To a large extent, I agree with this statement. Many companies’ owners claimed that the success of business depend on its profitability. However, many multinational companies embed business ethic into their operations. The truth is a business that makes nothing but money is a poor kind of business, since it may lead to bad reputation of the company, violation of law and poor employee performance.
Good reputation is vital for companies, since customers and investors ought to purchase goods and do business with well-known companies. Having a bad reputation is more than notorious image, but also sales loss, or even a big chunks off its share price. For instance: Exxon’s share price plunged 20% after the Exxon Valdez oil spill incident. In addition, after the scandal of Hoi Tin Tong selling mouldy jelly with almost no turtle shell is revealed;citizens criticized the management of the company as well as claimed for refund, both of which result in stock prices decrease and sales loss. A variety of laws were instituted by government for how companies should be run.
Companies which violate laws often face large fines and other penalties. E.g.:" McDonald's legislation" A typical case of influencing the lawmakers to enact legislation in order to serve their own selfish and harm society. In 1972, the company founder, Ray Kroc, made a rare donation of 250,000 in exchange for the legislation of paying teenager employee 20% less than federal minimum wages. Later, it was classified as McDonald’s most disastrous cases of bad business ethics.
Moreover, the crisis of Mattel manufacturing hazardous dolls which contained 180 times than the legal limit of lead content. Mattel have to recall it and face legal battles due to its unethical business action. These two show that companies which decide to apply unethical business actions eventually result in loss of profit.
Not only do poor business ethic post harm to the companies itself, but also affect employee performance, which in turn affect the productivity of the company. Take Foxconn as an example:during 2010, there were 18 employees committed suicide. Several reports from inside Foxconn stated that Foxconn adopted a “military” fashion that cause lots of pressure to employee. As a result, a total number of 24000 people, around five percent of its workers quit every month. Such loss in man power will affect the operation of the company undoubtedly. As a consequence, total sales number will decrease too.
Not everyone agrees that ethic is a relevant subject for business; one of the most popular myths argued that business practices basically are amoral, but not immoral, since commercial activity mainly adopt market-orientated policy. However, them fail to notice that business is a human activity which require ethical judgment. The reason why we should emphasize business ethic is that we are required to adopt the moral attitude in our daily life and business is no exception.
It is an outmoded view to say that business ethic is merely a buzzword. In fact, ignoring business ethic often lead to serious managing problems, including:bad reputation of the company, violation of law and poor employee performance, all of which affect the sales numbers directly. A good business should serve the role of profit maker and one of the stakeholder in society which help altering some social problems.
1.Scandal-hit herbal chain Hoi Tin Tong may scale back business http://www.scmp.com/news/hong-kong/article/1331666/scandal-hit-herbal-chain-hoi-tin-tong-may-scale-back-businessﾧ
2.Why a good corporate reputation is important to your organization http://www.cuttingedgepr.com/articles/corprep_important.aspﾧ
3.Real-World Examples of Bad Business Ethics http://www.brighthub.com/office/entrepreneurs/articles/115557.aspxﾧ
4.Effects of a Lack of Ethics on a Business Environment http://smallbusiness.chron.com/effects-lack-ethics-business-environment-23332.htmlﾧ