Salam Mesra Dari Nina Syakina
What is Business Ethics?
Why Business Ethics is Considered Oxymoron?
What is Corporate Governance?
Before we know more about what is business ethics, firstly we must understand what is business all about.
Business is an economic activity, a transaction where an offer is made by a seller and the offer is accepted by a buyer for a consideration with the hidden agenda of a gain or profit. Many businesses have gained a bad reputation just by being in business. To some people, businesses are interested in making money, and that is the bottom line. It could be called capitalism in its purest form. Making money is not wrong in itself. It is the manner in which some businesses conduct themselves that brings up the question of ethical behavior.
Business ethics is the study of business situations, activities, and decisions where issues of right and wrong are addressed. Business ethics are moral principles that guide the way a business behaves. The same principles that determine an individual”s actions also apply to business. Acting in an ethical way involves distinguishing between right and wrong and then making the right choice. It is relatively easy to identify unethical business practices. Besides, business ethics is also known as the behavior that a business adheres to in its daily dealings with the world. The ethics of a particular business can be diverse. They apply not only to how the business interacts with the world at large, but also to their one-on-one dealings with a single customer.
Good business ethics should be a part of every business.
There are many factors to consider. When a company does business with another that is considered unethical, does this make the first company unethical by association? Some people would say yes, the first business has a responsibility and it is now a link in the chain of unethical businesses. Many global businesses, including most of the major brands that the public use, can be seen not to think too highly of good business ethics.
However, it is not always easy to create similar hard-and-fast definitions of good ethical practice. A company must make a competitive return for its shareholders and treat its employees fairly. A company also has wider responsibilities. It should minimize any harm to the environment and work in ways that do not damage the communities in which it operates. This is known as corporate social responsibility.
Why Business Ethics is Considered Oxymoron?
People often joke that business ethics is a contradiction in terms. What they are referring to is the apparently inherent conflict between morality and the pursuit of profit. The implication is that if a company has to choose between profits and doing the right thing, profits will always win.
If business is about making a profit, can we really do so while still acting ethically?
The answer is DEPENDS!
Most of businesses in the world can and do act ethically. They do so because good ethical behavior is the best long-term strategy for a company. That's not to say that ethical behavior always pays off financially or that unethical behavior is always punished. Actually, doing the right thing can sometimes be quite costly for a business, and doing something unethical may pay off, at least in the short term. What we mean by the best long-term strategy is that for the most part and over the long run, acting ethically can give a company a significant competitive advantage over companies that do not act ethically.
In fact, several studies have looked for a correlation between good ethics and good corporate performance. There are plenty of examples out there of consistently profitable companies that also have a longstanding history of ethical conduct such as The Body Shop, Coach, Bonia (one of my favourite brand, kikiki) and others. Other studies have looked at how socially responsible firms perform on the stock market, and have concluded that ethical companies probably provide higher returns than other companies. It is true that some studies show no real correlation between ethical behavior and corporate profits. But we do know that no study's been able to prove a negative correlation between ethics and profitable operations.
Though, there are other more basic ways in which ethical conduct figures in a business's long-term strategy. Business, which is like a human life is a cooperative activity. Its very existence requires some minimum ethical standards. No business, just like no community, can survive if its members begin to believe that it's OK to lie to one another, to steal from each other, or to go back on promises. This kind of unrestrained self-interest results in a breakdown of society. Without minimum ethical standards in place in a society, its business activities will also collapse. If you don't believe that, just look at the long term breakdown of business activity in war-torn areas like Palestine, Iraq and Afghanistan a result of political uncertainty and distrust, civil unrest, and ultimately rioting.
Next, remember that businesses act rationally when seeking profits. That rational self-interest might actually dictate acting unethically when there's something to be gained. Doing the right thing is almost always costly, at least in the short term. But because business involves reputation and relationships, unethical behavior usually backfires in the long term. If a business takes advantage of its employees, its customers, or its suppliers, these groups and maybe even others will often find a way to retaliate by refusing to work for or buy from the company. Over time, unethical behavior can undermine good relationships with all of the stakeholders of a business: employees, creditors, customers, suppliers, shareholders, and even the community in which the firm is located. Ultimately, unethical behavior tarnishes a business's reputation. Particularly with the advent of the Internet, more information than ever is available about corporate conduct, both good and bad. Because most people prefer justice and fairness, they are more likely to want to do business with a company that does good than one that does not. In the end it is unethical behavior that becomes costly, and conversely ethical behavior creates its own competitive advantage.
No, "business ethics" is not an oxymoron!
What is Corporate Governance?
Corporate governance involves regulatory and market mechanisms, and the roles and relationships between a company’s management, its board, its shareholders and other stakeholders, and the goals for which the corporation is governed. The system of rules, practices and processes by which a company is directed and controlled. Corporate governance essentially involves balancing the interests of the many stakeholders in a company - these include its shareholders, management, customers, suppliers, financiers, government and the community.
Corporate governance also provides the framework for attaining a company's objectives, it encompasses practically every sphere of management, from action plans and internal controls to performance measurement and corporate disclosure.The framework of rules and practices by which a board of directors ensures accountability, fairness, and transparency in a company's relationship with its all stakeholders. The corporate governance framework consists of explicit and implicit contracts between the company and the stakeholders for distribution of responsibilities, rights, and rewards, procedures for reconciling the sometimes conflicting interests of stakeholders in accordance with their duties, privileges, and roles, and procedures for proper supervision, control, and information-flows to serve as a system of checks balances.
Feel free to view my business online page HERE.
::nina says::This entry is specially made for my Business Ethics and Corporate Governance subject lecturer,
Pak Din aka Abah
visit his page here.