Sometimes, the cause might be an individual act, and at other times, the entire company culture is responsible. In some cases, employees are so concerned with getting ahead and making money that they ignore procedures and protocol. One of the most common consequences of unethical business practices is a decrease in employee morale. However, there are those business people who opt to employ unfair and unethical business practices that result into unfair competitive practices. The consequences of such scandals can be far-reaching and long-lasting. With globalization, companies are trying their best to reap maximum profits and outweigh their competitors profits at the expense of the global economy. It makes a business seem more profitable while hurting the investors and end consumers. 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. -Misrepresentation: providing false or misleading information in order to manipulate someones opinion or decision As the name suggests, this is a method that they rely on in order to pretty much cover their competitors in dirt. Consequence ethics suggests weighing the consequences of choices and selecting actions likely to result in a good or the best effect. They outline vague and dubious agreements to exploit users. Moreover, the affected individuals would be junior employees of the company who may suffer from lifestyle diseases. highlighted ways and measures to prevent unethical business practices. Unethical behaviour has serious consequences for both individuals and organizations. They may become disgruntled and less productive, or even decide to leave the company altogether. Receive Exclusive Personalised content right in your Inbox. In the contemporary world, businesses that comply with the rightful ethical conducts are decreasing drastically. This cookie is set by GDPR Cookie Consent plugin. It isnt limited to only money. However, some managers take advantage of defenseless employees to exploit them in one way or another. This is exemplified by Mattel, of Barbie doll fame. 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. As discussed, some vulnerable employees suffer in silence, and it is upon the business managers to ensure that they treat all their employees equally. G4S: The inside story. However, personal, excessive and rapacious desire has led. This sad incidence clearly indicates that the greedy executives of such companies care less about those individuals and other living things that are affected in one way or another. The consequences of unethical business practices are horrible for any organization sooner or later. Such exploitation is widespread. Thomas Edison and Nikola Tesla are in a bitter feud to see who can bring electricity to the masses first. The companys partners, customers, and all other stakeholders will feel intimidated to be associated with a company that does not value the environment. Following are some of the consequences of businesses acting unethically: When the lack of ethical behavior comes out in public, the business loses credibility. Many companies also buy email databases and bombard the recipients with promotional messages. Big or small, public or private, youll find such unethical behaviors in all organizations. August 1, 2022. https://ivypanda.com/essays/unethical-business-practices-and-their-effects-term-paper/. 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. 8 How are unethical actions affect the business environment? Unethical behaviour has serious consequences for both individuals and organizations. Implicit or explicit promises of preferential treatment in return for sexual favors are also considered acts of harassment. Why is it important to study business ethics? . The New York Times. This cookie is set by GDPR Cookie Consent plugin. The cookies is used to store the user consent for the cookies in the category "Necessary". If unethical business practices are prevalent, everyone in a business environment is at risk. Consequences of unethical business practices. Greed to amass excessive profit. Secondly, unethical practices can damage a companys reputation, making it harder to attract customers, partners and investors. By cooking their books and tweaking the reports, they trick everyone to their advantage. Wal-mart is well-known for their unethical business practices concerning employees. -Fraud: deception or misrepresentation with the intent to gain an unfair advantage Incentivize Ethical Behavior. 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. In severe cases of unethical misconduct, it can lead to severe legal issues that result in loss of time, large fines, and other penalties with possible jail time. What other two military branches fall under the US Navy? Which is the most unethical business practice in the world? The customers, business partners, and employers may break ties. Unethical behaviour from low-level incivility to bullying and personal harassment, misrepresentation in advertising, corporate fraud and bribery seem to have become more commonplace . This paper will give a stringent analysis of the various unethical business practices and the effect that they have on the organization. The multinational company invested heavily to investigate and determine the extent to which its competitors adhere to the anti-bribery law. From mirroring its form factor to camera placement style, it has constantly reproduced iPhone models. Companies with a strong ethical identity tend to maintain a higher degree of stakeholder satisfaction, positively influencing the financial results of the company. For example, workers at Foxconn (a supplier for Apple) have been found to be working in conditions that are akin to slavery according Amnesty International. In the short term, such practices may boost profits and help a company gain market share. Thus, businesses slip into undesirable and complex conditions, which they can tap later to their advantage. Your email address will not be published. Hill, A. What are some of the consequences of the use of unethical accounting practices? Liked this article? Increases the Number of Legal Issues Essentially, there are numerous fraud cases in the management of the company, and those practices are driving G4S into the grave. 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. In case the company faces strict regulations in the country of production, the unsafe products are shipped into third world nations. What are the consequences of unethical leadership in business? False advertising is the most prevalent unethical practice. This is IvyPanda's free database of academic paper samples. The companies release toxics that harm the lives of the living things around their locality. Companies would spend millions of dollars to employ strategies that would enable them to enhance their sales. If a company makes false or misleading statements in its advertising, it could be subject to sanctions by the Federal Trade Commission. business environment and other business organizations. Once an unethical accountant is caught and tried, he or she will be punished. In fact, junior employees have a tendency of alleging to their supervisors in every aspect. This can create a hostile working environment and lead to stress and anxiety among staff. This cookie is set by GDPR Cookie Consent plugin. Employees incorporate the ethics of top-level managers of the organization. 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 set of rules and guidelines are the acceptable norms with which all business entities are to carry out their businesses. Deception, collusions, swindling sounds like the plot of a best-selling novel. 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. They can no longer trust anyone in their workplace, thus affecting their daily operations. Many businesses practice such questionable ethics with their investors too. The executives of the company have turned up to be violent towards their junior employees. While these cases vary, they are all examples of unethical workplace behaviour. Customers feel betrayed. The cookies is used to store the user consent for the cookies in the category "Necessary". Clifford, S. & Barstow, D. (2012). 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). Unethical business practices that involves the offering of kickbacks to win customers could have costly legal repercussions. 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. The unfair competitive practices would only earn a company massive profits in the short run. In 2013, it was revealed that Walmart had been using forced labor at its suppliers factories in China. In extreme cases, it can even result in physical violence. Explain the differences in the two numbers of mRNA codons and amino acids in the, A company is doing an ad campaign where the details of the ad are presented below. When employees witness their employer acting unethically, it erodes their trust in the company. Illegal business practices are ones against the law. Coca-Cola has been blamed for its unethical behavior in multiple areas. Lack of accountability may result in your boss thinking you have an "I don't care attitude" to the company's project or worst take you as a liar and may lead to job loss in the long run. This website uses cookies to improve your experience while you navigate through the website. He loves writing on travel and marketing. With regard to the mentioned allegations, there is a high possibility that the competitor company evades many other compliance payments to the government though bribery. The unethical business practice clearly indicated that the executives of the company were extremely selfish. Unethical business practices as those practiced with Wal-Marts competitors will result into bad publicity, and the company may never win the publicity trust in the future even though it struggles to employ ethical conducts. Ethical issues can arise in a variety of areas, including marketing, human resources, and finance. 7 What are the effects of ethics in business? A poor unethical leadership projects the image that ethics dont matter. Hence, there is a need to channel a new course of action. There are a number of ways to avoid unethical business practices: -Educate employees: Employees should be aware of the companys ethical standards and expected to comply with them. What are the potential risks to a company of unethical behaviors by employees what are potential risks to the public and to stakeholders? They collect it to understand customers preferences, personalize the experience and have relevant communications. In some cases, unethical business practices can lead to criminal charges. "Unethical Business Practices Essay." A documented code of conduct specifies the type of conduct and behavior expected in the workplace. Functional cookies help to perform certain functionalities like sharing the content of the website on social media platforms, collect feedbacks, and other third-party features. Eventually, the unethical behavior of a business will catch up with them and they will face serious consequences. professional specifically for you? Defamation. How long is it safe to use nicotine lozenges? Companies that practice unethical business conducts that harm the suppliers and the consumers should know that their practices might have adverse consequences than anticipated. Employees make better decisions in less time with business ethics as a guiding principle; this increases productivity and overall employee morale. Nestle was sued by the Federal Trade Commission for making false claims about their infant formula. Such a poor work environment would lead to a drop in productivity, lowered morale and employee attrition, which would lead to the downfall of the company. 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. Therefore, company executives are obliged to ensure that the company pays taxes exclusively. IvyPanda, 1 Aug. 2022, ivypanda.com/essays/unethical-business-practices-and-their-effects-term-paper/. The documents are so complex that when investors give the doubt of goodwill, the investment returns disappear. 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