In addition to the possible legal implications, unethical business practices can also damage a companys reputation and adversely affect its bottom line. Incentivize Ethical Behavior. They try to create a false impression of their competitors in the mind of the consumers. In many cases, an ethical dilemma arises due to money. Years later, they sued her . (2) Decreased productivity. highlighted ways and measures to prevent unethical business practices. Copyright 2023 performanceinspired.tv | Powered by Digimetriq, The definition of unethical business practices, How unethical business practices can damage a companys reputation, The financial cost of unethical business practices, The legal implications of unethical business practices, The impact of unethical business practices on employee morale, How unethical business practices can lead to a loss of customers, The social implications of unethical business practices, How unethical business practices can lead to environmental damage, The long-term effects of unethical business practices, Ways to avoid unethical business practices. What are the effects of unethical business practices? There are two main theories of business ethics, Human Resource Management and Business Ethics. Companies with a strong ethical identity tend to maintain a higher degree of stakeholder satisfaction, positively influencing the financial results of the company. The companys director agreed to pay fines amounting to $3 billion because of promoting a drug for unapproved uses, and improper marketing for other drugs (Thomas & Schmidt, 2012). Finally, unethical practices can lead to a breakdown in morale among employees, who may become disillusioned with their company and less productive as a result. A poor unethical leadership projects the image that ethics dont matter. For example, if financially reckless companies fail to follow ethical accounting guidelines, shareholders can't make informed decisions. Unethical practices are those that are morally wrong. The executive may receive merciless jail terms and finally, the company may end up becoming bankrupt because of the high costs associated with unethical business practices. A damaged reputation can take years to repair, if it can be repaired at all. A clear line between unethical and illegal business practices, however, doesnt exist. What are the consequences of unethical business practices? One of the most common consequences of unethical business practices is a decrease in employee morale. Some unethical business behaviour may include lying and changing the number of hours they have worked, making a long distance phone call on the business phones, and copying business software so they can use it at home. Whether it is a big conglomerate or a small business or even an online project, the stakes of outperforming the competition are always high. The areas overlap. There is a very high possibility of the G4S executives in such nations to be drawn into unethical practices that may further portray the companys incompetency. This, act of unethical business practices continues to capture world attention. Abhijeet Kumar is working as a freelance writer. How long is it safe to use nicotine lozenges? Behaving unethically can break your business in a way you can never recover. Its normal for airlines to overbook, considering the events of cancellation. By cooking their books and tweaking the reports, they trick everyone to their advantage. "Unethical Business Practices Essay." Furthermore, some even portray harmful products as healthy to make them more saleable. When someone is immoral, they make decisions that purposely violate a moral agreement. We use cookies on our website to give you the most relevant experience by remembering your preferences and repeat visits. For one, misconduct can irreparably erode trust among colleagues. It was so embarrassing that G4S was unable to supply enough security guards in a contract that would earn it massive profits during the 2012 Olympics. Its also not right to make unjust claims about them and their practices. 4 What are the consequences of unethical and illegal practices in a business? It has either failed or has little or no. (2022, August 1). Unethical business practices can have serious consequences for both businesses and employees. And if a company discloses confidential information or trade secrets without authorization, it could be sued for misappropriation of trade secrets or breach of contract. Anyone can be a victim. These can be conducted internally or by an external party. The workers (mostly women) were required to work excessive hours for little pay and were subjected to verbal and physical abuse if they did not meet targets. The cookie is used to store the user consent for the cookies in the category "Other. Receive Exclusive Personalised content right in your Inbox. There are many ways in which a business can be unethical, ranging from lying to customers, to exploiting employees, to engaging in bribery and corruption. In some cases, employees may be asked to participate in illegal or unethical activities as part of their job role. Glaxo agrees to pay $3 billion in fraud settlement. They offer bribes in different forms like gifts, political support, and sponsorships. How chemistry is important in our daily life? However, these terms are quite common in the commercial circles where unethical business practices can be seen by the dozen. Legal Consequences of Unethical Behavior. 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. Many businesses engage in unethical practices, such as bribery, fraud, and deception. Coca-Cola has been blamed for its unethical behavior in multiple areas. They trick consumers by making statements without accurate scientific evidence. Eventually, the unethical behavior of a business will catch up with them and they will face serious consequences. Transparency and accountability is outdated as companies are aiming at one thing; to reap maximum profits at all cost. G4S is at the risk of destroying its reputation; therefore, the future of the company is at risk. Spreading lies on social media, defaming for all the wrong reasons, and infringement of trademarks fall under these practices. A company like GlaxoSmithKline that has had some good reputation for many years can have its brand name torn down because of a single unethical incident. Unethical Business Practices Essay. In the GlaxoSmithKline case, the company promoted its unapproved antidepressants for human consumption (Thomas & Schmidt, 2012). The companies release toxics that harm the lives of the living things around their locality. This cookie is set by GDPR Cookie Consent plugin. Bribery and corruption are common in many business dealings. One of the unethical business practices some companies use is defamation. What other two military branches fall under the US Navy? Sometimes, employees have to work long hours without getting paid for the overtime. Employee relationships are affected. What many companies dont disclose is if the data is shared with third-party services. Every business must have suppliers of raw materials and customers who purchase their finished products. It further. The court can order the suspension of the companys activities for a considerably long period. The cookie is set by the GDPR Cookie Consent plugin and is used to store whether or not user has consented to the use of cookies. Further investigations indicated that the company lured the doctors by enticing them with luxury trips and spa treatments. Financial unethical practices can include insider trading or embezzlement. What are the causes of poor business ethics? Therefore, companies that are practicing deceptive and unethical sales practices should know that their practices would tore the company down in a matter of seconds. They want to keep such incidences hidden from public knowledge. However, upon investigation and publicity of the matters, the company will have its reputation destroyed. Implicit or explicit promises of preferential treatment in return for sexual favors are also considered acts of harassment. Employees are very essential stakeholders in any company because they determine the level of productivity of the company. The customers, business partners, and employers may break ties. (4) Decreased performance levels of employees. An open company culture with transparent communication ensures that everyone knows what is going on all the time. Some unethical actions are also illegal, and you could be arrested. 3 What are the effects of unethical behavior by customers to the company and other customers? In its investigations, Wal-Mart discovered that its competitors were indeed violating the corruption act that guides foreign investors. Unethical behaviour from low-level incivility to bullying and personal harassment, misrepresentation in advertising, corporate fraud and bribery seem to have become more commonplace . How Can a Business Leader Create an Environment of Transparency. -Damage to Reputation: Unethical practices can damage a companys reputation, making it harder to attract new customers and do business with other companies. Wal-mart is well-known for their unethical business practices concerning employees. 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. Some executives are even sued for creating false financial statements to deceive the investors. Consequences of unethical business practices Employee relationships are affected. 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. These cookies will be stored in your browser only with your consent. Some common ones include the desire for personal gain, the pressure to meet certain goals or targets, a lack of awareness of the consequences of their actions, and a lack of ethical values. 1 What are the effects of unethical business practices? 6 What are the potential risks to a company of unethical behaviors by employees what are potential risks to the public and to stakeholders? They have to ensure that the employees salaries are disbursed at the right time. You also have the option to opt-out of these cookies. You will love reading: How Small Businesses Can Leverage LinkedIn (Infographic), Why Listening To Customers Is Important (And How To Do It), Your email address will not be published. These cookies help provide information on metrics the number of visitors, bounce rate, traffic source, etc. It even designed screws similar to the ones in iPhone devices. These cookies will be stored in your browser only with your consent. Companies that practice unethical business conducts that harm the suppliers and the consumers should know that their practices might have adverse consequences than anticipated. In some cases, the individuals involved in the unethical behavior may even be criminally prosecuted. Unethical business practices are any type of business activity that violates moral and/or legal principles. 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. Essentially, the relationship between the company, its suppliers, and its customers ought to have mutual benefits. For creating false financial statements to deceive the investors their job role companies fail to ethical... Making statements without accurate scientific evidence disclose is if the data is shared with third-party services at. Have the option to opt-out of these cookies will be stored in your browser with... 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