Ethics

Business ethics has always been an issue in many companies. Most people think that if they are doing legal things, they are definitely ethical. This might not be true because most companies that are average performers are the ones that only worry about legality of their practices. The companies that go a step ahead and ensure that they act ethically always have their customers coming back to them. According to global studies, consumers are likely to either reject or accept products on the basis of the reputation of the producing company and its environmental and social responsibility. There is a higher chance of a consumer buying from companies with good business practices than the ones with bad ones.

Among the companies that featured in the 99 best ethical companies in the world according to Ethisphere Magazine (2010), is Nike (US Apparel). This company is basically known for its responsibility to other parties. Over the years, Nike has always made sure that it observes the US labor regulations. All along, it has maintained a good name and it has made good sales due to this. However, there have been issues that are tarnishing Nikes name. The Western press claims that Nike has been having unethical practices. They claim that it pays its laborers poor wages, subjects them to extreme working conditions, use child labor and harass the workforce among other ill practices. Nike has been criticized for neglecting the workers in order to make more profits. Nike defends itself by indicating that it is the independent contractors who do the unethical practices but it as well takes the responsibility for its suppliers misdeeds. To show its social responsibility, it has gone further to deal with their supplier factories in a move to stop unethical business practices. For example, Nike claims that it told the Indonesian suppliers to raise the minimum wage but it is the one which absorbed most of the cost incurred.

Nike suppliers do not solely supply for Nike. They are just independent contractors who make sports shoes for any company that wants to contract with them. Why the blame is only on Nike is not understandable but the move Nike took will ensure that the suppliers maintain ethical practices within their factories. Nike is now raising the standards not only within the company but also in the countries they work in as well. Other things that indicate that Nike is actually ethical are for example ensuring that the workers health, education and total welfare of the workers is checked in future.

Business ethics are good not only for the consumers, but to the company in general.  For example, when a company is ethical towards all the stakeholders and the public, it creates a good image. The consumers want to be associated with a company that is known for practicing what is good. This creates customer loyalty and continued sales and even when the economic times are bad, such companies are likely to perform better than their counterparts who do not practice business ethics. The investors are also likely to be drawn to the companies which practice business ethics.

Failure to practice business ethics can be detrimental to the performance of the business. For example, McDonalds is among the most known fast food restaurants. However, it is also known for its unethical practices. Fraser Consultancy compiled an index for the worst ethical companies and it featured McDonalds as the company that is worst unethical. This company treats its customers, staff, suppliers and even the environment unethically. This corporation is accused of being a major cause of obesity due to the type of foods on their menu. Although they have made changes and started preparing healthier meals, they have limited options. They were also put on spotlight when people started getting sick as a result of eating food from its outlets. There are other complaints that the workers in the corporation are students who are exploited by being paid lowly and despite working for extra time, they are never paid overtime. In addition, the working conditions are bad and the management demands that the workers work faster so as to keep the returns high. These results into high rates of accidents which are never compensated.

Early this century, the corporation was involved in lawsuits regarding the ingredients for their hash browns and French fries. While the corporation described them as vegetarian, there were allegations that they had beef in them. This led to major decline in the sales as lab tests were done to prove the case. Much money was also spent to pay for the damages caused by the issue. In another lawsuit, the judge found out that through advertising, this corporation exploits the children. They were also held responsible for their meanness to animals. The corporation is anti-union and the wages it pays are very low compared to the work done by the employees. During their promotions, they indicate that their food is nutritious thus misleading the public. They are also accused of destroying the rainforest and causing pollution.

Basically, it is bad to be unethical because it could contribute to the failure of the company. Most companies which are unethical ruin their image and lose a lot more.  McDonald has lost the sales, image and public trust and this is making it to close some of its branches.