The Domino Effect:
Unraveling the Consequences of Unethical Business Practices
Ethics is concerned with person’s moral
judgment about what is right or wrong. Decisions made in a company, either by
an individual or a group of individuals should be guided by the culture of the
company. Organizations should develop a culture of moral decision making even
though it might mean rejecting the route that will lead the group to massive
profits over short periods of time. Enormous consequences can befall a company
when it acts in an ethically questionable manner.
The reputation of a company is one of
the most significant assets. Many great companies have had their reputations
ruined due to shady business practices. McDonald has been a victim of using
shady business practices. While is it a global success story, it has received
backlash due to its perceived bad ethics in relations to its stakeholders and
employees. In 1972, the founder donated
to a campaign for a chance to pay teenage employees 20% less than the federal
minimum wage bills (Shabecof, 1972). While the aim was to maximize their
profits, this move rubbed the customers the wrong way and led to the loss of
valuable patronage.
Decreased number of consumer, in turn,
reduces the earnings of the organization. Customers are the most valuable
segment of any industry, and unethical dealing can lead to a decrease in the
number of consumers. Once Customers are dissatisfied with the products of the
company, they become reluctant to purchase some of these products. Public
perception of a company drives sales and profits, and hence the company loses
its holding against other companies in the same space.
In extreme misconducts, a legal case is
opened towards the company and charges, imprisonments and fines are enacted on
the executives or employees. This further tarnished the name of the
organization. There is also the loss of the financial feel for corporate
misconducts are usually quite large. In the state of Minnesota, CenturyLink, a
giant telecommunication company is facing legal battles filed by consumers due
to overbilling (Snider, 2017).
Fewer investors are willing to put money
into an organization that acts in an ethically questionable manner. A company
with a tainted reputation will have a lower stock price if it is publically
traded firm, as fewer people are willing to invest in such a company. Investors
have a piece of mind when they know their money is being used according to
their moral standing.
All these effects lead to a chain
reaction that causes a significant loss of value.
For Customers: they are the most
affected in case of unethical dealings. In healthcare, it can lead to death or
injury. In itself, it can lead to dissatisfaction of the customer and hence
decreased purchases. This is a severe drain on the companies bottom-line
leading to drop in profits, increased scrutiny, due to increased cynicism, on
products and hence lower sales. Customers are happier to make purchases of
products that they know have been sources ethically and responsibly. When a coffee company states that they pick
their beans from the suitable plant with no deforestation and pay their labors
good wages, this becomes a selling point for the final product.
Companies that have a moral standing are
less likely to be caught up with such issues and hence can maintain their
reputations which trickle down to more customers and therefore more revenue for
the organization.
Works
Cited
Shabecof, Phillip. "THE 1972 CAMPAIGN." The
New York Times 13 October 1972.
Snider, Mike. "CenturyLink faces new fraud suit from
over-billing charges." US Today 12 July 2017.
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