Ethics in Business
In an era where money is the driving force behind decision making, it can be hard for companies to make ethical decisions and thus the problem of bad ethics in business can arise. Although at times it can be difficult to comprehend the importance of companies conducting business ethically, the absence of ethics within a company can lead to a whole host of issues. Bad ethical practices can vary from those that break the law to those that break the relationship between a company and its customers. While the latter might not seem as detrimental, ultimately any bad ethical practices will result in the failure of a company. One of the biggest and most harmful effects when bad ethics are conducted by a company is a decrease in their customers’ loyalty. It is essential for a business to have a loyal customer base in order to be successful with a high profit margin. A loyal customer base leads to increased profits with lower costs as it is often cheaper to sell to recurrent customers than it is establish and thus sell to new ones.(SAYLOR REFERENCE) Therefore when the discovery of bad ethical practices by companies is acknowledged by its’ loyal customers, companies will immediately start to feel the strain as they lose them. Companies can lose their loyal customers due to bad ethical practices such as poor customer service. The extent of poor customer service can vary from the treatment of a single customer complaint, to the failure to address multiple complaints. The knock on effect of one instance of poor customer service such as refusing to replace a broken product can therefore have the same result as the refusal to order a total product recall for example. Whilst the bad ethical practice of poor customer service conducted by some companies does not break the law, other bad ethic practices such as the production of faulty products in the first place, can. If it is proven that a company has intentionally produced poor quality or malfunctioning products,
References: http://www.saylor.org/site/wp-content/uploads/2013/09/Saylor.orgs-Ethics-and-Business-Success.pdf (page 5 only) http://www.businessinsider.com/how-nike-solved-its-sweatshop-problem-2013-5?IR=T (the part under 1998)