Introduction
In this modern or contemporary business era, there is a need to contain the ethical business practice. The ethical business practice looks good for any business to create the goodwill and gain the advantage. In this modern business era, firms are looking to gain and sustain the competitive advantage through ethical business practices. Relative to normative and descriptive business ethics, the firm may set different moral values, norms, and standard in the business process. It is better to reduce the visibility of firm benefits or profitability to exhibit some values for stakeholders. The film depicts its preferences to gain the competitive advantage, and the ethical business practice is the best approach to justify the purpose (McDonnell, 2012).
Ethical Business and its Impact on Competitive Advantage
Different organizations are gaining the competitive advantage through effectively implementing the business ethics. It has been revealed that the company can gain the sustainable competitive advantage through depicting or executing the value-creating strategy. It seems tough for another organization to imitate the process. Thus, the difference can be made through the business ethics. For example, it is necessary for the company management to depict the leadership in the business process to increase the integrity capacity. The firm makes its reputation, as far as the perception of stakeholders of the firm is concerned (Alton, 2017).
The competitive advantage of the company can be streamlined through different ethical business practices. For Instance, the firm may demonstrate different charity activities instead of focusing on the profitability and revenues. If the firm considers helping poor through charitable activities, goodwill, positive perceptions, and brand image can be created, which lead towards the sustainable competitive advantage for a long run (Earley, 2017).
Also, the green business practices are in the limelight to gain the competitive advantage. Firms are looking to create a good impact on the environment and people through its outputs. Through technology transformation and different ways of doing work, the green business practices can be enhanced. It seems tough for any competitor to imitate this process. Any business intends to make the profit to expand the business. However, if the company wants to get a competitive advantage, community benefits must be considered instead of higher profit margins (Kasasbeh, Harada, Osman, & Aldalayeen, 2014).
It is a fact that the company intends to get the competitive advantage through deriving different competitive insights. For Instance, it seems good to investigate that area which can be touched to initiate the ethical practices. Some companies take ethical initiatives in the internal process. On the other hand, some companies are looking to take some ethical initiatives in the external business environment (Korn, 2013).
Arguments in Favor
The firm gets the competitive advantage through ethical business. The most important nothing for any company is to differentiate the process, which cannot be imitated by competitors. In the competitive market, the firm has to come up with different ethical approaches, which can make the difference. It has been revealed that the companies are showing the business ethics due to the well-established culture. Different ethical values such as openness, respect, and integrity are quite visible, which can be used to provide the customer benefits. The business ethics of the company can also be used as a powerful sales tool. Through depicting the goodwill and respect for the community, the buying behavior of the customer can be shaped (Secretary, 2011).
In the business process, the management can demonstrate the ethical practices to eliminate different malpractices. For Instance, if the management of the company shows the fair customer practices at the workplace, customers become loyal. Charging customers fairly and treating them with respect are some ethical practices, which can make customers loyal and satisfied. In this contemporary business era, the customer loyalty leads towards the competitive advantage, and of course, it is possible due to ethical business practices. The management, through conducting the ethical or respectful or fair business, can create the positive brand image and reputation in the market. Increase in word-of-mouth referrals is possible through fair business practices (Secretary, 2011).
With the perspective of employees at the workplace, ethical a workplace practices have been emerged to retain the best talent in the company. Different issues such as gender discrimination, unfair management behavior, favoritism, poor working environment, and inflexible working conditions are some unethical practices. Thus, the competitive advantage can be gained a through eliminating these practices. Employees can work with greater efficiency, motivation, and productivity if benefits are mutual. Comparatively, in the intense rivalry, the company can emerge with the strong work workforce, which is capable of meeting the customer expectations and industry need (Wadhwa, 2009).
Through cultivating the strong teamwork and productivity in the company, the firm can get an edge. Initiating the ongoing dialogue and attention regarding values increases the employee contribution in the business process. For Instance, the prominent ethical business practice is to reveal necessary information in the workplace. It creates the culture of openness, which enhances the employee contribution. The extraordinary contribution of employees is a competitive advantage for the firm (Wadhwa, 2009).
Against Arguments
Business ethics is good to contain the competitive advantage in the market. However, firm’s profitability is at high risk. It has been revealed that the firm can gain the advantage due to its profitability, which enables the expansion process in new markets. It seems tough for the company to maximize its profitability. Business ethics needs, investments, which are necessary to provide benefits to all business stakeholders. Due to business ethics, the company gains the limited competitive advantage. Comparatively, maintaining the balance regarding the profitability and business ethics is tough for the company due to limited financial capital. For Instance, the company expresses the ethical practices regarding the child labor, minimum pay, environmental impact, fairness, and integrity. However, for a long run, it imposes restrictions on the company’s freedom. Thus, the firm gains the competitive advantage of smaller scale, as regards profitability, differentiation, and cost leadership, some limitations are creating barriers (Earley, 2017).
In a firm, it has been seen that the ethics compliance programs are time-consuming and costly for the business. The workplace laws and culture of the company need the big change intervention to implement the ethical programs. Thus, it impairs the efficiency and profitability for a while in the operational process, which also impairs the competitive advantage in the competitive market. The cost of operations and new change intervention may hit the cost leadership strategy for the company a, which has been designed to gain and sustain the competitive advantage (Earley, 2017).
Key Findings
For gaining the competitive advantage through the ethical business practices, it is necessary to set a framework. The firm has to decide the roadmap to create competitive values. Many firms are focusing on the internal business practices such as workplace laws, fair employee practices, and many other actions to create a strong workforce. On the other hand, firms are concentrating on the external business practices. These external business practices are the fair presentation of the financial statements, ethical sales practices, customer respect and many others; the intention is to create the perception and get an edge. Thus, it depends on the vision and mission of the company, which shapes the ethical process of the firm. The impact of business ethics on the profitability is in the limelight (Alton, 2017). It depends on a firm that how it executes the business practices. The firm should choose some ethical areas, which are triggered by the profitability, For instance, if the firm changes the laws regarding the sexual harassment at the workplace, it can create a good impact on the efficiency and production, which are integrated with the company’s advantage. Another example is the depiction of the financial statement to investors. Usually, firms intend to hide the financial information from investors. It seems unethical, but the company can gain the advantage due to this act. Conversely, through showing ethics and showing the accurate financial information, good relations with investors can be maintained, which is also a prominent competitive factor (Wadhwa, 2009). Thus, combining the business ethics competitive advantage is necessary for any firm to make the difference and enable the business sustainability as well. The business practices must be according to the expectations of stakeholders, and it seems better to avoid malpractices (Secretary, 2011).
Conclusion
In the end, it is to conclude that the ethical business has a direct impact on firm’s competitive advantage. Ethical implications are linked to different business practices, and the management has to maintain its advantage through perfect execution of several ethical strategies. Every company may have different intentions regarding the business ethics and competitive advantage. However, the impact is quite visible. The modern business needs ethical values, which can be created for sustainable advantage. From retail to manufacturing, the competitive edge can be carried by the company to create a better perception, goodwill, and positive brand image. Ethical programs can also be differentiated from other firms to justify its advantage.
References
Alton, L. (2017, September 12). How Much Do A Company’s Ethics Matter In The Modern Professional Climate? Retrieved from https://www.forbes.com/sites/larryalton/2017/09/12/how-much-do-a-companys-ethics-matter-in-the-modern-professional-climate/#4d1bed331c79
Earley, K. (2017, August 22). The business benefits of promoting diversity and inclusion. Retrieved from https://www.telegraph.co.uk/connect/better-business/business-sustainability/business-benefits-diversity-inclusion/
Kasasbeh, E. A., Harada, Y., Osman, A. B., & Aldalayeen, B. O. (2014). The Impact of Business Ethics in the Competitive Advantage (In the Cellular Communications Companies Operating In Jordan). European Scientific Journal, 10(10), 269-284.
Korn, M. (2013, February 6). Does an ‘A’ in Ethics Have Any Value? Retrieved from https://www.wsj.com/articles/SB10001424127887324761004578286102004694378
McDonnell, D. (2012). Democratic Enterprise: Ethical business for the 21st century. Diarmuid McDonnell.
Secretary, C. (2011, July 27). Why We Need More Ethics In Business Negotiations. Retrieved from http://www.businessinsider.com/why-we-need-more-ethics-in-business-negotiations-2011-7
Wadhwa, V. (2009, August 17). Why Be an Ethical Company? They’re Stronger and Last Longer. Retrieved from https://www.bloomberg.com/news/articles/2009-08-17/why-be-an-ethical-company-theyre-stronger-and-last-longer
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