Ethics refers to knowing what is right and what is wrong, then deciding to do what is right. It is believed that moral principles are main drivers of knowing what should be done and any given situation. In business, there are ethical considerations to be made when any business decision is made. The management must decide on what the situation require and what is the right thing to do among the available options (Cheeseman par 5). This paper looks at business decisions and how ethics and law influence the decisions made by managers in various companies. In business, ethical values are closely related to the legal principles but in some cases the managers realize that their ethical obligations exceed their legal duties.
Individuals do not make decisions following the same pattern and their moral guidelines dictates what every person views as right or wrong. In some cases, what is the best for an organization may be something morally wrong from the perspective of an individual. The obvious ethical practices are practiced by almost every organization and those that violate them usually face consequences. The most common ethical practices in the business arena include but not limited to: money embezzlement, discrimination, protection of proprietary information, false insurance claims and sexual harassment among others.
Ethical considerations are important because the laws that protect people or companies from illegal treatments are not perfect. Sometimes an act could be committed but it is not protected by any law, leading to non-violation of any law. It is the duty of business managers to always do what is good for humanity and for business.
Managers are required to abide by certain ethical standards and laws in their process of conducting business with other business ,community or individuals. Ethics and law shape the kind of business decisions made in every company (Carroll and Ann 45). The financial institutions would not be able to charge their customers any interest rates they want to charge, the rate they are charging should be appropriate. Manufacturers of motor vehicles install new technologies in their vehicles to reduce pollution. Ethical considerations are made with the end user and the environment at heart.
Leaders and managers are called upon to remain alert to their own moral and ethical beliefs to be able to make business decisions that are good to both the company and the general society.
Decision making involves a lot of determinations, managers or business owners must consider what should be defended or recommended in every process. Business laws are aimed at helping individuals and companies include ethical considerations when making all decisions. In many cases, ethical considerations are only done when decisions made would have external impacts, it is advisable to consider ethics even in the internal affairs.
Ethical considerations ensure that businesses maintain certain set of principles that govern decision making process. The stakeholders of any business organization are responsible for determining the ethical standards to be observed with an organization. The individuals within an organization have different views and this mean that, ethical conflict could occur at anytime. Questionable actions and decisions could result in disputes, hence the need to have codified ethical standards that guide business managers on what is good to do and what is not. It is hard to be clear on the correctness of some business decisions because of the detailed and complex decision making processes.
It is important that the acceptable decisions be shared by everyone in a business to create a reliable and consistent relationship with all the concerned stakeholders. When the process of decision making is understood by the decision makers, then it becomes easy to design ways in which any conflict of interest may arise. The business men are answerable to the society, individuals and the government, they must then ensure that whatever decision they arrive at would not cause problem with any of the stakeholders. Some of the factors that affect ethical decision making in business include individual factors, opportunity and the organizational relationships. The moral philosophy, motivations and moral development stage are some of the key individual factors that affect decision making. The culture of an organization could also affect the kind of decision made by an organization. The set of values, goals, beliefs, rituals and norms determine what an organization believes to be right or wrong.
Corporate Social Responsibility
Social responsibility is one of the ethical considerations that affect the decisions made by businesses. Businesses are expected to be beneficial to the whole community and not just their customers alone. The profits made by the businesses are supposed to benefit members of the community in which the business is situated. Charity activities are considered by consumers as good signs that a business is mindful of the community, they could start being loyal to the brands of that business enterprise. The business should ensure that it does not engage in activities that negatively affect the health of the people.
Business corporations are governed by various laws; both local and international. These businesses are operating majorly on for-profit basis hence, people make investments and expect returns. It is the responsibility of the business managers that all their decisions are focused on making healthy returns and remaining friendly to all stakeholders. They must respect all contracts for the benefit of the investors and other stakeholders. The decisions made should ensure that the business cultivates a fair relationship with its customers and suppliers.
Business must also ensure that they do not influence competition by engaging in unethical practices such as awarding tenders unfairly to unqualified applicants. In case the corporation operates on a foreign land, the managers must ensure that all decisions made are legal in their country of operation.
Many people would like to make investment on the existing investment opportunity. When one wants to invest in shares of a company, they should ensure that they follow strong ethical or moral principles in line with personal values. Ethical funds would enable an investor to avoid making investment of companies that produce products that are not ethical to the investor. Section 180(2) of the Corporations law contains guidelines that could help businessmen who may want to invest in other businesses (Cross and Roger n.p). One may choose not to invest in companies that produce alcohol, tobacco, arms or cigarettes. This aspect is referred to as the green funding and an investor is advised to consider his moral beliefs before making any business decision.
Promotions and marketing strategies in a company are affected by ethical considerations. Some advertisements are considered unlawful for some audience and should be targeted towards specific channels. Others are considered friendly to all audiences and are advertised in all channels. Corporations must ensure that the moral beliefs of all their stakeholders, including the shareholders, are upheld all the time.
Ethical Considerations in Business Acquisitions
Before making any decision on business acquisitions, it is important for the businesses to consider the rights of their employees. Business acquisition must ensure that all the employees of the acquired company are absorbed into the new parent company.. All the shareholders of the affected companies should be consulted and included in the acquisition process.
All decisions made in a business must ensure that the rights of all the shareholders are taken into considerations (Ikejiaku 23). The business exist to maximize the profits of the shareholders and to minimize their liability. Managers should make decisions that protect the interest of the shareholders at all times and minimize any chances of liability that might occur according to corporations Act 2001.
Regulatory programs put in place within an organization must be ethical. Regulatory compliance, risk management and strong ethics should be central in any organization’s programs. Guidance and rules on fair prices, fair treatment of broker-dealers and open communications on all the traded securities must be maintained at all times. Organizations must code of ethics as stipulated under section 203 of the investment adviser codes of ethics act.
Carroll, Archie B., and Ann K. Buchholtz. Business and society: Ethics, sustainability, and stakeholder management. Nelson Education, 2014.
Cheeseman, Henry R. Business law: Ethical, international & e-commerce environment. Vol. 2. Pearson College Division, 2001.
Cross, Frank, and Roger Miller. The Legal Environment of Business: Text and Cases–Ethical, Regulatory, Global, and E-Commerce Issues. Cengage Learning, 2008.
Ikejiaku, B. “Consideration of Ethical and Legal Aspects of Corporate Social Responsibility: The Issue of Multi-National Corporations and Sustainable Development.” Nordic Journal of Commercial Law 1 (2012): 1-33.