Keywords: Business Stakeholders’ Management and Ethics, Procurement and Suppliers’ management, Business Ethics and Material management, Business ethics and product costing, Business Ethics and financial reporting, Business ethics and product prices, Business Ethics Assignment Writing Services
In 21th century, the phenomena of globalization, innovation and free markets have revolutionized the world. The new business dimension has emerged along with opportunities, constraints and demand (Jennings, 2014).
Brooks & Dunn (2011) stated that ethics are efforts to define what is good for both individuals as well as society as whole. These have resulted in increased demand for ethical practices, respect for human rights and environment as well as protect the interest of various stakeholders. Nevertheless, government plays an important role to manage the market freedom and promote the interest of different stakeholders through legislations. Government does provide market based framework to resolve disputes and promote competition in the market and preserve the social order in the society.
However, Parboteeah & Cullen (2013) contended that government alone cannot promote and manage every single transaction in the society and it lies at part of businesses to deliver in the best interest of the society. The businesses have responsibility towards shareholders in terms of profitability, employees to provide job security, consumer with quality products at reasonable prices, suppliers to make timely payment as well as positive impact on society.
Businesses are important component of the society, they have responsibilities towards communities, and other stakeholders attached to business. Businesses with responsible conduct contribute towards society and ensure trust and fairness in the society. The importance of honesty, fairness and reliability in business practices could not be emphasized less as it encourage sense of trust as well as encourage the welfare of society through developing confidence among stakeholders (Ferrell & Fraedrich, 2014).
Trevino & Nelson (2010) added that responsible business practices involve choices as well as actions of the employee to foster the expectation of business stakeholders. Whereas responsible business operation involve developing policies and procedures in order to conduct the business in responsible manner. Businesses promote ethics through respecting human rights in the business operations, compliance with rules and regulations along with communication of financial information.
Business Ethics and suppliers management
Manna & Chakraborti (2010) stated that supplier management is an important area of concern for business. Suppliers are any business associated with company that either sells or interest to sell its products or services to a business. Conflict of interest in supplier selection should be avoided and business should conduct its transactions on fair grounds. Supply chain is an integral part of the companies and supplier selection is an important area of address in today’s’ business environment.
The procurement of materials is essential part of business operations. In order to manage the ethical relationship with the suppliers, businesses have produced the code of conducts. The supplier selection should be ethics through inviting the entire supplier to compete for the business. The supplier should be allowed to compete for the business and submit proposal and fair decision should be made. Transparency of the processes, fairness and due diligences should be maintained while selecting a supplier (Parboteeah & Cullen, 2013).
Duska, Duska, & Ragatz (2011) evaluated that the supplier should be selected on merit through proper evaluation of the supplier. The code of ethics clearly defined on the prohibition of employees to accept gifts from their suppliers. All the bids and proposal should be evaluated on fair grounds as well as the decisions should be clear communicated with suppliers. Moreover, the payment should be made on fair grounds in timely manners to the suppliers.
Peter (2009) added that business should view suppliers as partner and seek to improve the operational efficiency through dealing supplier in ethical manner. The supplier should be encouraged for responsible business practices and conduct business operations in social responsible manner. Business supplier code encloses different standards and policy, which is essential for businesses.
Business Ethics and Material management
Sustainability is important of business concern and businesses should be careful when procuring the materials. The physical environment should be preserved and resources should be utilized in a ways that current generations as well as future generations can be benefited from the natural resources. The businesses should procure the raw materials in reason fashion and unethical practices should be avoided (Peter, 2009).
For example, a business buying cheaper material may hurt the environment because these illegal practices might be used by the supplier in order to provide the cheaper materials. The natural environment should be maintained for the living conditions should be management with minimum effect on the resources. The quality of the materials should be carefully dealt as many resources of should be managed effectively (Jennings, 2014).
Trevino & Nelson (2010) discussed that the renewable resources as water and timber should be utilized are responsible way so that it does not affect the environment. The businesses should buy recycle materials that preserve the natural resources and minimize the greenhouse gases. Moreover, the business should support the local supplier and procurement the materials from local supplier will promote the welfare of local supplier. The physical environment and resources will increase the reputation of the business and smooth the supply chain of the business.
McDonald (2014) stated that integrity and fairness should be considered while procuring the material. The material should be sourced in a way that it does not damage the natural resources and business should recycle the waste. The material usage should be minimized and tackle the pollution problem. The non-renewable materials, energy and water efficiency and minimize of packaging will maximize the benefits for the consumer. The cost of material will be reduced for the business and increase the business reputation for procuring the materials in sustainable way (Frederick, 2014).
Business ethics and product costing
Parboteeah & Cullen (2013) explained that the product costing is important financial area for the business. Business not costing the products in efficient and reliable manner and seeking short-term benefit over the expenses of long terms advantage can sabotage the future of the business. If business fails to properly determine the exact cost of their product, it is serious become uncompetitive or they may pass their inefficiencies to the consumers.
For example, a company takes advantage from the natural resources and buys materials at lowest rate or abuse the labor polices in order to gain advantages then it will damage the reputation of the company ion the long run and company product does not reflect the true cost of the product. The ‘creative accounting’ practices damage the creditability of the company in the eyes of suppliers, employees and customers (Ferrell & Fraedrich, 2014).
Brenkert & Beauchamp (2012) added that the product costing is an integral factor and company should determine the true cost of its products by added all the cost associated with the product. If company tries to compromise the cost of materials then the product quality may not meet the standards to might be harmful for the customers. Similarly, product cost is an important determinable factor to set the price of product as well as profitability of the product.
The product costing based on cheaper components or cutting the standardized practices will harm the business operations and subsequently damage its relationship with different stakeholders. Other important issue for the business during the product coting is use of the resources and selecting the different methodologies involve. For example, a business may decide to offshore to reduce its cost. However, this may result in job lose and local communicates may be effected from such business decision (Brooks & Dunn, 2011).
Business Ethics and financial reporting
Young (2015) discussed the role of ethics in a financial reporting and mentioned that it is an important area especially after many high profile scandals like Enron. The financial reporting of the affect wide range of stakeholders and the information enclosed by the company depicts the overall of the company. It enclosed financial information about the company and number of stakeholders makes decision based on information enclosed in financial reports.
Peter (2009) added that there are number of regulatory institutions monitor and review the financial report and ensure the integrity of data through applying number measures like audit and financial standards. However, despite number of financial regulations it important that resulted reported should be honest and fair. The creative accounting is area of concern for many companies and i.e. need for ethics while communicating with stakeholders could not be emphasized less to value the integrity of data.
Duska, Duska, & Ragatz (2011) debated that the ethical are important in financial reporting, as it is useful medium of communicating financial results with the stakeholders and they make decisions based on information enclosed in financial reporting. In ethics for accounting, information there are two types of principles are applied which are either rule-based approach (legislation) to principle-based approach, which are ethical standards and act in good faith. In ethical stance, all commercial activities are carried out with dignity and fairness and information produce by the business represent the true position of the business (Parboteeah & Cullen, 2013).
The information provided by the professional accountants should have objectivity and integrity. The different stakeholders attached to business need information to make decision and therefore, reliable information is important. Providing quality information of business financials is an important factor when communicating with stakeholders. The goal of the management is achieve balance in term of business operation and elimination of unethical practices (Brenkert & Beauchamp, 2012).
Business Ethics and product prices
Brooks & Dunn (2011) stated that there are laws and regulation, which protect consumer from the unethical pricing strategies, set by companies. Product pricing set by the companies should reflect the fair pricing of product. The amount of markup charged by the companies should just the overhead involve. The pricing strategy used by companies to stimulate the demand should be enough that does not involve the unfair practices. The price cutting strategy to sell out of dated items or selling undated products could raise the question of unethical price setting. The companies used unethical practices to increase the through undercutting the prices (Peter, 2009).
Frederick (2014) identified that the product prices should reflect the actual cost of the product and company should set ethical price maintain the competition in the market. Another issue surrounding the price fixing of the product and If companies do unethical practices it put consumer at disadvantage. Price discrimination strategy is another issue surrounding the price setting. Companies set different prices for same product and take advantage of the customer. These practices are usually unwelcome by the consumer and they feel uncomfortable with such price setting (Ferrell & Fraedrich, 2014)
Another form of price known as predatory pricing is common unethical practice pursued by many companies. The taking advantage and unethical practice of the companies create unfavorable environment and put consumer at disadvantage as well as damage the competitors business. The price fixing practices of the companies is unethical as it violates the rights of the consumers and market efficiency is ignored (Jennings, 2014).
The price set under the case of monopolies is also another unethical practice of companies. The companies set the price, which they consider, maximize their profit without considering welfare. Such practices limit the consumer autonomy and consumer force to buy the products at price, which does not reflect the actual value offered, by the product. Product pricing plays an important role how effectively a product can sell and how much value customer received from product (McDonald, 2014).
Ethics are set of business practices, which increase the fairness and integrity of business operations. The principle-based approach to business develop the ethical behavior in the individuals to develop positive relationship with the supplier, procure and utilize the material in responsible way, provide information to stakeholders which has been prepared with integrity as well the product costing should be based on real evidence. The supplier is important component of business and should be considering as partner. However, supplier should be selected on merit through fairness and effective evaluation.
Business should procure materials in responsible way and sustainability should be considered. The product costing should be based on long-term approach rather making short-term gains business should focus on long-term perspective. The product should not pass business efficiency to consumer.
The financial information provided to range of stakeholders should be reliable and integrity of information should be preserved. The role of financial information for decision-making is vital and therefore, umber of stakeholders used the information for effective decisions. The ethical stances enclosed in product pricing is also important because if company charges prices which does not reflect it fair value, then customer might not trust the business.
The product pricing and quality should justify the actual value provided by the product to consumers. Company should set it product pricing in such fashion that it does not defraud the consumer or competitors.
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