Assignment Topic for Business Ethics (Individual Assignment): Companies, that ar e perceived to be ethical, accrue diverse range of benefits

from its stakeholder s. a) You need to map and assess these diverse range of benefits b) how to buil d and maintain the ethical image of the companies that survives over a few decad es. Adoption of ethical practices by business organizations as they claim to be, is clearly visible and understandable from the various actions of the organization. However, there are certain benefits that these organizations get by being ethic al. some of these benefits are tangible while some are not. Most often these eth ical activities form a part of the orgnaization's CSR activities and they are sh own to have a beneficial effect on their bottomline. Financial Performance: The reasearch by the Institute of Business Ethics (IBE) d uring 1997-2001, shows that companies which adopted ethical practices have perfo rmed better in their business. The study scrutinised four indicators of business success, which are economic value added, market value added, price to earnings ratio and return on capital employed. In the study, it was found that comapnies with code of ethics performed better on two parameters, the economic value added and market value added. Also, these companies had a less volatile price to earn ings ratio which made them a safer investment with a long term perspective and R OCE of these companies was also clearly higher than the companies that did not e mphasize on ethical practices. The results of this study show that adoption of e thical practices by companies helps them in improving their public image and res ults in superior business performance. Customer loyalty & brand image: Companies following ethical practices enjoy the loyalty of their customers during difficult times. One example for this is Johns on & Johnson's recall of its painkiller "Tylenol", after it was discovered that they were contaminated by someone. Though the recall costed Johnson & Johnson mo re than $ 100 million, the result was a boost in consumer confidence despite the contamination scare. Ethical business practices can also help a company disting uish itself from its competitors. Partnering with non-profit organizations, offe ring employee benefits or going green are all ways in which, a company can portr ay an ethical & upright image of itself. Socially responsible business practices will also improve a company's customer service and industry connections. All th ese factors will help improve the organization's reputation and create a long-te rm strategy for success. As a company develops a reputation for ethical business practices, its customers will start to see the business as dependable and morally upstanding. The trust its customers feel for the company is a fundamental ingredient in growing long-t erm customer relationships. When customers see a business helping the community and limiting environmental impact, they are likely to become dedicated customers . These enthusiastic customers will talk to their friends and family and hopeful ly create more loyal customers. Such customers will become a powerful advertisin g method. Putting together a solid foundation of customers will help such busine ss become more profitable and successful. Employee commitment: Another benefit of adopting ethical practices is that it in creases the commitment level of employees towards the organization. Employees of ethical organizations take pride in being associated with their organizations a nd are much likely to stay with the company for longer time than other companies . Also, if the organization is ethical in its treatment of its employees

Do ethics pay? Personnel Today, 09595848, 5/13/2003