Kelvin-- my full essay

Topic: Being ethical will be the way of doing business in the future?
Passively? Actively?

One day, I did shopping with my friend in a fashion shop. Suddenly, she told me with an angry voice “hey, Kelvin, I won’t buy any leather shoes and cloths!” Actually, I understood the reason behind but one question came to my mind and the question is that is it a must for the company to run the business ethically nowadays? Generally, ethical business is the company to obey the laws and adherence the internal regulations. However, the situation changed. Nowadays, being ethical is not an easy task anymore. Apart from the external laws and the internal conducts, putting attention onto the social responsibility is a crucial factor that leading the company to be success. As far as I can see being ethical is no more an optional choice, someone still to question about this by saying that being ethical is costly and sometimes becomes a heavy financial burden for the company. Considering that, this article is trying to discuss the issue in two aspects, which are doing business in an active and passive way. In the conclusion of the article, it will show that no matter running business actively or passively, being ethical is the only way to lead the company to be success in the long time.
At the past and even now, government tries to implement the law and regulation in order to “force” the company running their business ethically. Seeing that, companies need to take the social responsibility according to the laws. In order to protect the environment, the right of customer and the employee and the public safety, laws seems to be the essential tools to achieve the above aims. There are some regulations related to the employees’ right such as the minimum wage. In UK, for the worker who aged 22 years and older, the minimum wage for them is 5.8 pounds per hours and 3.7 pounds for all workers aged of 18, who are no longer of compulsory school age. According to this regulation, all the workers can receive reasonable wage in order to maintain the life. If the employer fails to do so, they will violate the law and receive punishment from the authority. In addition, the laws of product and service safety also have the impact on the company. People are concerning the product safety more then before. Seeing that, the penalty of whom can’t reach the product safety standard may be very heavy. The maximum penalty is 20,000 pounds and 12 months’ imprisonment. Actually, it is the passively way to do the business ethically by following the external regulations. It is because the regulation is only the external motivation to “ force” the company to take responsibility of the society. More importantly, the main advantage of obeying the law is avoiding the punishment from the authority.
The next step is to run the ethical business actively. The meaning of active is that companies have the internal ethical goals and try to achieve those goals through the business operation. Indeed, it is not enough for the company only follow the regulation from the authority. It is no doubt that following the regulation can be the cost to the company, however, if the company can do something more, it will becomes a golden chance to gain the mutual benefit between company and society. One very important competitive advantage of the company is the human capital. Employees are the most crucial resource. First of all, they have the first feeling of the company. The feeling will directly affect the performance of the employee. Seeing that, if the company can respect the employees’ need and provide them with a good working condition and treat them as a part of the company. It will establish a good reputation making company easier to recruit and retain the human resource. From this point of view, as the employees are longer employed to the company, the cost of recruitment and training can be reduced. As a result, the company can gain the superior human resource as the competitive advantage.
On the other hand, building up the good image can be a power strategy to widen the customer based. According to Goodpurpose Global Study of 2008, if the company is ethical, there are 52% of the customers will advertise the company and 54% will invest their money; 68% will keep their loyalty even in the recession. Seeing that, not only did the ethical help the company to keep the loyalty of the customer, but also help to widen the customer based. In other words, doing ethical business help expand the company automatically. Many companies try their best to advertise the brand and product by investing a huge among of money. However, it is not a good way to attract the customer in such way. The reason behind is that it is useless to get a large market share in a short time but also lose it in the short time too. Therefore, the key success point is to gain the loyalty of the customer and being ethical can achieve this aim.
As we all know that one coin has two sides. Doing ethical business is doing some extra thing beyond the normal operation. For instance, providing the employee with a good working condition and training or putting more resource on the protection of the environment. All of them are cost. Someone may criticize doing ethical business will increase the cost and it is irresponsible for the shareholder. At the same time, company expansion maybe constrained by the ethical goal. However, all of the cost and disadvantage can be traded off in the long run. In fact, the main purpose of running ethical business is to build up a good image of the company. With the well-known brand name and good image, it can help to increase the business opportunities. Company image catches the attention of potential investors and business partner. 71% of investors (Christopher Nolty, Senior Investment Consultant) would make them more likely to invest in the good image company, which carry less risk and have a better return. In this sense, the cost can be traded off by the further investment and the wide and loyal customer based in the future.
Running a business is not a short task. Therefore, we need to put the focus point on the future. It is not enough to obey the laws. Nowadays, if you want to have a successful business, setting up ethical goal is inevitable. It is incorrect to criticize ethical goal only bring with drawbacks to the company. If we consider the long run, ethical goal will lead the company to success in the future. Therefore, modern organization should balance both company interest and the obligation to the society. The ultimate goal is to achieve the mutual benefit that is the sustainable development for both company and the society.

References:
http://www.enterweb.org/ethics.htm
http://www.hmrc.gov.uk/nmw/
http://www.internationallawoffice.com/Newsletters/detail.aspx?g=6b9da561-6498-46b5-85a6-3849739333c2
http://ezinearticles.com/?Five-Benefits-of-Good-Corporate-Image&id=1369432
http://www.principledprofit.com/socially-responsible-investing.shtml