The Impact of Ethics on Profitability: A Business Development Report

This report delves into the crucial relationship between business ethics and profitability, examining whether ethical practices truly lead to higher profits. It explores various aspects of ethical business, including corporate social responsibility (CSR), ethical leadership, and the impact on employee retention, public image, and legal compliance. The report uses The Body Shop as a case study to illustrate how ethical practices can enhance a company's reputation, attract customers, and drive financial success. Furthermore, it discusses the key constraints in developing a strong ethical culture, such as ethical dilemmas and conflicts, and offers insights into overcoming these challenges. The conclusion emphasizes the importance of ethical business practices for long-term sustainability and positive brand image.

Sustainability and
ethics

Table of Contents
INTRODUCTION...........................................................................................................................4
MAIN BODY...................................................................................................................................4
CONCLUSION..............................................................................................................................10
REFERNCES.................................................................................................................................11
INTRODUCTION

There are a number of factors that are playing a very crucial role in making a business
more profitable and it consist of management teams, productive workforce and dedicated top
management. Addition to it well understood business practises that have to be implemented by a
as a philosophy of management that is to be relying on business ethics. Present report is based on
discussion of the topic “Does ethics results into higher profits”. There is discussion on Body
shop that is a British, skin care and cosmetic brand (Wolpe and Rommelfanger, 2017). It is
having headquarters in Croydon, UK and was founded by Anita Roddick. There is discussion of
practises related to business ethics and CSR policies of business and exploring whether ethical
business result in higher profitability. Further there are some key obstacles that are present while
a business is willing to develop a ethical culture & achievement of long term sustainability.
MAIN BODY
Literature review
Business ethics and CSR of small & multinational business
According to views of Brian Hill, 2019 Ethical individuals are those who are able to
identify the differences between wrong and right. In context of a business ethical behaviour is
application of fairness to relationships and honesty principles with all customers and co workers.
Ethical business are willing to treat all their individuals as the way they are willing to treat
themselves (Scott, , 2017). There is a need to build up high loyalty of customers and avoiding all
legal issues so that there can be retaining of employees for a longer duration of time. Having a
customer base that is loyal enough is a key factor that is responsible for long run success of a
business organisation as it helps in saving of marketing cost and acquisition of new customers by
positive marketing and mouth publicity that is part of indirect marketing communication tool for
many organisations.
According to view points of Melissa Horton, 2020 there are many different factors that can help
in making a business more profitable it consist of expert teams of management and consistent
demand from consumers. Further there has to be well known business practices that
organisations are willing to implement a management philosophy that is relaying in business
ethics and is a result of being successful by operating in ethical manner.
With instance to Body shop, its founder Anita Roddick once said that “Bing good is good
business” in year 2016 in February after a time period of 40 years company has issues a news
that is related to new commitment of becoming one of most sustainable and ethical global

business,. This focus towards ethical responsibilities has lead to generation of more than 3000
stores across 60 countries.
Ethical business or profitable or not
Enhancing organization's reputation:
Reputation of a business can be improved by having a ethical behaviour that can lead to
creation of a more positive image in the external market (Prescott and Szollosy, 201). If a
particular organisation is having any type of unethical activities that it might affect the chances
to have new customers especially in this world of social networking where customers can
disseminate information about any negative experience that they have gone through.
Retaining employees
It is a requirement to retain employees and they must be provided with fair
compensations according to their dedication level. There is a need of career advancement that is
based on their potential & competence level (Donohue, 2020). When organisational are firmly
open in all their dealings then there is more chances of retaining talented employees.
Positive working environment
Employees posses responsibility to be more ethical and they have to eb honest enough
related to their experience and capabilities. Ethical employees have to be perceived as team
players and not juts a individuals. There is development of positive relationships with their co
workers (3 Reasons an Ethical Business Leads to Profits, 2016). The most extreme case of poor
ethics is employee theft. In many industries this can result in high cost for business and
organisation are willing to avoid this type of behaviour on part of employees so that each
members of organisation is aware about the expectation with them.
Avoiding legal issues
Many organisation are willing to cut the profit pursuit by not having compliance with
external regulations and labour laws, ignorance for safety hazards of usage of any substandard
materials of products. It consist of legal fees, fines and government sanctions that are related to
government agencies. It can result in long run damage to reputation of a organization that is
more harmful for a organisation than legal fines.
Business ethics in management
Leadership in organisation is a key that holds relation with its long run success and
remains consistent with the philosophy of management that is built on a foundation of creation of

a positive example for their workers (Mittelstadt, , 2017). There is ethical accounting business
practises, public interaction and information dissemination to all shareholders of all leadership
teams so that it can posses a direct affect on the profitability of a organisation. When such
integral aspects are not performed with a resounding theme than it may lead to impact on the
short and long term.
Business ethics and employee morale
Employees who are having a higher level of satisfaction are more productive than
employees who are not satisfied. Unethical business practices might lead to unrest among
employees and there is a great dissatisfaction (McDermott-Levy, Leffers and Mayaka, 2018).
Business ethics have to be encouraged by company executives and management so that there can
be focus on increasing of the exponential ability of employees. There is enhancement of
productivity when the distraction level is low and morale of employee is high.
Business ethics and public image
Organisations are more productive with more investors and higher profitability. But the
external image is also a very crucial factors that is affecting the profitability of a publicly traded
brand. Organisations face repaid decline if they face situations where there is discovery of
unethical behaviour on part of organisation (Kim and Loewenstein, 2020).
Bottom line organisations that are laying a framework for all business operations will be
more profitable as compared to those who are part of unethical business.
In context of Body shop there are certain ethical business practises such as ethical leaders have
productive workforce there is “Linking of leadership with well being of employees” engaged
workers have leads to Changes in ethical responsibility of Body shop and helped them emerge as
a global ethical beauty brand.
Ethical business practice help in reduction of cost
The modern business is characterised by triple bottom line business that has a aim to pose
a positive environment and a social effect on earning of profits. Many business like Bodyshop
are making a discovery that it helps them in maintaining their cost and enhancement of
profitability.
For example Pepsi-Co also has amounted that they are willing to save $375 million by
establishment of energy, water, waste reduction & green packaging initiatives since 2010.

in year 2016 Hilton has also reported about the waste,m energy and water reduction strategies
that has saved approx $550 million since the year 2009 and there is coverage of Pespsico as a
sustainable brands according to CSR report of year 2014.
Consumers are willing to spend more with ethical brands
All business are relying on higher profitability to their customers. Many evidence have
suggest that ethical practices of a organisation helps in generation of customer support.
According to Nielsen research it was founded out that 55 % of the online shoppers across 60
nations are having passion about business to make positive environmental and social impact
(Grady, 2018). Many consumers around world have rightly said that the social motive of brands
is one such crucial factors that is influencing their purchase decision (Are Business Ethics
Important for Profitability, 2020).
Researches made by Mintel have also found out that more than half consumers in UK
have stopped buying products from those brands who are proved to be involved in unethical
business practises. And in future more than 33.33 % will stop busying even if there is no
availability of substitutes. This type of behaviour clearly depicts that consumers can penalise
their business in the external market. In Body shop there is a ethical instance that is followed and
adopted as one of main objectives as a part of their vision statements by their founder Anita
Roddick.
Key constraints for developing a strong ethical culture and achievement of long run
sustainability
There are many key constraints that occur as a result of ethical dilemma gap that is faced
by organisation that lead to generation of a mental conflict between moral paradox and moral
imperatives if any of circumstance like separate treatment of employees, inconsistent application
of policies, customary parasitises for detriment official policy (Berreby, Bourgne and Ganascia,
2017). Are the issues that lead to a ethical gaps in a organisation that have to be bridged
properly. Ethical leadership is a topic that is gaining lot of prominence especially among the
organisational professionals, Leaders & employees according to different industries.
When there is prevailing and promotion of technical culture then there is setting of expectation to
generate enhanced communication, collaboration and resolving of conflicts,. This can help in
increasing the situation of integrity, trust and behaviour that can lead to generation of “right”
outcomes.

Prevailing of ethical dilemma:
There is a situation of technical dilemma when a person has to choose among different
available alternatives. It is a circumstance that leads to high mental conflicts among the moral
paradox and moral imperatives. This leads to making a decision to have contrary to understand
what is takes to feel right ( The Advantages of Ethical Behavior in Business, 2019).
Leaders face challenges associated with credibility and integrity of monetary, personal
and status gain. There can be some uncomfortable moment where a person is more superior and
many disagree with something unethical.
Conflict:
It is also a inevitable and natural situation that is striving as a ethical leader where he is
bound to experience about different internal conflicts that is having relation with self evaluation
process and is also related with external conflicts of challenges facing because of ethical
dilemma (Artal and Rubenfeld, 2017). Ethical leadership is all bout being more clear and values
that have to be demonstrated in vales and principles of vision & mission statements.
In organisations there is a need to consider the desired outcomes by developing a
overview of negative and positive outcomes from other respective.
Some of the common types of conflicts that are common in any business situation includes:
 No transparent and clear resolution process of conflicts
 Dealing with organisational policies and moral ambiguity
 Benefits in trend of organisation, status and finance that is perceived from unethical
behaviour
 conflict of interest because of agreements and decision making
Ethical leader has to work towards mitigating conflicts by application of effective
communication techniques and use of conflict management strategies. There is also a need that
leader has to work towards some commonly set standards that is require to understand the core
values. These safeguards and standard will serve towards minimisation of risk and supporting of
ethical violations. Unrealistic objectives can lade towards spurring of leaders as it carets undue
pressure on employees and beaching of legal guidelines to achieve them.
There is a need that ethical leaders in a organisation are equipped with techniques of
appropriately managing of conflicts and they have to consider all elements that is leading
towards unethical behaviour and situations. There is also a requirement consider how results can

be achieved for this there is requirement to build up some distinguishable ethical standards by
the top management of every organisation.

CONCLUSION
From the above discussed report it can be said that ethical business practises are very
crucial for a business organisation in order to develop a positive brand image in the macro
environment. This helps in enhancing of brand image for existing customers and then further
attracting of new customers. This has a right positive impact ion the probability of the
organisation. It can be said that it is ethical business practises also results in generation of
technical dilemma for as many times small and multinational business have to deal with a
confusion of solving the Confusion between maximisation of monetary profitability and
consideration of ethical practises. This leads to generation of challenges in the course of
implementing ethical practices in a organisation that has to be solved by development of
appropriate strategies.

REFERNCES
Books & Journal
Artal, R. and Rubenfeld, S., 2017. Ethical issues in research. Best Practice & Research Clinical
Obstetrics & Gynaecology, 43, pp.107-114.
Berreby, F., Bourgne, G. and Ganascia, J.G., 2017, May. A declarative modular framework for
representing and applying ethical principles. In 16th Conference on Autonomous Agents
and MultiAgent Systems.
Grady, C., 2018. Ethical principles in clinical research. In Principles and practice of clinical
research (pp. 19-31). Academic Press.
Kim, J. and Loewenstein, J., 2020. Analogical Encoding Fosters Ethical Decision Making
Because Improved Knowledge of Ethical Principles Increases Moral Awareness. Journal
of Business Ethics, pp.1-18.
McDermott-Levy, R., Leffers, J. and Mayaka, J., 2018. Ethical principles and guidelines of
global health nursing practice. Nursing Outlook, 66(5), pp.473-481.
Mittelstadt, B., 2017. Designing the health-related internet of things: ethical principles and
guidelines. Information, 8(3), p.77.
O’Donohue, W., 2020. Criticisms of the Ethical principles for psychologists and code of
conduct. Ethics & Behavior, 30(4), pp.275-293.
Prescott, T. and Szollosy, M., 2017. Ethical principles of robotics.
Scott, P.A., 2017. Ethical principles in healthcare research. In Key Concepts and Issues in
Nursing Ethics (pp. 191-205). Springer, Cham.
Wolpe, P.R. and Rommelfanger, K.S., 2017. Ethical principles for the use of human cellular
biotechnologies. Nature Biotechnology, 35(11), p.1050.
Online
Are Business Ethics Important for Profitability, 2020 [online], Available through
<https://www.investopedia.com/ask/answers/040715/how-important-are-business-ethics-
running-profitable-business.asp>
3 Reasons an Ethical Business Leads to Profits, 2016 [online], Available
through<https://onlinemba.wsu.edu/blog/3-reasons-an-ethical-business-leads-to-profits/>
The Advantages of Ethical Behavior in Business, 2019 [online], Available
through<https://smallbusiness.chron.com/advantages-ethical-behavior-business-21067.html>