Bad business ethics include behaviors that violate the law, damage customer trust, or both. Dishonesty, negligence in production, customer service failures, and financial scandals are examples. Companies that practice bad ethics face consequences such as loss of business relationships, a bad reputation, lawsuits, and bankruptcy.
Bad business ethics covers a rage of business behavior that violates the law, damages customer trust, or both. Business ethics is a broad and somewhat subjective field and much of what is included depends on the circumstances. There is often a fine line between behaviors that are simply bad decisions or harmful practices and those that are truly unethical. In most cases, actions that fall into the latter category are those that violate a written or unwritten code of honesty and fairness. These actions can be external, meaning they directly affect the customer, or internal, such as policies governing employees and internal company policies. Dishonesty, willful negligence in product manufacturing, and serious customer service failures are some of the more common examples. Financial scandals and wage discrepancies are another. In some cases these can result in prosecutions or penalties and fines, but other times they just result in a damaged reputation and a loss of ‘goodwill’, a trade term referring to the company’s image in the public.
Dishonesty
Dishonesty is a common example of bad business ethics. For example, if a company makes false claims in its advertising, there is an argument to be made that the company is dishonest to its customers, leading them to believe something that is not entirely accurate. Being dishonest is sometimes against the law, but not always. Much depends on the circumstances and the likelihood of real harm from deception. Companies often walk a very narrow line between what is punishable and what is technically permissible, usually in order to increase sales. Many experts consider this practice unethical, or at least “bad” ethics.
Sales and profitability aren’t the only reasons companies lie or distort the truth, however corporate leaders are sometimes dishonest in order to get credit for things they haven’t actually done, usually as a means to improve their business. social capital or general image. Claiming to have invested a certain amount in a specific charity, for example, or pledging to support non-profit groups, but then never following up on some examples. Stalling or delaying cleanup efforts during environmental crises such as oil spills or emissions problems can also fall into this category.
Negligence in production
A company can also face lawsuits or costly recalls if it intentionally produces poor or defective products. While not all defective products are created intentionally, a company that knowingly manufactures and markets products that could harm a customer is generally considered to have bad ethics, as well as breaking consumer protection laws in most places. Clients often come together under these circumstances to file a lawsuit against the company. The company may have to recall the products it sells and inform the public of the problem, which can also damage the company’s image.
Customer service failures
While lawsuits and illegal activities can damage a company’s reputation, bad business ethics can also include activities that do not involve any violation of the law. Poor customer service is not only bad business practice, it could also be considered unethical. Engaging in unethical or illegal acts by Company executives or key employees may also damage the Company’s reputation and may be considered an example of bad ethics, especially if conduct occurs in the course of doing business.
The failure to replace damaged or defective products or refund their purchase price to complaining consumers is one of the key examples of this type of behaviour, but even general policies on how customer inquiries are handled can cross the line into the realm of “unethical” if the company treats its critics with hostility or disrespect. Many companies have dedicated customer service teams to handle issues, but much of how they respond to issues is usually driven by the company’s overall position in conflict management. Simply being rude to a customer is not generally considered unethical, but may be a pattern and practice of not dealing with disgruntled customers or intentionally dealing with them in a disrespectful manner.
Financial scandals
Many business ethics issues center around executive salaries and compensation. Companies that are losing money and laying off employees in order to save money while giving their senior management raises and bonuses are often seen by the public as corrupt, at least ethically. Similar issues arise when discussing how corporate assets are invested, especially those related to public shares and equity trading. Top management sometimes makes investment choices that lead to a short-term profitability bubble, during which they themselves are able to capitalize, before it all crashes, at the expense of employees and shareholders.
Common consequences
Companies that consistently practice bad business ethics face several problems. More immediately, the loss of business relationships and a bad reputation with the public can hurt sales. Lawsuits and settlements can be costly and can even result in lost profits. The end result of bad business ethics can be bankruptcy or out of business, although this usually doesn’t happen quickly. Often companies do not face any consequences, at least not for many years, and this is one of the reasons why unethical practices persist.
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