Is your business ethical?
Business ethics are values and beliefs that a business senses when deciding. Ethics are decisions, behaviours, attitudes or thoughts that are fair, honest and lawful. It is about doing the right things. A firm is ethical when its decisions are considered fair and honest by the stakeholders. Being ethical is a trade-off between being professional or greedy for profit. For example, an unethical business may use children and offer them remuneration below the minimum wage, while an ethical firm only employs eligible people as stated by the law and offers them the minimum wage or above. Ethical firms consider the implications of their decisions on both people and the environment. Managers must think about the implications of their decisions on stakeholders before deciding how their decisions may impact, benefit or harm them. Some firms believe that acting ethically increases costs and reduces profits, although this belief is proven to be wrong because unethical activities may irreparably harm the reputation and existence of the business. Ethics can lead to building a powerful brand image and guaranteeing customer loyalty.
How do you sustain your business?
A business is sustainable, if it protects the environment, supports people and makes a profit. Sustainability shows how impactful business is on the environment, society and the economy. Ethics and sustainability are interrelated, as ethics encourage fair decisions, and sustainability focuses on the impact of these decisions on the business and surroundings.
The legislation and ethical values govern the protection of the environment so that all people and businesses must protect it. The public expects companies to help protect the environment because of their influential impact on it. Companies can harm the environment by cutting down trees, abusing natural resources and spreading emissions and toxic waste. For these reasons, laws impose strict limits on any action, which may harm the environment.
Social benefits are positive impacts that a business can make on people and society. For example, a firm builds a free child-care centre to give back benefits to the community, or build a school in a town which lacks schools. Alternatively, a business may build roads in rural communities, or build a new factory on a greenfield site, that creates social benefits in the form of new jobs. However, losing open land is a social cost and such a building is justified only if the benefits exceed the costs.
Profit is essential for enterprise sustainability. Businesses cannot survive without capital, which is vital to pay for salaries, materials or machinery. Firms exist to achieve the mission of making a profit or helping society. The profit mission pushes a business to make enough revenue to cover expenses, while the social enterprise tries to solve any pressing problems that society faces or to attract donors. Without sufficient funds, i.e. from profit, donations, loan or equity, a business cannot perform its mission and sustain.
This article is extracted from my new book- Mastering Enterprise Skills for Potential Entrepreneurs, which can be found in The Book. If you want to receive more information about the book and our activities, you can register in our newsletter by using this link.
Prepared by: Munther Al Dawood
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