MBA Program Essay
18 August 2014 Nowadays organizations faces a number of challenges, technological advancements, globalization, supply chain requirements, new legislations, environmental regulations, customers’ expectations and competition, just to name a few. One problem of vital importance for an organization is maximization of profit; after all, businesses are there to make money for the stockholders and shareholders. In order to remain sustainable and viable an organization must consider all the other issues aforementioned, remain in compliance while continue being ethical, transparent and responsible for not only for the organization and its investors but, for society as well. The best way for an organization to achieve profitability is by building trust, this can only be achieved by ways of open and honest communication. Media coverage has made public corporate scandals in the last few years, creating awareness of unethical practices. Issues with made up financial reports, product quality, poor customer service, out of court settlements without admission of guilt, has created skepticism amongst consumers, thus affecting profit for the organization and the overall socio-economic stability. Deceptive practices are noticed. An example of a common practice among the retail industry is price gouging. Human beings are creatures of habit; consumers like to frequent the same businesses for their own personal reasons. They become familiar with the prices and when there is a markup and then a sale for the original price before the markup, it gets noticed. It is a sure way to lose credibility and customer’s loyalty. Consumers do not like to be deceived. An organization that engages in unethical practices affects everyone, creating a cascading effect. Once it becomes public employees morale goes down, they become uncertain about their future with the organization, hence motivation and productivity, hence employee turnover and loss of organizational returns on investment. Also, the community depreciates when organizations go out of business. The positive effect of negative publicity is due to lack of corporate integrity and transparency is that stockholders and shareholders will look deeper into the organizations they will invest. Customers have become savvier and will spend their money from businesses with a track record of integrity and transparency. They will sponsor the businesses they feel they will get what they need without fear of being taken for what they are worth or compromising their private information when swiping their bank cards to pay for the goods. Organizations can only build trust through open and honest communication.
Taking the ethical stand can be risky. There is no guarantee that being ethical can increase profits. Nonprofit organizations for example operate in good faith, and not necessarily out there to make a profit. The ability of an organization to remain transparent is a must do if they are to remain in business. When organizations are not transparent, they could be under a cloud of suspicion and at risk, affecting their profit and damaging their good name. The whole world and non-governmental organizations will be looking for that transparency. Technology has become so widely available that positive or negative information will be known, almost immediately around the world.
Ethical organizations experience the same fluctuations in business profit as any other organization due to economic downturns. Nevertheless, the smooth operation of an organization, its viability and the viability of the community in which it operates, depends on the everyday moral and ethical decisions made. A strong ethical environment will not violate the principles of right and wrong when conducting business. There is no adjustment between ethical behavior and economic performance. Being ethical can translate into better products, improved corporate reputation which leads to stronger sales and higher profits.