Give reasons that a business should be run ethically. Explain the rationale behind each reason.

Ethical behavior can bring significant benefits to the business. Reputation is one of the most important
assets of the business and it is very difficult to achieve and rebuild. A business that sets out to work within
the ethical guideline has less chance of being fine of poor behavior. Business which is not following any
ethical code leads to wider consequences and it may damage the image of the organization in the long
run.
We can find number of reasons of being ethical in the business. Followings is some reasons that a
business should be run ethically:
o

Ethics towards employee: Ethic gives credibility and respect to the employees. Employees
want to stay with a business and it may reduce staff turnover. If the business runs in the ethical
code, employee may follow the footsteps. Employee takes better decision in less time when
business ethics are guiding principle. It increases productivity and morale of the people. Also
employees inclined to stay loyal towards the organization
Ethics toward customer: Customer credibility increased double towards the business that
follows ethical code. They buy product & service and want to associate with ethical business
because they know to source their materials and labor in an ethical and responsible way.
Business need to ethically examine how well they are meeting ethical expectation of the
customer.
Ethics towards investor: An ethical operation of a business is directly related to the
profitability. If a company's status is less than ideal based on the perception that it does not
operate ethically, investors are less inclined to purchase stock or otherwise support its
operations. Investors gives quantitative value but more of that they study qualitative value of
the business- the public image of the business all of these things are taken into account before
investments.
Ethics towards society: A well-thriving and flourishing company may come across it fitting to
pay back to the society, because it is the society that permit it to exist within its midst by
demeaning its products and services. Business social responsibility is about caring for the
workers, giving back to the community, and being financially, environmentally, and socially
responsible. According to the Forbes magazine more data has been released supporting the
fact that the consumer is willing to buy a product form the average company than socially
responsible company. Business exist in the society using the social resources it is their moral
to give back to the society
Ethics towards Country: Nobody is in better position to create long term sustainability change
than business. The ethical responsibilities concern societal expectations that go beyond the
law, such as expectations to conduct organization's operation in a fair way. This means that
organizations are expected to do more than just meet the terms with the law, but also make
positive efforts to foresee and meet the norm of humanity even if those norms are not officially
enacted in law. Lastly, the discretionary responsibilities of corporations pass on to society's
anticipation that organizations be good citizens

References:

www.quora.com
Haward Business Review
Forbes
Scholarly Article
udemy.com

Despite running a business ethically is an intrinsic act in itself, the reasons for a
business to run ethically are classified in terms of perspective of various entities
associated with the businessBusiness Perspective
o Meet stakeholders expectations: Stakeholders expect the business to run
ethically and with social acceptance
o Competitive Immunity: Ethical businesses have higher chance of sustainability
in the competitive business environment.
o Employee retention and low employee turnover: Employees are less likely to
leave the companies that value the ethics.
Investors Perspective
o Businesses running ethically build up confidence among its investors.
o Its a matter of pride for the investors to be associated with the ethical
companies.
Consumer Perspective
o Loyalty: consumers are loyal to the products/services of ethical companies.
o Acceptance: Ethical business are well accepted in the public and society.
o Support: Businesses running ethically receive public support
Employee Perspective
o Performance: People working for ethical companies are likely to have higher
performance rate.
o Pride: Its a matter of pride to work for companies that are ethically sound.

A business should be able to earn a good reputation to sustain the society and for that it should run
ethically. The reasons why a business should be run ethically are as follows:1. Employees working for an ethical business feel good about themselves and become proud to be
associated with the business. Thereby increasing the productivity at work.
2. An ethical business hardly faces litigation, police charges, court cases or indictment. Hence it could run
its operation smoothly.
3. Being a good business is intrinsic in itself.
4. There is ethical consumerism, where people buy or hire services from companies which are ethical. For
example, there are products which claims "no testing on animals" or "no child labor used".
5. Investors invest in an ethical company as they have confidence in its performance and longevity.
Hence, in order to sustain the business for a longer period of time, a business should always run ethically.

Ethics means study of morality. Basically it means being right or wrong in a moral sense. So when we talk
about the business ethics, they are the moral principles that guides the way a business behaves.
Some years back, the business enterprises were more focused on doing business, earning profit on legal
way. They were concerned only on doing business legally but now the concept has been changed and
entrepreneurs have realized that that business not only limit up to doing legally but they have something
to do with ethics as well. So we can say that doing business legally doesnt mean they are ethical too.
The following are the some of the reasons for a business to run ethically:
o

o
o

Doing business ethically can be a powerful tool for achieving the best results in the sense that
the entrepreneurs are more committed or inclined to achieve the best consequences in the
positive way and ethics can be manipulative factor for doing so.
Ethical business practices help to take good business decisions. Once business operates a
code of ethics, the entrepreneurs and employees will make decisions being limited to this
framework.
Business ethics build trust in the business among business associates and suppliers. It helps
to maintain good and strong relationship between the suppliers and customers.
Business are the integral part of the society; business are directly or indirectly associated with
the society. So operating the business in ethical manner helps to enhance the brand image
which in turn help businesses to survive in long run as well.

Reasons for business should run ethically

1. Legal advantage

The ethical company will easily cross the legal barriers.

1. Government Support
Government will always support the ethical companies.
1. Customer Support
The ethical companies will always have customer support and the customers are loyal to the company.
1. Investor Confidence
Investors are always confidence on investing in the ethical companies.
1. Motivation
Staffs are always motivated to do the task in such organization.
1. Performance
The ethical company performance is always the better.

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Customers,

in fact everyone loves doing business with ethical company. Your customers,
suppliers, partners even your competitors would like and opt to do business with you if you have
a ethical company. It doesn't take extra cost or money to be ethical, you just have to be ethical
and follow the principle from inception. Being ethical doesn't mean you will add extra cost to
your product, services or to your operation. If the company is ethical and build with ethical
values, it is highly like that all the employees will adopt the culture. They will think twice before
taking unethical actions or decisions.
It is very important to gain the trust and establish the company as ethical company. Once the
company image is set as ethical in the market, it will always have superlative
advantage. There are always external factors in business. If there are instances, events where
others try try to defame your company, publish wrong information or accuses you of false
information, being ethical helps in these crucial times. Even if the accusation is big or widely
spread, it is highly likely that your customers,suppliers will not believe the false information and
will remain loyal. Your business will remain intact. I think the trust factor is the biggest
advantage and you can build and retain this being ethical.
Besides this, running business ethically will help you operate in healthy state of mind where you
do not have to worry about false doing or going to prison. And most importantly, good is good in
itself and hence running business ethically is always good.
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Rules cannot address every human activities. They are just intended to bring the people to right path if
they are following the wrong one by defining right and wrong. Its not possible to define right and wrong in
all prospects. Ethics, on the other hand, talks about the morality- and ethical responsibilities come as the
virtue of good human behavior, rationality and thoughtfulness.
o

LEGAL but NOT ETHICAL

o Lying is often legal but unethical.
o Connecting sewage pipe to a Bagmati except some sections of it is not illegal, but is
not ethically right.
o Carbon trading and Polluters pay principle is legally right but ethically worng.
o Seeing someone starve to death when you have more than enough food for yourself
could be legal but not ethical
o Finance manager sharing the employee pay scale with other employees is not often
illegal in a company, but is not ethical
o Employee evaluation based on the personal relation could be legal but not ethical
o ETHICAL but ILLEGAL
o Euthanasia
o Selling the medicine to emergency patient without proper prescription
could be ethical but not legal
o Hundi means of transfer

For business environment the law provides an important lead for efficient decision making. Legal standard
and ethical standard are not alike nor do they have the same opinion. Sometimes we need to cross the
limitations of laws and make ethical decision i.e. it may be illegal and ethical. Being human we dont only
follow the instructions or rules we need to work through our sixth sense as well. In case of Natural disaster
and any other accidental case I found reporters first clicking the pictures and then only helping them get
out of the place. Its their first duty as being a reporter but it is unethical being human.
Legal but unethical
Gambling is something that is legal but unethical. Government provides license to the casino owners. It is
unethical because people will be used to it and find a way to earn money easily. But at the same time

other one is losing which makes the whole family suffer. Laws are different in different country. Nepal does
not allow its citizen to enter the casino but other country like U.S.A allows.
Illegal but Ethical
Whistle blower is a person who exposes any kind of information or activity of the company that is deemed
illegal: violation of company policy/rules. But it is ethical if an employee convey the tax cheating
information or wrong doing of the company to the government bodies and media.

Legal rules might be insufficient for fulfilling ethical responsibilities

At one point of time, carpet industry was booming in Nepal. The industry was generating
employment, making money, earning foreign exchange resulting in good social welfare of the
country. However, one of the major employees of the industry were child labors. The industry
were providing work to underage children which was not ethically right. Children of growing
age who were meant to go school, learn, laugh and enjoy their childhood were working in these
Why might legal rules be insufficient for fulfilling one's ethical responsibilities? Can you think of cases in
which the business person has done something legally right, but ethically wrong? What about the
opposite--are there situations in which a business person might have acted in a way that was legally
wrong but ethically right?

Even if you never broke the laws, you cannot claim that you lived your best of your life because life should
not be solely me & I. To be a part of civilization and act as a human means to go beyond what the law
demands of us. It means to live according to ethical rules and principles, many of which ask more of us
than the law does. Ethically value and legal principle is closely related but law & ethics are far from co
extensive. Legal norms & ethical norms are not the same nor do they always agree. Law guides to take
ethical decision & often personifies ethical principle. For a long time business executives and managers
have assumption that their conduct is morally acceptable if it is within the law. This means they can do
any wrong thing staying within the law.
A Business which runs after legally right can end up with gaping holes in its responsibilities towards
stockholder, employees, society, consumer, investor etc. The business may achieve short term benefits in
terms of profitability but in the long run it will harm stakeholder support. We can take the example
of Gudpak Bhandar of New Road.
Can you think of cases in which the business person has done something legally right, but
ethically wrong?
o

Before the credit card act 2009 banks could tempt teen agers to open the credit card with full
promises of financial freedom not considering the teen's ability to pay high interest debt.
Moreover even they didn't have full time job to qualify for a credit card. Opening credit card

account is legal however it is not ethical to misguide to open the account. Another important
issue is bank is investing public property in the wrong place.
o As an investment advisor you have two options to recommend to your Clients. Let's say
investment A and investment B. Both of these are suitable for the clients nevertheless
investment A will pay you more in terms of commission than another one. It is perfectly legal to
recommend Investment A because it is suitable for clients but looking to another prospective it
is your best interest to recommend it which is not ethical.
Are there situations in which a business person might have acted in a way that was legally wrong
but ethically right?
We can take a example of a book publisher who might engage in ethical but illegal demeanor by
publishing a book exposing secrets of government, if the author was employee of government. This
violated secrecy laws for ethical reasons.
References:
I.

Universal class, your legal & ethical responsibilities as a manager

II.
http://www.npr.org/2012/05/01/151764534/psychology-of-fraud-why-good-people-dobad-things
III.

http://www.shsu.edu/klett/Business%20Ethics

IV.

https://ethicsalarms.com/ ,Ethics Alarm

carpet industry. This is the case of legally right and ethically wrong. Though, the industry were
legally right as they were paying the employees, there were unethical in using child labor.
Many pharmacy shops provides medicine without prescription in Kathmandu valley. There are
cases where the customer/patient do not have time or money to visit the doctor during illness.
Pharmacist providing medicine is illegal but ethical as they are helping the person. We can
debate on the effectiveness and medical knowledge of pharmacy but there are many such cases in
our society.
Another example would be exploitation of employees by companies. Companies make
employees work for long hours, more than office hours for profitability. This is illegal as law do
not allow this whereas business wise ethical as it is working for company progress and
compensating employees with extra pay for additional work time.

Therefore, a business manager cannot make the right decisions without the understanding the concept of
ethics and its importance. Moreover business ethics is the emerging concept which is carried out in real
world which eventually benefit business and society as well.

Use the value chain and competitive forces models to evaluate the impact of the Internet on book
publishers and book retail stores and answer ; Is there anything book retail and the book publishers
should be doing to stimulate more business? Please support your answer using 5 force and value
chain. Limit your answer to maximum 2 paragraphs