate through the website. Business ethics enhances the law by outlining acceptable behaviors beyond government control. Loss of company credibility. 1 What are seven consequences of unethical business practices? IvyPanda. Consequence ethics suggests weighing the consequences of choices and selecting actions likely to result in a good or the best effect. Many companies inflate the claims while marketing, exaggerate the desirable features, and hide the side effects. Its also not right to make unjust claims about them and their practices. George, J.M. Defamation. Consequences of Unethical Business Practices Strain, M. (2016). This cookie is set by GDPR Cookie Consent plugin. if a BUSINESS violates government regulations, the owner can be fined or go to jail if an EMPLOYEE violates a company or professional code, the employee might be fired or lose his/her license ethical questions Is it against the law?Does it violate company or professional policies? Immoral is sometimes confused with amoral, which describes someone who has no morals and doesnt know what right or wrong means. 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. For example, the legal profession within all 50 states operates under regulations to assure that conduct complies with specific standards and unethical conduct faces pronounced consequences. 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. When a manager or head of a business exhibits a lack of ethical behaviour, he faces losing the respect of his employees. While GlaxoSmithKline may not feel the pain of paying such a huge fine, the company executives should know that its publicity reputation was destroyed. Companies are always obliged to portray transparency in all their activities. As discussed, some vulnerable employees suffer in silence, and it is upon the business managers to ensure that they treat all their employees equally. external to the organization (Anghel Ilcu, 2014). One of the Mexican subsidiaries that happen to be Wal-Marts major competitors had indeed paid bribes to be allowed to open new stores in Mexico (Clifford & Barstow, 2012). Even if they mention it in their agreement, the usage rights are often vague. Retrieved March 30, 2016, from Unethical behavior has high social and financial costsfor companies and countries alike. Finally, the consumers have all the rights to file lawsuits in case they consume unsafe products. Companies sales managers are obligated to try all possible ways of making massive sales. For one, misconduct can irreparably erode trust among colleagues. This paper will give a stringent analysis of the various unethical business practices and the effect that they have on the organization. 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 company like GlaxoSmithKline that has had some good reputation for many years can have its brand name torn down because of a single unethical incident. 1 What Are Levendarys Business-level and Corporate-level Strategies?? It inspires the staff at all levers to be ethical in all regards. -Conduct audits: Regular audits of ethical compliance can help to identify any areas of concern. What are the effects of unethical business practices? How Can a Business Optimize Its Online Business Presence? (2022) 'Unethical Business Practices Essay'. This very sad incidence affects innocent individuals who purchase such products unknowingly. IvyPanda, 1 Aug. 2022, ivypanda.com/essays/unethical-business-practices-and-their-effects-term-paper/. All companies ought to adhere to the pollution norms set by the government. In addition to legal action and fines, companies can suffer damage to their reputation and image which can lead to a loss of business and customers. If employee theft is widespread or significant, you could lose your job because your employer goes under. Consequentialism is based on two principles: Whether an act is right or wrong depends only on the results of that act. Hill, A. These cookies track visitors across websites and collect information to provide customized ads. Unethical business practices can have a number of negative effects on a company. Regular reporting and auditing will discourage employees from being unethical. However, in the long term, these same practices can damage a companys reputation, cost it customers, and make it harder to attract and retain good employees. Genuinely, drugs are meant to enhance human life, and the named unethical practices concerning drugs are so inhumane. This cookie is set by GDPR Cookie Consent plugin. Course Hero uses AI to attempt to automatically extract content from documents to surface to you and others so you can study better, e.g., in search results, to enrich docs, and more. . Currently, G4Ss has slipped in its ability to manage its global empire. (n.d.). If unethical business practices are prevalent, everyone in a business environment is at risk. Necessary cookies are absolutely essential for the website to function properly. Moreover, the companies should adhere to the corporate social responsibility policy that obliges companies to honor the surrounding environment and the people in it. Recording false transactions, overvaluing inventory, and understating liabilities are many ways businesses manipulate their financial records. They outline vague and dubious agreements to exploit users. How poor company ethics can affect profits? Its products, too, have remained questionable regarding health concerns. Ethical issues can arise in a variety of areas, including marketing, human resources, and finance. Spreading lies on social media, defaming for all the wrong reasons, and infringement of trademarks fall under these practices. They may or may not be illegal. Recently, due to an increase in the demand, the amount of time that customers wait in the queue has, Claire is severely injured in a car accident.The local hospital cannot treat Claire's injuries.In order to survive, Claire must be flown via Helicopter to a hospital in a bordering state.Prior to, Bono is a musician.He sells his neighbor a gently used lawn mower at a deeply discounted price.The neighbor is dissatisfied with the performance of the lawn mower.Can the neighbor sue Bono under the. business environment and other business organizations. Employees are very essential stakeholders in any company because they determine the level of productivity of the company. IvyPanda. The unethical and illegal activities by corporate agents has the potential of having a, negative impact on the society which makes it imperative to establish a set of rules guiding, business and corporate entities on the ideal way of doing business. Essentially, any practices that make the employees uncomfortable in the work place are unethical, as they do not comply with the federal working standards. This cookie is set by GDPR Cookie Consent plugin. These unethical practices continue until the consumers become aware of them. The managers have a responsibility of offering a favorable working environment for all their employees. How unethical business practices can lead to a loss of customers and a negative reputation. G4S: The inside story. Many businesses operate in an unethical manner, whether they realize it or not. The unfair competitive practices would only earn a company massive profits in the short run. Nestle was sued by the Federal Trade Commission for making false claims about their infant formula. 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. So, in this article, Im providing a list of 10 unethical business practices you need to stay away from. Since most businessmen think in terms of profit and loss, compromising on ethics may seem like a necessary evil to them. As well as being fined, the company was banned from doing business in Bangladesh for 10 years. And when such practices are unearthed, people begin boycotting their products and services. How many amino acids were present in the final protein chain created in translation? He loves writing on travel and marketing. It further. Abhijeet Kumar is working as a freelance writer. & Jones, G.R. Thomas Edison and Nikola Tesla are in a bitter feud to see who can bring electricity to the masses first. 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. Copyright 2023 - IvyPanda is operated by, Wal-Mart inquiry reflects alarm on corruption, Glaxo agrees to pay $3 billion in fraud settlement, GlaxoSmithKlines Leadership Management Framework, GlaxoSmithKlines Limit to Supply in Canada, The Exchange Rate Impacts on GlaxoSmithKline Company, GlaxoSmithKline: Impact of Production Chain, GlaxoSmithKline: the Management of Innovation, GlaxoSmithKline Plc's Financial Reporting, Role of Hiring Ethical People in Creating and Sustaining Organization, Moral obligations of multinational corporations, News of the Ethics and Social Responsibility. Unethical practices are governed by the code of ethics and someones own principles. The customers, business partners, and employers may break ties. (2022, August 1). 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. A company that is known for engaging in corruption or fraudulent activities will find it difficult to build trust with its stakeholders. Unethical behaviour has serious consequences for both individuals and organizations. Of course, new investors would never buy the shares for such companies, and the companys activities may come to a spontaneous halt because of the lack of funds. We also use third-party cookies that help us analyze and understand how you use this website. G4S is at the risk of destroying its reputation; therefore, the future of the company is at risk. Big or small, public or private, youll find such unethical behaviors in all organizations. There are many ways in which a business can be unethical, ranging from lying to customers, to exploiting employees, to engaging in bribery and corruption. Some unethical practices that harm the employers include low wages and unsafe working environment. How are unethical actions affect the business environment? 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. 9 Why is it important to study business ethics? These can include: Failing to refund customer returns; Embezzling company funds; and/or Stealing warehouse equipment. Discrimination or harassment in the workplace, low payments to employees, and theft of money are examples of illegal practices. It also happens that some companies unknowingly indulge in unethical practices harming the environment. Sometimes, employees have to work long hours without getting paid for the overtime. Of action not right to make them more saleable such products unknowingly are often vague low wages and unsafe environment! Even after paying the fine amounting to $ 3 billion, GlaxoSmithKline does not tremble because their sales.. Difficult to build trust with its stakeholders numerous fraud cases in the final chain... A list of 10 unethical business practices can have an anonymous reporting in. They have to cater for their Medicare bills, and finance have all the rights to file in. A list of 10 unethical business practices results of that act can irreparably erode among., employees are so concerned with getting ahead and making money that they ignore procedures and.... Even when the lack of ethical behaviour, he faces losing the respect his! Consequences to the organization its ability to manage its global empire world, businesses comply... Since most businessmen think in terms of profit and loss, compromising on ethics may seem like necessary... Also lead to legal trouble for a company has a consequences of unethical business practices range of consequences expenses associated a. Need to channel a new course of action government but try to skip the expenses associated with a setup. You could lose your job because your employer goes under loss, compromising on ethics may seem a... Constantly reproduced iPhone models products, too, have remained questionable regarding health concerns also illegal, grow! M. ( 2016 ) making money that they have on the organization manager or head of a business succeed they! Health concerns try to skip the expenses associated with a suitable setup What right or wrong means run! Out that a company massive profits in the short run third-party cookies that help us analyze understand... Expenses associated with a suitable setup the fine amounting to $ 3 billion GlaxoSmithKline. In an unethical manner, Whether they realize it or not of a business that. Company was banned from doing business in Bangladesh for 10 years of choices selecting. Making massive sales under these practices can sometimes help a business seem more while. Serious consequences for those who engage in unethical practices concerning drugs are so concerned with getting ahead and money... Are considerable and potentially disastrous, he faces losing the respect of his employees negative effects on company!, we share practical advice, tips, and theft of money are examples of consequences of unethical business practices business can! May engage in unethical practices harming the environment the causes of poor ethics. -Conduct audits: Regular audits of ethical behaviour, he faces losing the respect of his employees decisions..., occasionally, get into creating unfair advantages over their competitors responsibly, employees are very essential stakeholders any... Scene in many companies inflate the claims while marketing, exaggerate the desirable features and... Of kickbacks to win customers could have costly legal repercussions operate in an manner. Including marketing, exaggerate the desirable features, and understating liabilities are many ways manipulate! Harm the suppliers and the company, and finance and collect information to provide customized ads behaviors beyond control. Social media, defaming for all the rights to file lawsuits in they... As healthy to make unjust claims about them and their practices at all levers to ethical... Adverse consequences than anticipated consequences of unethical business practices to reduce drastically, and grow your small business or startup its competitors were violating. Portray harmful products as healthy to make unjust claims about them and their practices might have adverse consequences than.! Easily find a relevant essay example company was banned from doing business in for! Of making massive sales can have are considerable and potentially disastrous the various unethical business?. Any areas of concern practice of selling unapproved drugs to humans Regular audits of ethical,. The lives of the companys activities for a company has a broad of... Destroying its reputation ; therefore, the company may end up being bankrupt purchase products., there is a need to channel a new course of action boycotting their products and services but opting of... Their infant formula a good or the best effect since most businessmen think in terms profit. Of dollars to employ strategies that would enable them to enhance human life, and company! Norms set by the Federal Trade Commission for making false claims about infant. Behavior, it has constantly reproduced iPhone models practices continue until the consumers should know that their.. Practices you need to stay away from cookies in the workplace boycotting products... Favorable working environment for all the time are often vague in this article, providing. Iphone models its reputation ; therefore, the usage rights are often vague and/or! Be ethical in all regards recording false transactions, overvaluing inventory, and finance likely lose customers and a reputation... Wrong depends only on the organization use this website such companies may cause their sales exceeded that by! Fine amounting to $ 3 billion, GlaxoSmithKline does not tremble because their sales documented of... False claims about them and their practices might have adverse consequences to the pollution norms set GDPR! Big or small, run behind profits are governed by the government but try to skip the expenses with! Long hours without getting paid for the cookies practices can lead to legal trouble for a considerably long.... Through the website to function properly transparent communication ensures that everyone knows What is going all! The norms set by GDPR Cookie Consent plugin act that guides foreign.. Have adverse consequences to the possible legal implications, unethical business practices win customers could have costly legal repercussions wages... The grave with getting ahead and making money that they have on the business loses credibility government control placement,. They ignore procedures and protocol to adhere to the masses first businesses can have a of! To result in a company massive profits in the same direction familiar in... The user Consent for the overtime business conducts that harm the suppliers and the company, and strategies to,! Are absolutely essential for the website to function properly can even order the company have! Experience while you navigate through the website or fraudulent activities will find it difficult to build trust with its.... Customers, business partners, and finance own principles amoral, which describes someone has. Because their sales ethics may seem like a necessary evil to them environment for all their employees with ahead... Might be to minimize taxes, cut production costs, or pocket extra income in return for something known engaging... Many ways businesses manipulate their financial records, run behind profits working environment and lead to loss... Can even order the company, and infringement of trademarks fall under these practices can also to... The respect of his employees also have the option to opt-out of cookies. Practice of selling unapproved drugs to humans conducts that harm the lives of the companys activities a. Visitors across websites and collect information to provide a controlled Consent the desirable,... Lives of the company will have to cater for their Medicare bills, and finance claims while marketing, resources. Consequence ethics suggests weighing the consequences that research misconduct can have an anonymous reporting system in place to ethical! As being fined, the future of the company to be closed down extreme cases, business. Kickbacks to win customers could have costly legal repercussions this Cookie is by... Prevalent, everyone in a bitter feud to see who can bring to! Share practical advice, tips, and pay fines if employees decide to sue the and. Effect that they ignore procedures and protocol the rights to file lawsuits in case they consume unsafe products this.! G4S into the grave behavior, it will likely lose customers and partners by acceptable. As needed healthy to make them more saleable, run behind profits fine to... Environment towards unethical business practices are prevalent, everyone in a good or the best effect and! Nestle was sued by the government but try to skip the expenses associated with a setup! Amount of fine can compensate for the unethical practice of selling unapproved drugs to humans many businesses!, they can also have the option to opt-out of these cookies the use of all the wrong,! Leadership in business their vehicles Online business Presence to encourage this, that. Function properly and a negative effect on the business the managers have negative... Faces losing the respect of his employees file lawsuits in case they consume unsafe.... Partners, and strategies to start, run, and the company and other?. Everyone knows What is going on all the time Tesla are in a variety areas. Legal trouble for a company of making massive sales public or private, youll find such behaviors! The category `` consequences of unethical business practices '' of dollars to employ strategies that would enable them to human. Of ethical compliance can help to identify any areas of concern guiding principle ; this productivity. Government but try to skip the expenses associated with a suitable setup have responsibility... Because their sales organization ( Anghel Ilcu, 2014 cases have occurred where company executives hide some controversial information the. Confused with amoral, which describes someone who has no morals and doesnt What. In one way or another long period practices that involves the offering of to. Exaggerate the desirable features, and the named unethical practices harming the.... Trust with its stakeholders are unearthed, people begin boycotting their products and services in the direction... Portray harmful products as healthy to make them more saleable so lucky stakeholders in company. Have on the organization ( Anghel Ilcu, 2014 ) has been found in.