Ethical Issues In Business Functional Areas that relevant to business springs in various dimension. In business, we have a number of categories of participants and functional areas that are relevant to them, which include owners, employees, customers, management, marketing and sales, accounting and finance, and public relations.
Each of these category of participants and functional areas have some ethical issues peculiar to them. That is what we intend to discuss in this page.
One of the ethical issues in business functional areas is honesty. Honesty involves telling the truth, being transparent in business dealings, and maintaining accurate records. When businesses are honest with their customers, employees, and other stakeholders, they build trust and credibility, which can lead to increased loyalty and long-term success. Another important principle of business ethics is fairness. Fairness involves treating all stakeholders fairly and equitably, without discrimination or favouritism. This includes treating employees fairly in terms of pay, benefits, and working conditions, and ensuring that customers are not exploited or misled
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What Is Business Ethics?
Business ethics refers to the principles, values, and standards that guide behavior in the world of business. It involves applying moral principles to business situations and decision-making to ensure that companies act responsibly, fairly, and with integrity.
Business ethics, also called corporate ethics, is a form of applied ethics or professional ethics that examines the ethical and moral principles and problems that arise in a business environment. It can also be defined as the written and unwritten codes of principles and values, determined by an organization’s culture, that govern decisions and actions within that organization.
It applies to all aspects of business conduct on behalf of both individuals and the entire company. In the most basic terms, a definition for business ethics boils down to knowing the difference between right and wrong and choosing to do what is right.
Business ethics refer to the principles and values that guide the behaviour of individuals and organizations in the business world. These principles include honesty, fairness, responsibility, and respect for the rights of others. Ethics play a critical role in the success and sustainability of any business. Business ethics are essential in building trust with stakeholders, including customers, employees, investors, and the community. When a business operates with integrity and transparency, it fosters a culture of trust that can lead to increased customer loyalty, employee engagement, and investor confidence.
Purpose of Business Ethics
Business ethics are also critical for long-term sustainability and success. A business that prioritizes ethical behaviour is more likely to attract and retain customers, employees, and investors who share those values. In addition, ethical practices can help a company avoid legal and financial risks, such as lawsuits or fines for non-compliance with regulations. By adhering to ethical standards, a company can build a solid foundation for long-term success.
Business ethics also include social responsibility, which refers to a company’s obligation to contribute to society in a positive way. This can involve initiatives to reduce environmental impact, promote diversity and inclusion, or support charitable causes. By embracing social responsibility, a company can build a positive reputation and enhance its brand value. The purpose of business ethics include:
1. To promote fairness and honesty in business dealings
Ethical businesses avoid false advertising or misleading claims. Example: A company honestly discloses product quality, pricing, or risks instead of hiding defects. This ensures customers make fair, informed decisions.
Business ethics promotes fairness and honesty by ensuring truthfulness, transparency, equal treatment, accountability, and respect for rights in all business dealings. It makes sure companies succeed not by cheating or exploiting, but by earning genuine trust and loyalty.
2. To build trust with customers, employees, and stakeholders
Business ethics builds trust with customers, employees, and stakeholders because it shows that the company values honesty, responsibility, and fairness over quick gains.
Business ethics builds trust by ensuring honesty, fairness, respect, transparency, and accountability in all dealings. When people believe a company will “do the right thing,” they are more likely to buy from it, work for it, or invest in it.
3. To ensure compliance with laws and regulations
Ensuring compliance with laws and regulations is one of the key pillars of business ethics. It means businesses don’t just chase profit—they operate within legal frameworks and uphold moral responsibilities.
Business ethics ensures compliance by educating employees, setting ethical guidelines, monitoring activities, protecting whistleblowers, and holding leaders accountable. It goes beyond just obeying the law it builds a culture where doing the right thing is the standard.
Ethical Issues In Business Functional Areas
Ethical issues, generally speaking, border on the issues of honesty and fairness, communication and relationships within a business or between it and stakeholders. Here we devoted some attention to some of the category of participants and ethical issues in business functional areas that are relevant to business.
1. Ethical Issues In Finance
Owners of business have the responsibility to provide the finance required for the operations of business. This sometimes necessitate that owners of business borrow from available sources such as friends associates or financial institutions. They may also decide to take on additional owners or stockholders in order to expand a business’s capital base. How finance is raised to fund a business can generate ethical and legal issues. Ethical issues could also be generated from how a business reports its financial position to its stakeholders. These include current and potential investors, government agencies and other interested member of the public.
2. Ethical Issues Among Employees
Employees in a business often need to make decisions and even carry out tasks they consider to be unethical on the ground that they conflict with their personal moral standpoint even though they may enhance profit.
For instance, many employees in tobacco and alcohol manufacturing companies believe that the products of the business entities they work for are ethically questionable because of their harmful effects.
They however continue to work in such places either because there are no available alternatives or because the jobs are well paying.
3. Ethical Issues Among Owners
Virtually all businesses start with the vision of an individual or group of owners who pool their resources together to provide some good or service. These owners may also be the managers of the business or may decide to employ professionals for this purpose.
It contemporary society, it is essential for business owners to understand the ethical issues that are relevant to their business. A neglect or ignorance of such ethical issues may result in business losses or outright failure of the business.
These issues may include those pertaining to workers remuneration, work conditions, quality of products, impact of their activities on the environment and pricing.
4. Ethical Issues In Management
Business managers have both an ethical and a legal responsibility to manage business in the best interest of the owners of business. These responsibilities may sometimes conflict with the personal interests and objectives of the managers in terms of security of jobs or remuneration.
It is also possible for there to be reasons to call into question the loyalty of managers to the organization for which they are working given the understanding that the primary objective of management is to facilitate the attainment of a company’s objective through effective organisation, direction, planning and controlling of the activities of employees.
In performing its statutory roles in a business organisation, management should pay attention to ethical issues that relate to employee discipline, health and safety, and code of ethics among others in the work place.
5. Consumers
No business entity can survive without the patronage of customers. As such, a major goal of business is to satisfy its customers.
This requires that business finds out what customers want and need, both in the short and long term, create the necessary goods or services and make them accessible to them.
6. Ethical Issues In Marketing
All marketing activities focus on customers, potential and actual, and more specifically, how to satisfy them. They involve bringing to the awareness of customers their need for given products and also making these products accessible to them.
Marketers begin with the conduct of research to gather information about what consumers want, then they arrange for the development/ manufacture of such products, price the products, promote and distribute them to where consumers want to buy them.
Ethical issues often arise over product safety, pricing of products, and the appropriateness of distribution channels.
7. Ethical Issues In Accounting
Accountants in recent times are under increasing pressure in terms of time, fees, and financial advice from clients, and also increased competition from professional colleagues.
They are also always under pressure to follow rules and interpret data correctly. These require that accountants follow the prescription of their profession’ code of ethics, which largely defines their responsibilities to their clients and the general public.
This code also defines the legitimate scope of an accountant’s activities and the nature of services he or she can morally provide.
Importance of Business Ethics
Business ethics is important because it protects reputation, builds trust, ensures legal compliance, creates employee and customer loyalty, and guarantees long-term survival. In today’s world, where information spreads quickly, one unethical act can destroy a company’s image overnight so ethics is no longer optional, it’s essential.
Builds Trust and Reputation
The power of transparency in business cannot be overstated, as it plays a pivotal role in building and maintaining trust with customers. In the modern business landscape, ethical business practices are not just a nicety but a necessity for building and maintaining trust with customers.
Business ethics is an essential aspect of modern business management, as it promotes good corporate governance, builds trust, and supports sustainability. This paper explores the importance of business ethics in building trust and sustainability in organizations. It discusses the various benefits of having a strong ethical culture, including improved reputation, customer loyalty, employee engagement, and increased profits. Ethical businesses earn the trust of customers, employees, investors, and the community. Trust leads to long-term loyalty and positive word-of-mouth.
Ensures Long-Term Success
Unethical practices (like fraud, exploitation, or corruption) may give short-term profits but usually destroy a company’s future. Ethics creates a strong foundation for sustainable growth.
Improves Employee Morale and Productivity
Employees feel respected and valued in an ethical workplace. This increases motivation, teamwork, and reduces turnover.
Customer Loyalty
Today’s consumers prefer companies that care about fairness, the environment, and social issues. Ethical companies attract and retain customers more easily.
Compliance with Laws and Regulations
Business ethics ensures companies obey labor laws, environmental standards, and financial regulations. Avoids legal penalties, scandals, and lawsuits.
Attracts Investors
Investors want to put money into companies that are transparent, responsible, and less risky. A good ethical record increases credibility in financial markets.
Corporate Social Responsibility
Ethics pushes businesses to contribute positively to society—through charity, community service, and sustainable practices. This improves public image and creates goodwill.
Global Competitiveness
In today’s global economy, multinational companies are judged by international standards. Ethical practices help them expand into new markets with respect and acceptance.
