Ethics in Business Are an Optional Extra!

Introduction

Sherwin (1983, p428) argues that “ethics is generally referred to as the set of moral principles or values that guide behaviour” and according to Carrigan et al (2004, p403) “ethical consumption is the conscious and deliberate choice to make certain consumption choices due to personal and moral beliefs.” With the above defined, it leads to the question how important is corporate ethical behaviour in today’s world? Through analyzing ethical factors that affect firms and evaluating whether or not Ethics in business are or aren’t an optional extra in firms, I hope to be able to provide a clear and accurate conclusion.

How can a firm become Ethical?

”Ethics is about: norms; values; rights and responsibilities; sharing; fairness; obligation and exchange.” (Naylor 1999) this suggests that there are many aspects in which a company could become ethical. The most commonly recognized ethical practice is fair pay. When the media discovered in 2007 that Asian workers that worked for Topshop were working up to 12 hour days six days a week for only Ð'Ј5 a day, Owner Sir Phillip Green had to release an immediate statement in order to provide the public with his explanation in which he suggested that he was unaware of these conditions and was to monitor the conditions of these factories (Newell et al 2007) the instant release of a statement occurred in order to limited the damage that could face firm such as a loss of sales and market share due to a damaged reputation. With this in mind, by paying workers a fair rate their reputation could well be saved and legal costs avoided. Another way in which a firm can be ethical is by focusing on discrimination. For example, not employing a worker on the basis of race, sexuality or disabilities.

Ethics is business are not an Optional Extra!

Businesses who adopt corporate social responsibilty are regarded highly by consumers this is because consumers want to feel as though they purchase goods and services from companies that are ethically sound. Cowe et al (2004) revealed that consumers purchasing habits are affected by the social corporate responsibility of a company. Research carried out by MORI found that a third of UK consumers are concerned with ethical issues and that a quarter have gone as far as investigating personally the companies social responsibility. Cowe et al (2004, p2) state that “Shoppers are highly aware of ethical issues and many are ready to put their money where their morals are.”

This indicates that businesses who adopt ethical practice reap the benefits, for example, “The Body Shop” owned by Anita Roddick is one particular business that illustrates the benefits of adopting ethical practices. вЂ?The Body Shop’ made Ð'Ј500 million in 1994, which was a 16% increase on 1993 sales. This ultimately highlights the level of success a firm adopting an ethical approach can achieve. The main reason behind this dramatic increase in sales was that вЂ?The Body Shop’ incorporated promotional and marketing strategies that focused on their ethnicity and therefore turned it into their Unique Selling Point (USP) which resulted in them gaining advantage over their competitors promoted and marketed their ethnicity and turned into their Unique Selling Point (USP) therefore using the fact that they were ethnic to their advantage. Being ethical also enables a firm to charge a higher price for their goods/services and could therefore benefit financially in the long run.

By being ethical, businesses also reduce the risk of causing legal troubles. Adopting ethics in business may include not using sweat shops in less develpoed countries such as China or Africa. A sweat shop is a manufacturing facility which pays employees a poor wage and therefore increases the firms profit. Often companies that use sweatshop, in the long run, they may cause irrepairable damage, For example, BBC’s Panorama (Jensen 2000) caught Sportswear company Nike using sweat shops and resultantly consumers boycotted them leading to a dramatic sales decrease. Finally, if a firm decides not act ethicially they could be taking a large risk. Todays consumers are far more demanding and they expect organisations to fulfil their demands. There has been a signficant rise in ethical consumerism, meaning that more and more of todays consumers are demanding that businesses act in an ethical manner. If businesses adopt an ethical approach they will be more likely to meet their customers demands.

Ethics in Business are an Optional Extra

Despite the problems associated with Nike using sweatshops, in some instances, poor ethics have not affected a company’s success. For example, Gap was involved in a breach of its ethical code when it was discovered that they were involved with an alleged illegal employment and breaches of human rights. The three year legal battle concerning Gap’s behaviour was finally settled in 2002. (Iwanow et al 2005). However despite Gap’s controversial